Part One: The French in crisis

Part One: The French in crisis

Part One

in which thoughts fly high and Linux isn't even mentioned.

Or is it?

The French in crisis

Beaujolais in crisis. The secret is out!

That headline was in The News, an English-language newspaper published in France for foreigners and others interested in things French.1 I had bought a copy to read on the train when I was backpacking across Western Europe. I had made it a habit to read not only the International Herald Tribune but a local paper in each country I passed through. However, having read physics rather than French in high school, I had to resort to a French newspaper written in English. And why not?

So, what was this crisis that the Beaujolais winegrowers were facing? Had frost or crows ruined the grape harvest? Or were killer grasshoppers on the loose?

Not even close. The crisis stemmed from 2001, an exceptionally good year for the Beaujolais harvest. Yes, it had been an exceptionally good year. But the following year complete disaster loomed, because the 2002 harvest was about to be just as good! For a while this information was kept quiet, a sordid fact known only to winegrowers and other wine-trade insiders. However, the secret was now out, and the poor winegrowers were facing ruin.

  • 1"Beaujolais in crisis.' The News, France's English Language Newspaper For Residents and Lovers of France. No. 159/August 2002, p 1.
hingo Sun, 2006-08-27 17:56

The law of supply and demand

The law of supply and demand

We have all heard of the law of supply and demand. Even by reading Asterix one learned that the law of supply and demand is what sets market prices and seems to be what generally keeps the wheels of the economy turning.1

The law of supply and demand builds on mathematician Daniel Bernoulli's insight that the price of a product should not be determined so much by its production cost, but by how useful it is to its prospective buyer. If a buyer is willing to pay a lot for it, then a cheap product can be sold at a high price. According to a saying in Finland, it is not stupid to ask a high price, but it is to pay it.

Consequently, if the same product is available from more than one vendor, the buyer gains by taking his business to the one who offers it at the best price. So, demand hikes up the price and supply brings it down, and somewhere along the line a balance is reached, and that is where business happens.

The law of supply and demand can lead to situations that seem strange when common sense is applied to them. OPEC is an organization whose members include most of the oil-producing countries of the world. The member countries decide between themselves how much oil each of them will produce in any given period. If brief reports in the news are to be believed, the Arab gentlemen of the organization essentially make one of two decisions: either to increase or decrease oil production.

And following one of the meetings in which they've decided to decrease oil production, you can bet that the news next day will announce the price of oil has gone up in the world. This is so normal, so mundane, it hardly raises an eyebrow. But let's think about it. The oil is no different to the oil that was on sale at a considerably cheaper price just the day before. It's no better or worse in quality, it's sold in barrels of the same size, it's exactly the same kind of oil, it's just more expensive. This is an example of the law of supply and demand in action. When supply goes down, the price goes up - even if all else remains equal.

  • 1See Obelix and co.
hingo Sun, 2006-08-27 18:15

Wine down the drain

Wine down the drain

Going back to the French winegrowers of Beaujolais, an unfortunate situation had occurred whereby supply exceeded demand. There was too much wine. If the secret were revealed, the prices might drop dramatically. And when the secret was revealed, there was a crisis.

But the French knew what to do. Professional wine tasters had already started dividing the wine into three categories. Only the best wine was to be sold. The middling wines would become vinegar, and the worst wines would be poured down the drain. The winegrowers knew the law of supply and demand and calculated that it made better business sense to sell less wine at a higher price than to sell more wine at a lower price.

hingo Sun, 2006-08-27 17:59

Wineglass symphony

Wineglass symphony

The smallest village shop, whether it is French or Finnish, follows the law of supply and demand, and to say that is hardly shocking news.

What is shocking, though, is that the law of supply and demand has sneaked outside its rightful territory into areas of which it should stay clear. For almost three centuries, we've been aware of the mechanism of supply and demand. It has become such an ingrained part of our thinking that its tentacles have reached even into areas of our lives that have nothing to do with commerce. When there is no connection to commerce, the result of the warped thought processes can be very sad. And the worst thing is, even as we implement it, when the law of supply and demand is operating outside the field of commerce, we don't necessarily recognize it as such.

When I first had Christmas dinner with my wife's family, it transpired that my father-in-law is the sort of person who always has a trick up his sleeve to entertain guests. In honour of the festivities, a table had been set with wineglasses - not however for us to drink Beaujolais from. As we were waiting for the dessert, my father-in-law wet his index finger and started showing us how to make music by running it around the rim of a wineglass.

Naturally, in such a situation, everybody starts trying to make their wineglass ring, and as I recall I was the last one to charm a reasonably pure note from my glass. So there we were, whining away together, when my father-in-law moved on to his grand finale: balancing a fork and a knife on the tip of a match over his wineglass. If you've never seen this trick performed at any of your festive dinners, please feel free to drop in sometime when we are visiting my in-laws in Jakobstad (Pietarsaari in Finnish). It's really worth seeing. But as it looked rather difficult, the rest of us didn't even try to do it. After the wineglass music and the match tricks, our Christmas lunch continued in high spirits.

