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Why OLPC (One Laptop Per Child) is not working: the economics behind the technology and the idea.

Posted on: 07-Jan-2008

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One Laptop Per Child (OLPC): A misguided merger of capitalism and socialism.

 

 

Intel’s exit from the OLPC is major sign that this idea is in trouble, not that Intel is some evil corporate giant driven by greed, as I’m sure some would like to paint it. But, let’s step back from this event and look at the OLPC to ask is it practical? Let me start with the disclaimer that I’ve never been a fan of the OLPC since it got started. It’s not because I am against children having laptops. It’s just that I think OLPC is over laden with marketing smoke and mirrors and far too complex an economic proposition to be successful.

 

First principle is that no child anywhere in the world should be computer illiterate, computer literacy has become essential to everyone’s future and we need to make sure that every child has access to computers. I doubt that anyone disagrees with this, nor do I.

 

But trying to make this principle a reality immediately creates problems. As everyone who is involved with schools should know: technology evolves at a rapid pace and must be replenished every two years to keep up with technology. Second as children grow, their computer needs outgrow what they have, just like they outgrow their clothes. So OLPC is fundamentally flawed in the sense that children need a steady stream of computing power that will never be filled by just One Laptop. They’ll need many laptops, as all of us do. You can no more feed a child with a one meal than you can with a One Laptop. That’s just part of the problem and really doesn’t touch on economics, which I promised to focus on.

 

So let’s start with the OLPC’s mission: “to develop a low-cost laptop—the "$100 Laptop"—to revolutionize how we educate the world\'s children.”  It is a big leap of faith to believe that the problems with education are solvable by giving children a laptop. This was the same idea behind putting computers in classrooms more than 20 years ago. The computer helps, but it does not replace the teacher. There are huge social integration issues with the technology in training teachers and parents how to effectively integrate computers into a child’s development. If this really did work and was so effective, then there should be a huge market for a $100 laptop today. Since it’s not there, the problem must be something else.

 

One key assumption of the OLPC is that developing a $100 laptop is difficult to do and that it takes a large not-for-profit organization to pull it off. It is true that it’s been difficult to get their design close to this target. Yet at the same time, the flashing lights on kid’s sneakers are sometimes driven by processors with close to a MIP of computing power. This is a level of performance once reserved for super computers. So it’s quite possible that a $100 laptop for children could be designed and made, the bigger problem is that there is not a market for it. Yet there is a market for $100 sneakers with blinky lights that use similar amounts of processing power.

 

Here lies the crux of the issue. If there is a market for something, people are willing to buy it and producers are willing to make it for a given price. Below this price: producers won’t make it. Above it: people won’t buy it. A true capitalist (or in the more politically correct language of today, someone who believes in market based solutions) looks at the above problem and concludes that there is no market for $100 laptops because none exist. If there were buyers, someone would make them.

 

But wait, there’s more. Markets don’t always work as efficiently as advertised by capitalists. A true socialist (in politically correct language, it means someone who thinks organizations like the government can do a better job of running things than a market can, which is based on the idea that it can hire people smarter than average to make decisions for the average and below) decries the above situation as being one were the average person doesn’t have their priorities set right and that someone smarter can make better decisions: hence the OLPC. It is also why charities exist and is generally for the good, but also . . . the most extreme endgame of this ideology can breed megalomaniacs like Stalin or Hitler.

 

Thus, OLPC may be a laudable goal or it may be a bunch of ivory tower types trying to push their ideology on the masses and gain a lot of power and money in the process. But, this is off track again, with respect to the real economic issue.

 

The biggest economic issue with OLPC is that it is a charity and it is producer at the same time. Yet it is also neither: they are not listed on the big charity checker websites, like charitynavigator.org. Also, where it really seems to have gotten out of line is in developing an entirely new standard for hardware and operating systems. Doing so probably means it will never be cost competitive to the PC standard, much less, Apple. Moreover, because it is a product being produced by companies, they have a profit motive. Meanwhile, like most socialist programs, they have the associated problems of inefficiency and delivery problems because there are few individual incentives (which you can see at their website). 

 

OLPC has married the worst of socialism and capitalism. Why not simply have an efficient charity that collects money to buy laptops in massive volumes at competitive bid and then distribute them? This is what CARE does so effectively. If CARE were like OLPC they would be taking on Monsanto in genetic crop development and then contracting farmers to make the food so they could distribute it. See why it is socialized technology at its worst?

 

I may get a lot of hate mail for this, but my bigger fear is that it could really set back some really good ideals: most importantly that computer literacy has come to be as important today as reading, righting, and arithmetic came to be in the last millennium. I hate seeing good money and effort going to waste.

 

 

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