Rent Seeking and the Demise of a Sharing Culture

The classic example of rent-seeking is that of a feudal lord who installs a chain across a river that flows through his land and then hires a collector to charge passing boats a fee (or rent of the section of the river for a few minutes) to lower the chain. There is nothing productive about the chain or the collector. The lord has made no improvements to the river and is helping nobody in any way, directly or indirectly, except himself. All he is doing is finding a way to make money from something that used to be free.

Robert Shiller


The Great Chain protecting Fort Webb

A recent post on the OSS Watch Team Blog by Jim Farmer, “Open Source Software Licensing Trends”, points out that AGPL makes up less than 1% of the open source licenses out there and the trend is to become more open, not less.   This got me to thinking more about this progression over the past 35 years, my recent posts about Kuali, and how higher education’s knowledge sharing culture is adapting and changing.  Farmer writes,

Higher education has traditionally been a knowledge “sharing” environment. Early software was exchanged without license and, in practice, without restrictions. As the monetization of intellectual property, including software, becomes pervasive more restrictive software licenses have been introduced and enforced. These licenses impose legal duties of the user of “open source software” that could be unexpected and have undesirable consequences.

In the Kuali situation, the Kuali foundation board basically shifted the projects’ development activity to the for-profit KualiCo and imposed the AGPL license.  However, it is the same goods, just different packaging.   So the question with the change from Kuali to KualiCo is…Does it add value or rather is it designed to seek a way to charge for something that was previously free.

While reading and wrestling with the sharing and productivity question, I  stumbled upon the term “rent-seeking”.  What a revelation this was in my personal conflict about what is productive and what is not!    I never really had a word or phrase to describe this increasing reliance in our society on required unproductive activities, but my discovery of  Joseph Stiglitz’s  “The Price of Inequality”  provides a great discussion of this topic. Thank goodness for Nobel laureate authors.

The “Price of Inequality”  is essentially an attempt to change the debate about an unequal  two-tiered society.  He suggests that inequality violates moral values, and in a money-driven political system the most influential are granted excessive power.  Those with the power use it to protect themselves from competitive forces by winning favorable tax treatment, ­protected market share and other forms of what economists call “rent-seeking.”

At Educause 2014, “the father of Kuali” Barry Walsh stated for Inside Higher Ed, in reference to the change from GPL to AGPL licensing,

I’ll be blunt here, it’s a commercial protection  —  that’s all it is.

Seems this statement could almost be part of the rent-seeking definition. For whom is commercial protection provided?….that would be KualiCo.

To make matters worse, just like in a typical rent seeking scenario, it became obvious early on to many that KualiCo was really formed way before the community meetings took place and “friends” secured their places in the new rent-seeking, river chain collector positions either directly or via “acquisitions” with no RFPs, community involvement, due diligence, or disclosures whatsoever.

With the ownership of the licensing transferred into the hands of KualiCo,  Shiller’s example of the feudal lord at the beginning of this blog post is personified with the change from Kuali to KualiCo. It is is very discouraging for those who need a way to make administrative computing software affordable without vendor lock-in.

”Is this change to KualiCo productive and will Kuali be better than it was before?”  Will institutions like mine benefit from this change?

There are many signs of intense desire to do rent-seeking in the Kuali to Kualico situation.  My blog readers have pointed out several examples that have rent-seeking characteristics, including the new contribution model for the member institutions:

Every institution that is submitting a contribution has to now provide specs, documentation, technical resources, and fix bugs caused by their contribution during testing. Additionally, functional resources will provide said specs, and also provide help testing.

This is quite a lot of work for an institution that still pays fees, and now also must donate code and functional/technical resources to contribute to a product such as KFS.

What a great way for KualiCo to get a free staff of workers to help better their KualiCo cloud offerings. Big institutions may be too slow to change and adopt a whole new version with the contribution. If another school wants that one contribution, they’ll incorporate it in their next upgrade (long term) or get it from the institution directly (short term). So in my opinion it seems it really mainly benefits the KualiCo cloud initiative since they probably are pushing for vanilla hosted products. In either event, they’re asking a lot of institutions who pay their dues and do all that extra work … and for what benefit?

Another example of which I have been told is a shift from Kuali’s open JIRA system to KualiCo’s private JIRA system.  They essentially created a new system and have been using it to manage the important work there without oversight by the community. As a result, JIRA references in the Kuali Foundation’s KC release notes now point to the private JIRA tasks maintained by KualiCo, making them inaccessible to regular community members.  Individual institutions have been relying on the information in JIRA to support themselves. With that resource no longer available, they have become less self-sufficient and more likely to have to rely on paid support from KualiCo.

I have stated my dislike for the gated community of Kuali and the change to KualliCo does nothing but reinforce the gate. A stated need to speed up development time to create a complete open source administrative software suite and a reliance on rent-seeking in the form of vendor lock-in by KualiCo  are very conflicted objectives.

The Kuali Foundation board installed a chain across a river that flows through their land and then created a collector, KualiCo, to charge passing boats a fee.

It is my observation that universities challenged by KualiCo have savvy river boat captains navigating the best course for their institutions. Many institutions together will likely dig a canal to divert the river so that they can bypass the rent seeking Kuali foundation free of tolls and have the river benefit the downstream universities in an open and fair way.

Stats from Old Blog:

April 30, 2015 | Filed under: ERP, Higher Education, Kuali, open source and tagged with: , , ,, , ,


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