| I disagree very slightly. Mostly with this part: >So, with hardware, the cost of the workforce plays a major role, while with software it does much less. To produce physical things, you need a lot of people who are not well-off, and for whom factory work is an upgrade of their financial and social standing. A "developing country", with huge swaths of population leaving rural life for a better city life and factory work, is best in this regard. Ideally you sell your product to richer folks, maybe outside the country of production. You don't need a lot of people who are not well-off. You can automate the entire process. The problem with automation and labor saving technology is that it is capital intensive. The higher the capital investment per job (higher capital intensity), the bigger the chunk of money that flows to capital rather than labor. This means that the cost of the workforce in a software company plays a bigger role than in a hardware company, where financing costs to pay for labor saving technology play a bigger role. There are mining companies in Africa, who have nothing but an army of people equipped with shovels digging a small scale open pit mine. There is no way the labor cost here is the biggest constraint. An excavator and wheel loader could accomplish more with less people, but it would mean getting a USD loan to import foreign equipment and then selling for export to pay the foreign debts, rather than local production. |