Linux loves the slow economy

I have a theory that the free software movement will flourish during the Bush presidency. But before I get to my theory, let me come clean on my politics so you'll get an idea about the lens through which I see our political and financial future.

I voted for George W. Bush. But I am not a Republican. I am a registered independent who leans toward being libertarian. Like many libertarians, I want the government out of most of what we do. As a result, the federal government would shrink dramatically. This is one of the things the Republicans say they want, which is one reason why I also lean Republican.

I also believe we should have a flat tax, which has been promoted by some Republicans. A flat tax, along with a dramatically reduced government would translate into a very significant reduction in our federal taxes. A flat tax also appeals to my sense of fairness, as does Bush's across-the-board tax cut. Some of you may resent the fact that with an across-the-board tax cut Bill Gates and his company would pay fewer taxes. Call me a dreamer, but I believe that if Microsoft pays fewer taxes, more money will be available to spend on goods, services, and employees. I may not like Windows, and I may not like the corporate attitude of Microsoft and its leadership, but I'm totally in favor of creating an environment wherein Microsoft can hire more employees and offer them good wages.

Anyway, smaller government, a flat tax, and moral leadership are some of the changes I'd like to see. And although Bush and many Republicans say they favor some of these changes, I am fully aware that this transformation is not going to happen anytime soon, if ever. The only thing more illusory than political platforms and party promises are vendor-funded benchmarks.

A long time coming

Nor am I under the illusion that Bush can turn around the economy on a dime. Bush is not going for a flat tax, but he is on the right track by pushing for an across-the-board tax cut. I hope that Bush will get his cut and continue to encourage Alan Greenspan to reduce interest rates. But while reduced interest rates and a tax cut will certainly stimulate the economy, the effects will not be immediate. In fact, I subscribe to the doctrine that it takes one to four years for most economic policies to produce tangible results. How quickly the economy regains momentum is anyone's guess. Indeed, there's no guarantee that it will recover at all in the next four years, especially if the Bush economic strategies are blocked in Congress, or if the national debt gets out of hand once again.

If you think I'm being overly pessimistic, consider two wild cards that could make our economy even worse: Japan and the Middle East. The economic problems in Japan could easily begin to have an impact over here. The Japanese have invested heavily in American companies and real estate. If Japan's economy continues to tank, investors may be tempted to liquidate their holdings in American properties. And if tensions in the Middle East erupt into a full-scale war, all bets are off on predicting the price of oil.

Now for the good news. A slow economy does not negate the fact that the Internet economy still represents the greatest business opportunities for the next few decades. The dot-coms that are failing aren't all doing so because the Internet didn't deliver on its promise. Most of them are failing due to poor planning, reckless spending, and the fact that after several years of experimentation, we're still clueless about how to advertise properly in this medium. If they're smart, future dot-com arrivals are going to be more careful with their money.

Likewise, IT departments are going to see their budgets shrink in spite of the fact that the demands on their resources will remain stable or even increase. All of these folks are going to watch every penny, from development costs to the deployment and management of hardware and software.

Enter open source, *BSD, and Linux. No matter what Sun or Microsoft tells you, it is infinitely less expensive to build your infrastructure around open source and inexpensive appliances. And it is getting cheaper by the minute. A few short years ago, you would have to struggle through difficult installations in order to adopt Linux, only to be faced with a steep learning curve when it came to system administration. Now installation is usually a breeze, and administration is much easier. More important, we're seeing more companies using Linux as the foundation for server appliances that are managed with a Web browser. That means no installation at all, and no-brainer administration.

Even though Linux has been a credible choice for some time now, the problem for free software has been largely psychological. Money flowed freely, so CIOs could play to their sense of security without worrying so much about the bottom line. In the past, a conservative CIO would be more reluctant spending US$59 on Linux than spending $50,000 on Windows 2000, simply because nobody ever got fired for buying Microsoft. In a sluggish economy, however, that same CIO can become a hero for saving the company tens or hundreds of thousands of dollars by taking such risks. I predict the slowdown will produce a lot of heroes of this type.

So my conclusion is that, while I have confidence that Bush can turn around the economy, I do not believe he can turn it around quickly. In the meantime, we'll be stuck with tight IT budgets and fewer investors for dot-com start-ups. That may be bad news for the stock market, at least in the short term, but it's great news for open source. America in financial straits is truly the land of opportunity for free software.

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