Checks and Balances; Cost and Value; The Importing Developing World.

A few things teased at me today, and though I haven't come to concrete conclusions I think they are worth discussion.

The story "A new car for 3,330 pounds?" caught my eye in my morning perusal of Reuters. It caught my eye because it seemed like something worthwhile for people in developing countries, and it seems that this is the idea Renault has for the Renault Logan. But what caught my eye was this particular quote:

...Despite revamped stamping lines, a new assembly workshop and the arrival of on-site suppliers like France's Valeo and U.S.-based Johnson Controls, there is one thing that takes visitors to the factory back in time -- the number of workers.

Renault has axed half its staff but the factory still produces fewer cars per employee than any of its other plants, with lines of men and women lifting sheet metal onto the stamping machines by hand -- a job done by robots in France.

While Dacia concedes it must do better to meet internal targets, it also notes that with wages at just 150 euros a month -- roughly the national average but less than a tenth of what a typical Frenchman earns -- there is not much incentive to modernise.

"This is nothing like Renault's ultra-modern factories in France in terms of automation," Simon Valin, Dacia executive director, manufacturing told Reuters. "Why would we install expensive robots when labour is so cheap?"...

Indeed. Why install expensive robots when labour is so cheap? So that had me wondering, since the plant in question is in a developing country. Romania. So this is really of interest. I weighed it for value for posting at WorldChanging.com, and I still may - but the quote about labour being cheap bothered me. Maybe it shouldn't, but it still does.

Not too long ago I received some email about solar equipment which could be manufactured local to wherever it was purchased. In other words, if the cost of labour is low the cost of the product becomes lower. The integration cost becomes lower. And I thought that this was interesting, responded, and still await a message. It appears, at this point, that it was Spam or Scam (or both). Yet I thought the idea was good. Maybe too good.

Meanwhile, on the Digital Divide mailing list, the article UN calls on private sector to bridge digital divide was posted, and it made me pause for thought a bit more. I made comment about corporations actually creating the Digital Divide in the first place. There's a bit of irony involved there, I think.

Corporations that export things to the developing world do so for profit, not charity. It would be foolish to think otherwise. Someone mistakenly thought that I was talking about Microsoft, or software, but that's probably because I am a Free Software advocate - and therefore I must hate Microsoft (not so). But this isn't just about software, or intellectual usability, or what have you. This was a little different, and I tried to get my point across with the costs of hardware. I did reference Microsoft, but these days it's hard not to talk about something related to them. Sort of like having a shotgun, shooting at a barn and being yelled at for hitting the barn. Here's part of what I wrote:

You see, if a labourer is working so cheaply, then how can said labourer afford a computer from this salary? All things being equal, most IT commodities in my part of the world come from the United States - the hardware, mainly from Tampa, Florida (where the wholesalers shop for essentially what is repackaged Far East product), and the software from Redmond, Washington.

For reference, the US dollar sells for $6.29TT from the bank here.

Let's talk about the cost of a motherboard. Figure about $50 US gets one a computer motherboard. And, as I recall, the minimum wage in the U.S. is about $6 an hour (some change too, I recall). So someone working for minimum wage works 8.333 hours to pay for a motherboard. A day. Some people on this list may not realize that, but there you have it.

Now here's the interesting part. The same part would be sold for around $315 TT (the cheapest motherboard on the market, presently, which is probably less than $50 US). Minimum wage here is around $8TT an hour. So a person would have to work almost 40 hours to get the same thing. A week. Many people on the list probably haven't thought about this.

As far as software, I referenced an interesting study about License Fees and GDP per capita: http://www.knowprose.com/node/view/115

So - although the labour is cheaper, and therefore things can be produced cheaper locally, there's a bit of a problem when it comes to purchasing power of the labourer. Local products, the labourer can still get. Yet the goals of the Digital Divide discussion group and ICTs are to make machines more usable for people in the developing world and even parts of the developed world. How can this be done if computer parts are imported into a developing country at the same prices at which they are sold in developed countries?

If it takes 5 times as many man-hours to obtain the same equipment, how is a developing nation to catch up? It can be done, that's something I believe - but I'm not sure how. India has done a pretty good job, and by all accounts Brazil appears to be on the fast track. So it can be done.

As the thoughts were fermenting, I went to teach a class this evening. In the back of my mind was the whole 'cost vs. value' concept. The concept is simple. Air, at this time, is free to breathe. Yet the value of air can be determined by not having any. So air has a high value and no cost. When it comes to any sort of business, the idea is to give more value than the cost.

With this on my mind, I swung by my Great Uncle John on the way home - he turned 89 last week, but he's sharper than most 30 year olds I know. I bounced it off of him, and though he didn't answer directly, he told me a little story of his life here in Trinidad back during World War II.

During this time, tires (tyres) were hard to come by in Trinidad and Tobago, so the taxis did not go as far or as fast. Apparently they bolted rubber onto the sidewalls when the sidewalls weakened (tube tires) so that they didn't have to buy any during this time. But, as it was, Uncle John had to go from Port of Spain to Cunupia. Taxis were a difficult thing, and he ended up walking most of the way home (a respectable distance) on what he recalls as a moonlit night. In fact, he was quite happy it was moonlit; there was sugarcane on either side of the road, and if there were no moon I imagine that it would have been easy to get lost.

Now, Uncle John got home at a physical cost - he walked about 20 miles - but he did so because he valued being home that evening.

Cost and Value. When it comes to computer parts, it's also a matter of cost and value. You and I, people who use computers all the time, probably see more value in computer parts than the average person who doesn't use one everyday. So you and I might sacrifice more, pay a higher cost, than someone who doesn't value it.

And after all of that, the Head Lemur posted Free does work, Microsoft just doesn't get it.

So I'm not sure where I stand on this yet. It's all unsettled. But I think it's about cost and value. I'll either finish this or flesh it out more as my mind comes back to it... feel free to leave your two cents below. This really needs to be thought out, I think.