Next, on New Year's Day, my wife threw a bachelorette party for a friend who had been her bridesmaid of honour, and for whom she was now matron of honour. The party included a dinner, during which - so I've been told - some drinking was done from wineglasses, and at some point my wife was inspired to show the others how to play them. As you have probably guessed, everybody at this party, too, tried their hand at ringing a tune from their glass.

Telling me about the evening afterwards, she was obviously a bit uncomfortable when she came to this part of it. When I asked her why, she finally confessed in a low voice that she rather regretted having shown all her friends how to play the glasses, because now everybody knew how to do it, it no longer seemed so special.

That was a sharp observation she'd made! A trick loses its value if everybody knows how to do it. There's no longer anything special about it. At least, this is how we always seem to think. On the other hand, you can't claim that music is more beautiful if you don't play it, than if you do. Or that an untold joke is funnier than a told one. And it can't be fancier to play a wineglass alone than to do it for an audience. But that is often how we think.

This story of playing on wineglasses is an excellent example of the notion of supply and demand on the loose outside the world of business. It slips into our everyday thinking and is so underhanded in the way it infects our behaviour that it goes unnoticed.

This way of thinking has been with most of us since we were children. It is what is at work when two children tell a third, "We won't play with you!' It's as if their friendship grows stronger from not playing with others.

In addition to which, "we' might "have a secret that we're not telling you!' Children's secrets can seem amusingly insignificant to adults, but what a secret is about is not what matters - the important thing is that they are not telling it to others! Adults carry this exact same model of operations on into the world of trade secrets. Often, the kind of stuff branded a trade secret can also be absurdly insignificant, but the important thing is that they don't tell others about it. Today's companies are at least as interested in the things they don't do as the things they pretend to be doing and producing. And the doings of such companies aren't always any loftier than kids playing in a sandbox. In the Finnish magazine Tietoviikko, a columnist once wrote about his friend's experiences at a new media company that has since gone bankrupt. There, it was said, they generally spent more time writing non-disclosure agreements than they did doing any real business. In hindsight, the guy was quite happy about it. You really wouldn't want anybody to know about the kind of stuff that was going on inside the new media bubble!

In the light of these observations, there's an ominous sense that much of what we do is done with a logic of mean-spiritedness, whether it is in business or in our everyday lives! We handle our relationships with other people the same way Arabs handle oil production: "After yesterday's meeting, OPEC announced that it won't play with you anymore.'

hingo Sun, 2006-08-27 18:24

The morals of farming

The morals of farming

The French Beaujolais article strengthened my stereotypical image of the French and particularly French farmers. They're immoral creeps, they are! And by that, I don't just mean that pouring good booze down the drain is immoral, even though a good number of my fellow countrymen would consider it so.

What particularly struck me about the article was that nowhere did it question whether or not there might be something even slightly irresponsible about pouring good wine down the drain - and this is me thinking of wine as a foodstuff now, not as an alcoholic beverage.
The job of a farmer is to produce food. Without food we die, so this is not an entirely unimportant issue under scrutiny here. And there's more to it than that, since you could argue that the point of working is to produce wellbeing - food, health, security, entertainment, and so on.

"Yeah, yeah,' I can hear you thinking, "but wine is not food. The point of wine is to be rare and expensive, a treat. Otherwise there'd be no snob value! And snob value is half the fun of drinking wine. It's not as if they're pouring milk and potatoes down the drain.'
Maybe so. I've lost my faith in French farmers, but you might be right. Because nobody would actually throw away real food - would they?

They most certainly would, and do. I claim that, like everything else we're doing these days, the actions of farmers and governments are all too often based on a mean-spirited logic.

hingo Sun, 2006-08-27 18:27

Mean-spiritedness and EU farming subsidies

Mean-spiritedness and EU farming subsidies

As is widely known, all farming in Europe is based on a massive system of subsidies. For some reason it seems farming is such unprofitable work that farmers need to be subsidized if we are to have anything to eat.

I wonder if anybody knows all the political reasons behind the farming subsidies? The least likely of them might not seem to be national security. But because we up here in the north have considerably less favourable weather for farming than our southern European friends, it really is a question of national security that our farmers get their subsidies. When it comes to the production of food, most people would consider it vitally important for each country to maintain a certain level of self-sufficiency. And because those of us living at Arctic latitudes can't possibly compete with the farmers in southern Europe, we must pay our farmers subsidies. Even I can see the point of that. What I don't understand is why French farmers also get subsidies, and in particular I don't understand why they get paid more than their colleagues in the north!

