FOSS Development As Economic Stimulus 365
heybus writes "Economist Dean Baker, best known for calling the housing bust and warning of the ensuing economic collapse, has just published his recommendations for how to allocate President-elect Obama's estimated $800 billion economic stimulus plan. Among other things, Baker calls for juicing the economy with $2 billion worth of government spending to support the development of free and open source software. Baker's idea is similar to the New Deal federal arts and writers' projects: the government would fund projects as long as they produce freely available code. In addition to employing programmers, 'the savings [to consumers] in the United States alone could easily exceed the cost of supporting software development.'"
Re:Open Source (Score:2, Informative)
OSX is built on Darwin, a particular flavour of UNIX. It's best not to call it a 'distribution', because you risk confusing it with a linux distribution, which are collections of similar software, artwork and (Very often) repositories of more software built on the same kernel.
I know you're two nerds comment was a humourous exaggeration, but I really think there are people who believe that about major distributions like Ubuntu and Red Hat.
Re:Open Source (Score:2, Informative)
Re:nope (Score:5, Informative)
That's actually the broken window fallacy [wikipedia.org]. If someone breaks your window, they're helping the economy because you will then spend money to buy a new window and pay a worker to install it for you.
But actually what's happening is that resources that would go into something productive for the economy get diverted to replacing something previously existent, thus reducing economic growth.
Re:The New Deal failed. (Score:2, Informative)
a) Well, to be honest, the economy was actually growing very fast under the New Deal, between 5% and 10% every year, from 1933 right up to the US entry into WW2. Millions of jobs were added before WW2. There was only one recessionary year when the Government tried to cut spending too early, but quickly corrected it.
b) You don't have to be in a war to push an economy out of a recession... rather than bombing Europe, you could spend the money building infrastructure.
c) The prosperity of the US was very real. The improvement in technology, health, education, employment and productive capacity was much higher from the wartime investments. The same was in fact true of the rest of Europe. Sweden was the first to apply the principles and became just as wealthy as the US.
I'm not sure where you are getting the mercantilism connection to Keynesian policies. Keynesians were very much against the Gold standard... Everyone from Friedman to Keynes to Bernanke agree the Gold standard was a primary cause of the Depression.
You clearly oppose Globalization, but I don't think it really matters. The New Deal really didn't have anything to say about global trade and it really doesn't make much of a difference when everyone is in a deep recession as well.
Re:Possible Concerns (Score:3, Informative)
You are correct. So the prudent thing for the new administration to do is to look at things where government spending works, and concentrate on those.
I have a friend that does air-control design. It goes a little beyond your basic HVAC, but involves quite a bit of it. He was around during the 70's/80's when the US Feds were giving out money for "solar heating" devices. He says that it got so ridiculous, you would see companies sticking a solar panel on a wood stove and calling it a solar heater. The government just isn't good at subsidizing industries in this way. The laws can't be written specifically enough to allow innovation, while at the same time limiting those who just want to game the system. I foresee the same thing happening with the incoming president's "energy policy". It will be a grab-bag for a bunch of scammers. What the government should do is build up the infrastructure (to enable commerce), set the interface standards, and then let anyone that thinks they can make a profit selling energy at market rates have a go at it.
For software, the better alternative is to fund an open office suite or other tools for use by all federal agencies. Any company can participate (including Microsoft), but the results would be open source and free from licensing/patent baggage, and owned by "the people". The data exchange formats would be likewise unencumbered. If you can work within that framework and make a better widgit than the "hobbyist", then you should be able to earn a tidy profit. Otherwise, don't quit your day job.
Re:The New Deal failed. (Score:3, Informative)
but even if you go by the best way of interpreting the New Deal, unemployment was never lower than 9%, INCLUDING make work jobs, which means that, 8 years of Roosevelt were NEVER as good as the WORST year of George Bush JR.
Economic growth was strong, closer to 10%. Unemployment was falling, but you didn't get full employment until WW2. This is to be expected when you are coming off a 25% unemployment rate and a decline in demand of 40% (90% in equity markets). As the economy was growing, you still didn't need many new workers to meet the growing demand because your productive capacity was built for output much higher (and you were still implementing technologies developed during the negative years).
You can't really compare Unemployment Rates of two different periods like this though. 20% of the workforce now works for the Government. The New Deal programs only employed a few thousand people. A much larger proportion of the population are employed today, so unemployment does not fluctuate so wildly.
The New Deal was not successful at reaching full-employment. You really needed a War Economy or a Centrally-Planned Soviet Economy to do this in the short-term.
The New Deal was actually quite small on a macroeconomic basis. However, it was the programs he created that created the society we know today of high home ownership, middle-class earners, social security & basic health care.
Re:As if the New Deal was successful, it wasn't (Score:3, Informative)
There are no mainstream free-market Austrian economists anymore
I don't know what you mean by this, but every economist still reads Mises and Hayek, and I haven't seen someone refute the Socialist Calculation problem identified by Hayek. There are minor differences between Monetarists and Austrians (and the more honest of both sides agree that inflation is a monetary issue but that can also inter-react with distortionary over-investment in sectors).
The Austrians are actually claiming that the housing bubble during a time of otherwise low inflation is proof of the Austrian Business Cycle [wikipedia.org] versus Monetarist/Chicago business cycle models.
Here are six Austrian economists [typepad.com] and also the Review of Austrian Economics [gmu.edu].
Re:Open Source (Score:3, Informative)
The infrastructure developed from the New Deal provided a tangible product which could be openly used by other segments of the economy and benefited far more. Roads affected the Automotive Industry and eventually the suburban sprawl and housing.
It should be noted that the Interstate Highway System [wikipedia.org] was not started until 1956.
The CCC improved roads in public parks. The WPA did pave or repair 300,000 miles of road [washingtonpost.com], but keep in mind the US currently has 3.9 million miles of highway [bts.gov].
New Deal spending is actually a lot less than people generally think. Federal spending peaked at 8% of GDP [blogspot.com] during 1933-1941, whereas today it is over double that number (20% [usgovernmentspending.com]) while both state and local spending are both themselves are today over 8% of GDP.
The New Deal was more about dollar devaluation and regulation rather than spending.
Re:As if the New Deal was successful, it wasn't (Score:3, Informative)
His biggest misstake being the budget balancing in 1937 that immediatly sent the country into a second recession.
Obviously balancing a budget can't send a country into a recession in itself (or the US would have been in a recession in 1998). Raising taxes or reducing spending might. As it happens, Congress passed the Undistributed Profits Tax [wikipedia.org] in 1936.
There are other competing theories on 1937: the Fed doubled bank reserve requirements in 1937; scary talk by FDR in April, 1937; the economy feeling the full effect of the Social Security and Federal unemployment payroll taxes that came into force in 1936. Perhaps they all played a roll.
Re:Possible Concerns (Score:3, Informative)
The Government has done this because private corporations are not willing to pay for something you just give away free to the public
The one counter-example are private Universities, which do spend their own money on publicly available basic research.
(source [nsf.gov]) total basic research spending in universities in 2001 was $20.8 billion. $12.9 billion came from the Federal government, and $7.8 billion came from non-Federal sources.
Institutional funds (e.g. university endowments) are the largest source of non-Federal university basic research spending, followed by industry and state/local funding.
Basic research, of course, pales in comparison with the $250 billion total amount of US R&D done (source [aaas.org]).