118,000 and counting...

The confirmed death toll of Sunday's catastrophic tsunami is now over 118,000. This all happened in a matter of minutes with no warning. I personally think the world should grief over this by NOT celebrating the New Year and donating all that money to the poor victims. For each death, tens of people will be greatly impacted and hundreds will mourn. That's a lot of people.

In a recent National Geographic I saw a map of the world with the expected population in 2025. Many cities in Asia, especially in this region, will have more than 10M people. All of India only had 3 cities like that at the turn of the century, but that number will be over 10 by 2025. We've been very lucky so far that natural disasters have not hit these highly dense cities. But given the growth rate, it's just a matter of time before the odds catch up. Maybe this Tsunami will be the start of seeing natural disasters with 6 or even 7 digits death counts.

If the current population growth continues, there will be no standing room on earth by 2600. So something has to give. And sadly, it will be hunger, disease, and natural disasters. Nature has no mercy. After all, 99% of species that ever lived on earth are now extinct. We, humans, are also not helping our own fate.

Today, I had an interesting conversion with a few folks about why I think software should be free. Copying software is labeled anything from 'stealing' to 'fighting evil' depending on who you ask. So I want to explain what I believe: basic software for personal use should be free.

I have two arguments. The first argument explains why I think software for personal use is massivly over priced and should be controlled. The second argument explains why I think some software should be free (or at most companies should charge for the distribution of the CD -- the variable cost).

I'll make my first argument using MS Word as an example since it's one of the most popular software products ever. Most home users of Office use Word to type or read simple docs; most home users probably don't use 75-90% of the feature set. So it's unfair for MS to charge users for something they don't need, never intend to use, and don't even have a choice about. It's like if cable TV only came with all premium channels and pay-per-view events for $130/month instead of the typical $50. And bundling Word into Office is like forcing people with cable TV to also receive 5 magazines, join two book clubs, etc for an even higher fee. How many home users use Access or PowerPoint? A very small percentage. Do we all need the same features available to a professional writer? Why should we pay? I think it's fair to ask a business user to pay more because they use more features. I don't like the argument of "well, MS invested so much in building Office" because most home users never benefit from most of the IP tha MS creates. In fact, it makes the software more complicated, more buggy, and in some ways less secure.

Now, let me explain why basic personal software should be free (I'm not including something like Games because it's not really necessary, but will include something as basic as Word). PC's are now a critical way to share information, communicate, and really conduct the basics of life around the globe. I've heard of elementary schools where children need to have a laptop! PC's are as necessary telephones. In the US, a heavy discount is available for low-income families in order to have telephone and electricity (but not cable TV). So as a society (for good or for bad), we've decided that people should have telephones at a huge discount that does not even cover the variable cost. Granted, there's no free long distance, but it's enough to make a 911 call. Now, I argue that a product like Word is similar. A kid in a poor family should be able to type up a paper just like anyone else.

Now, you might ask why I think it should be free to all as opposed to just providing discounts based on income. Most companies that provide the basics of a society (ie. airlines, telephone companies, electricity companies, etc) hardly make a profit. It's very competitive. Now, shouldn't key software for personal use be the same? And given that we don't have competition, shouldn't we as a society take this to court and win to have free access to something so basic? Would Office really be the hundres of dollars that it is if there was competition? I really doubt. A basic word processing package should NOT cost more than $20. Afterall, MS can have a profitable Office Division by simply selling to corporations who need most of the features. I realize that my last point takes a leap of faith (or is "hand wavy" for someone who disagrees). But I do think that companies should do somethings for the overall good of the society. We belive in democracy and capitalism not because the rich can get richer but because it's a better system for the society. And forcing companies to make basic software free is a good thing -- just like providing electricity at the variable cost. Does this mean that PhotoShop, Games, etc should be free? Just like anything, there is a gray area. But I hope that I made my point.

The guys who invented paper & ink no longer charge us for 'intellectual property' or the fixed cost of figuring out how to make paper. Now, I don't have a problem with MS making money by showing ads in their products. In the end, I think that corporations act this way because of the way CEOs are rewareded in our capitalistic society. I wish we lived in a world where rewards were based on contributions to society rather than quarterly EPSs.

When I was in grad school, I decided to spend a summer and work on Wall Street. Though I quickly realized that it's not the place for me, it was still exciting for a summer. On my last day, I asked my MD (managing directors are basically two/three levels up from a VP) how he can justify working for a company that only cares about making money and the rich richer. He had a very good answer:

The modern world requires a lot of money. Cities need money to build roads and bridges. Corporations need money to expand their infrastructure and business and create jobs. And the rich and even the middle class have money they like to invest at a higher rate than the prime interest rate. So you need firms to create securities over these financial needs and sell them at various risk/reward levels to investors. Without the Goldman Sachs of the world, the Golden Gate Bridge would have never been built (as it was built using a municipal bond).

Granted, this doesn't justify some of the bad things that occur on the Street (like the close relationship between the IBanking and Equities), but I like this argument as most people don't see the value of these firms.