OK, so I don't understand the EU farming policy, that's OK. But I do know there's a lot of talk in the EU about quotas. There are quotas for milk, quotas for eggs, and quotas for grains. When a farmer gets a certain subsidy for his work, he also commits to not exceed his quota. Because, if farmers did exceed their quotas we'd have more food than the citizens of the EU could eat, and in no time we'd have the same crisis on our hands as the Beaujolais winegrowers.

In a word, Europe's farming policy is based on mean-spiritedness. The subsidies policy is based on farmers agreeing not to produce more food than their agreed quota. When one considers that a great number of people on Earth are starving and many of them actually die of hunger, this policy seems extremely questionable.1 Yet this gets very little coverage in the media, perhaps because we've come to accept that being mean-spirited is normal and sensible. Ironically, both farming and commerce are often spoken of as being productive when actually it is being mean-spirited.

  • 1This does not deal with the fact that dumping European over-production in developing countries would also cause problems, as it would make their domestic farming unprofitable. However, this question also relates to the law of supply and demand.
    In the World Trade Organization negotiations on free trade held between the US, Europe, and several developing countries in 2003, a miracle occurred: pharmaceutical companies were willing to make concessions to their patents because the developing countries demanded it. In the end no deal was done because the countries in the EU, in particular, were not willing to give up their farming subsidies. For some reason that is just too hard for them.
hingo Sun, 2006-08-27 18:29



The logic of mean-spiritedness that follows from the law of supply and demand, can also be found in all fields of commerce where there is any so-called "immaterial property', including information technology (IT), music, film, and other kinds of entertainment, but the most glaring examples of it occur within the world of computers.

It is interesting that in the information business, handing over the product never means the giver has any less of it. Digital information can be endlessly copied. Einstein's famous dictum is true: "If I give you a penny, you are a penny richer and I'm a penny poorer. But if I give you an idea, you have a new idea but I still have my own.'

Unfortunately, Einstein's principle has not been the guiding light in the IT business. Instead of treating digital information in the way most appropriate to it, it is treated as if it were a natural resource that is running dry. It is sold in cardboard boxes just as oil is sold in barrels.
An average computer program costs, let's say, a bit less than EUR 1,000. Of course there are more expensive software programs - large corporate systems can cost up to EUR 50,000 - but even a grand is a still lot of money. Usually, a computer program is bought in the tangible form of a CD, which is probably additionally packaged in a pretty cardboard box. The manufacturing costs for one CD, including the cover, is about EUR 1. The cardboard box is even cheaper. To that you'd have to add transport and warehousing costs, and the retailer must have their commission. But the fact remains: when we buy a computer program, 99 per cent of what we pay is for nothing.

Of course it's not really for nothing, because we're not buying just any CD, but one with some specific software on it. Computer programs obviously don't just self-generate, which means the programmers must also be paid. But even so, the physical mechanics of commerce in the field of IT is inappropriate to digital material. And that has given rise to a certain tension.

One way this tension is expressed is through piracy. Piracy means that a computer program (or any other product available through IT) is copied without permission of the originator. Copying, of course, doesn't cost anything, nor does it take anything away from anyone - that is in the sense that nobody has less computer programs than they had before some copying was done. However, piracy is illegal and a lot of time and money have been spent and tears shed in fighting piracy in both the IT and entertainment industries - almost as much as in the US versus Arabs fight over Iraqi oil.

But we also have a lot to learn, particularly from the IT industry, about breaking the cycle of mean-spirited business practices. An ever-increasing number of programmers are writing their software based on the principle of Open Source. In the Open Source movement, there is no ban on copying software. Actually, it's encouraged. There is no disguising of how the programs work; instead, the source code in Open Source programs is, as the name suggests, open and freely available.

The existence of Open Source programs in itself is hardly surprising. Thanks to the Internet, there need be no costs for distributing a program, which means it would be far more surprising if the Internet wasn't used to distribute free programs. What is extraordinary about Open Source is that in recent years it has become apparent that in many ways the Open Source programs are often better than the corresponding closed source programs. It would seem that by working in accord with the inherent nature of digital information, rather than doing its utmost to fight against it, the Open Source community has released an extraordinary resource, one hitherto much misunderstood and neglected within the IT industry.

The power of this is best illustrated by the question, if Open Source programs, such as Linux, are better or merely just as good as the corresponding non-open programs, then where do they come from? Who makes them, and who finances their work?

At first, it can look as if the Open Source programs are self-generating! Of course, that can't be true, and isn't. But when you ask who has made them, the answer is nobody in particular! For example, Linus Torvalds has been working on his Linux for more than a decade, but even so he has only written a small part of the code of the Linux kernel. Most of it has been written by somebody else. Who else? Many other like-minded people. Some do it for fun - Linus is one of them - others do it for work.1 Aha, so what corporation are they working for? The answer to that is: several unconnected businesses. However you twist it and turn it, the end result is that no one person designed Linux, it wasn't financed by any particular party, and you could almost begin to think it was self-generated! Behind Linux, there are lots and lots of programmers who are not mean-spirited!

