Re: economic efficiency of free software

On Tuesday, February 17, 2004, at 02:14 PM, Taran Rampersad wrote:
>
>> On Mon, 16 Feb 2004, Taran Rampersad wrote:
>>
>> Software is a perishable good - it decays as the
>> problem it was designed to solve evolves, and as the platforms it 
>> builds
>> upon are updated.  It's far more like lettuce sitting in a warehouse 
>> than
>> gold bars in a safe.  Software that sits too long without being put to
>> market in one form or another becomes worse than worthless; it can 
>> become
>> a liability.  MBAs will one day wake up to realize this; for the 
>> meantime
>> it's a competitive advantage for the few businessfolk who do.
>>
There are very different rules in accounting for your average business. 
As far as I know only insurance companies and software companies may 
take that perspective. Insurance company executive make that type of 
statement about their core (sometimes aged cobol) code.

In terms of government (a very likely source of early investment in 
code) code can be a purchased asset that depreciates, office supplies 
that are considered effectively valueless once purchased, or continued 
investment (as software is built) until completion at which time it 
becomes an asset that is depreciated. I have no expertise in accounting 
this is from discussing the matter with associates with expertise.

There is no single way in which software is treated in accounting. 
Understanding how to account for the value of sharing might be an 
interesting accounting or public finance thesis. If you are in a FSB 
and interested in a capable person to research the issue I could 
introduce you. I would love to see some policy or finance fellowships 
in FSBs, MS certainly has them and FSB are at risk of losing the 
theoretical debates if MS investment in economists and analysts pays 
off.

regards,
Jean