TCS Daily

The High Cost of Being Open

By Chresten Anderson - March 10, 2004 12:00 AM

Recently the website was launched. It is essentially an advertisement portal for open source software and free software. Its intended purpose is to "address the need for a comprehensive overview of open source software available for consumers."

There is nothing inherently wrong with this -- it is perfectly acceptable for such a portal to exist and in fact many do. What makes this particular one problematic is that it is being financed not by open source software producers but by the Nordic Council of Ministers, which of course means the taxpayers of Nordic countries.

The portal represents yet another front in the battle over intellectual property rights. With it, Scandinavian governments are providing ammunition to the opponents of software patents. And they are letting taxpayers -- including the proprietary software companies themselves -- foot the bill. Aside from the moral issues involved (there seems to be something inherently wrong in having to pay for the bullet at your own execution), the website -- and the policy it espouses -- distorts the free market process in which companies advertise to inform customers about their products. This is because, contrary to welfare economy theoretical beliefs, information is not free nor instantaneous, and hence the fact that consumers aren't fully informed about their choices isn't a public policy problem.

In a market process consumers seek out information about various products that serve their needs, and they do so until they feel confident that further investigation will not result in a better offer. But in doing so the consumer will also consider the cost of further investigation. After the fifth store of not finding a better price I may very well decide to go with what I have found even though I know that store number 6, 7 or 25 may save me €5. But I make the rational choice that the expected benefits are lower than expected costs.

However when government intervenes in this process and spends some of my -- and the rest of the taxpayers' -- money to provide information about one product it reduces its relative cost. And it also increases the costs to everyone who isn't looking for these products. And it results in a poor allocation of resources.

Of course this problem doesn't bother the open source community, which will take all the support from governments it can get as it seeks further support for its products. Among its strategies is an attempt to constrict government procurement policies to open source instead of proprietary software products.

This they argue will reduce costs for taxpayers -- and other consumers -- since open source products are putatively cheaper than their proprietary counterparts. While this argument may be correct in direct monetary terms it misses a few other costs associated with purchasing and installing software packages -- either at home, at the business or in government offices. People need to be trained in the usage of new programs, unless of course they are extremely easy to use and very intuitive or simply just upgrades of recent products.

Open-source products are seldom user-friendly; they are usually designed by volunteers with high-tech savvy but not much feel for the end-user. The extra costs of this are sometimes -- if not all of the time -- ignored by the open source community in their economic arguments.

It is understandable and rational that companies try to promote their own products with advertising. It's fine for Coca-Cola to create a website promoting itself or even soft drinks in general, but it is not acceptable if Coca-Cola goes to Washington, Brussels or the Nordic Council of Ministers and demands that taxpayers foot the bill for it.

Just as Coca-Cola is perfectly able to finance such information initiatives itself, so too apparently is the open-source community. Spend a few minutes searching on the web and you can find many privately funded websites promoting free or open source software. So this leaves me somewhat confused as to why I, as a taxpayer in Denmark, or proprietary software companies in the Nordic countries should pay for something like Nordicos.


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