The Open Source community is turning the practices of the IT industry upside-down. And what is most encouraging about this is that in practice Open Source code seems to be proving that mean-spiritedness is the worse option - openness is better. Could that also mean that music is more beautiful when played and that jokes are funnier when told? Can we learn to identify and eliminate the logic of mean-spiritedness wherever it's at work in other areas of life, so that along with open code, we can also have an open mind and live a more open and generous life?

  • 1Actually, while this book was being written, Linus started working for a foundation called the Open Source Development Lab, where he is paid to work full time on Linux - for the first time in the twelve-year history of Linux. See also Just for Fun: The Story of an Accidental Revolutionary (2001), Linus Torvalds, David Diamond, Texere Publishing, US.
hingo Sun, 2006-08-27 18:54

Linux and Open Source

Linux and Open Source

My aim here is not to prove Linux is better than Windows, or that Open Source is the only right solution. I'm certainly not trying to deny the fact that oil is a diminishing resource. But I do hope to prompt a bit of rethinking of some prevailing attitudes. Next, I'll be taking a look at the principles, values and practices of the Linux world and, who knows, we might even learn something from them.

Approaching the end of this introductory Part One it's probably a good idea to accept that some readers may never even have heard of Linux or the concept of Open Source. So, before proceeding any further, here's a short-and-sweet summary of the background to Open Source programming.
Average computer users believe, perhaps justifiably, that they have never used Linux. Most probably, they are using a Microsoft operating system called Windows together with other programs by Microsoft and a few other companies to handle their daily computing requirements. But indirectly all of us will have made use of programs produced by the Open Source community. The text you are reading right now has been written on a computer running on Linux, using a word-processing program called OpenOffice.

If you've used the Internet, you have definitely been in touch with a web server using the Linux operating system. More than 60 per cent of all website pages on the Internet are there thanks to an open server program called Apache. Most e-mails are passed on to their recipients through an open mail server program called Sendmail. These are all well-known Open Source programs. So, quite unknowingly, you probably use Open Source programs on a daily basis!

As I explained earlier, the usual practice in a programming company is for the source code of a computer program, the text the programmer writes, the work itself, to be kept secret. Usually, it isn't shown to anyone outside the company, and the finished program is distributed only in machine code, that is in the form in which the computer uses it. In practice, it is impossible for anyone to read a program in machine code. In addition to which, the use of the program in machine code is limited through various legal clauses to which the buyer of the program must agree before the program will download onto their computer. One such typical clause states that the buyer agrees to install the program from one CD onto one computer only. So, if somebody has two computers they should buy two copies of the program they want to use, even though there is no technical reason for doing so.

The Open Source community work to a completely different set of principles when producing their programs. The use of an Open Source program is not artificially limited in any way. The source code is available to all and sundry. It can, for instance, be published on the Internet. Not only is the source code freely available for other programmers to read but also for them to use in their own programs, even though the code has been written by others.

In recent years, these simple principles have become a serious challenge to the traditional programming industry. Even though this industry is still going strong, it has begun to seem that systems based on Linux and other Open Source programs are often both cheaper and qualitatively better. Lately, many big information-system projects have been based on Linux. And as I have already said, for web servers, using Linux is the rule rather than the exception.
That's as far as this text will go in presenting the history or technical background of Open Source programs. However, for those who may want to read more I would recommend the following books and links.

Rebel Code: Inside Linux and the Open Source Revolution
Glyn Moody, Perseus Books Group, 2001
A narrative history of Linux and Open Source, with first-hand accounts from more than fifty interviews of prominent leaders in Open Source.

The Cathedral and the Bazaar
Eric S. Raymond
Available as a book: O'Reilly, 2001
On the Internet:
A seminal text of the Open Source movement, this essay presents the work culture and dynamics of the Open Source community. In the days when it was still necessary, this text played an important role in defending the financial viability of Open Source programs.

The GNU Project
Richard Stallman
Published in the book: Open Sources. O'Reilly, 1999.
On the Internet:
A look at the history of the Free Software movement by its founder.

The Open Source Definition
Bruce Perens
On the Internet:
Ten principles that the licensing of an Open Source program must fulfil.

Just For Fun: The Story of an Accidental Revolutionary
Linus Torvalds and David Diamond. HarperCollins, 2001.
Autobiographical story of Linus Torvalds, which tells the history of Linux along with Linus' ideas on the meaning of life.

The Hacker Ethic
Pekka Himanen. Random House, 2001.
The Finnish philosopher's ethical take on the principles of the Open Source community.

hingo Sun, 2006-08-27 19:02