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@trengriffin /1 Priceless 😉...
There are two approaches:
🅰️ Hal Varian way of valuing it in isolation
🅱️ Tim O'Reilly way of accounting for aggregate
Since the concern here is GDP (aggregate income or output), a broader consideration like #2 is more appropriate, albeit complex...
There are two approaches:
🅰️ Hal Varian way of valuing it in isolation
🅱️ Tim O'Reilly way of accounting for aggregate
Since the concern here is GDP (aggregate income or output), a broader consideration like #2 is more appropriate, albeit complex...
@trengriffin /2 Take Android OS as an example of open source software's (OSS) contribution to GDP...
Going to control for output items switching fm Consumption to Investment buckets; fm expense to capitalized; fm domestic accts to EX/IM; etc...
Going to control for output items switching fm Consumption to Investment buckets; fm expense to capitalized; fm domestic accts to EX/IM; etc...
@trengriffin /3 Also going to assume the market value of Android is $0 in isolation, which fully removes its output from real GDP (adversely)...
@trengriffin /4 whereas even a $0.01 license would be massively deflationary relative to closed source OS it hypothetically displaced, but no impact on real GDP -- at least narrowly, without an increase in unit sales or complementary goods/services...
@trengriffin /5 So, despite elimination of OS income fm GDP due to replacing closed source with free license...
Android has stoked smartphone sales (~$393B in 2018); app sales (Google Play Store ~$25B in 2018); cloud capital/infrastructure/SaaS; chips/sensors/IoT; net new jobs/bizs/IP...
Android has stoked smartphone sales (~$393B in 2018); app sales (Google Play Store ~$25B in 2018); cloud capital/infrastructure/SaaS; chips/sensors/IoT; net new jobs/bizs/IP...
@trengriffin /6 And even though the prices of a lot of those items have been deflationary/disinflationary, the growth in unit sales ("growing the pie"/"broaden the base") has net-net increased aggregate output...
Plus, Android had a capitalized cost of $50M in 2005 fwiw...
Plus, Android had a capitalized cost of $50M in 2005 fwiw...
@trengriffin /7 In sum, back to the top, open source is accounted for appropriately per its associated aggregate output -- both direct and indirect -- as are its contributions to (dis)inflation; standard of living; consumer/producer surplus; deadweight loss:
@trengriffin /8 Again, it's great that it saves you time and money relative to prior incumbents...
but GDP asks (and measures) what output you're producing with that extra time and money...
and across all of these cases in aggregate, the answer is net positive...
🏁
but GDP asks (and measures) what output you're producing with that extra time and money...
and across all of these cases in aggregate, the answer is net positive...
🏁
@trengriffin @timoreilly @halvarian And, of course...
attn @cullenroche @calculatedrisk @EconomPic @Brad_Setser
attn @cullenroche @calculatedrisk @EconomPic @Brad_Setser
@trengriffin @timoreilly @halvarian @cullenroche @calculatedrisk @EconomPic @Brad_Setser Forked again:
cc @BluegrassCap @GavinSBaker (ICYMI)
cc @BluegrassCap @GavinSBaker (ICYMI)
