William H. Magill on Fri, 12 Sep 2003 23:38:15 -0400

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Re: [PLUG] Interesting Outsourcing Article...

On Friday, September 12, 2003, at 09:29 PM, Stephen Gran wrote:

Isn't this just a problem with the underlying capitalism model of
business?  In the short run, it makes sense to reduce costs by any
means, in this case, outsourcing, in order to stay competitive.  In the
long run, however, the thing that keeps the economy afloat is not the
supply side but the demand side, and you need workers with money in
their pockets to buy your goods if you plan to actually sell things.

Just a short note on the basic schizophrenia of the model - nobody stays
in business trying to pay workers extravagantly, but that's the best way
to keep everyone in business. Just a short note after too much scotch.
Now back to your regularly scheduled programming :)

Don't confuse Capitalism with Competition.

Socialist economies have just as much trouble with Competition as do Capitalist.

Statist economies on the other hand simply dictate who can produce what, so Competition (at least internally) does not exist. However, black markets then traditionally bypass those controls.

The Tech industry of the past 10 years generated an enormous dislocation in the economy. It is going to take at least another 6-18 months for the pig to get through the Python. Sun is probably one of the best examples of a company slaughtered by the Tech Bubble. They now are forced to compete with themselves. There is still a glut of "brand new" Sun hardware available for a fraction of the cost of a new purchase from Sun. Why buy a new box from Sun when you can buy the same box on eBay for a fraction of the cost.

The "IT market" (as if it were monolitic) is no longer a "growth industry." It is now a "mature industry." Basically that means that vendors have little to differentiate each other consequently they compete on price.

Look at Linux -- It's prime "sales pitch" is that it is free compared to Microsoft (or any proprietary OS). That is a real difference. The idea that it is "better" than another OS is not a tangible thing which non-technical people understand. That you can run Linux on "commodity" hardware instead of high-margined "proprietary" hardware like SPARC, PARC, Alpha or Power, is what grabs the attention of the bean counters.

William H. Magill
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