Normal software development in economic terms is normally treated as
a fixed cost to produce a "product". Fixed costs determine market
entry and exit points, not profitability. Phone support, bulk built
to order, and the way that most Taiwanese firms do hardware are
variable costs. Economically speaking it's an apples and oranges
comparison, and to say one follows from the other is not really
accurate.
Free software development on the other hand is a bit more tricky, and
I could see how exporting the work in certain scenarios would make a
lot of sense. However, to this point most of us working in the Free
Software industry are funded by companies working on "products".
(You're sounding like a lot of my friends in the SARHK when speaking
of China Alan 8).
Asside- Fixed costs also determine other things like the number of
competitors that can operate in a market for a particular good.
Pretty much all software is an Oligopoly whereas the other things you
mention are much closer to true competition. The reason Free
Software development is more tricky is that if Free Software were to
rule the world, then it would be individual consultants vying for the
same business of modifications to Free code bases. So, in the
alternate universe where all software is Free Software, Perfect
Competition would probably rein supreme and there would be 1000s of
consultants vying to make custom modifications for particular
companies. In that alternate universe, then programmers from western
countries would be probably be driving dump trucks by day, and
programming at night for fun. Luckily I learned how to varnish and
stain wood when I was a kid, so even if the alternate universe hits,
I'm ready.
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