Category: Economics

On January 2, technology investor Paul Graham published two posts. One on Refragmentation, about 20th century mass organizations breaking into pieces. Another on inequality, about why it’d be best to directly fix problems like poverty rather than fix inequality per se. What puzzled me was the visceral hate the inequality post produced, even by a number of tech insiders. Graham went so… Continue reading On the harsh reaction to Paul Graham’s post on inequality. Adapting Tyler Cowen’s laws to writing on the internet.

My favorite analogy for understanding technological unemployment is “peak horse.” Below is the version told in Greg Clark’s book A Farewell to Alms: there was a type of employee at the beginning of the Industrial Revolution whose job and livelihood largely vanished in the early twentieth century. This was the horse. The population of working horses actually peaked in… Continue reading Since cars replaced horses, won’t robots replace people? The future of technological unemployment.

I just finished Carlota Perez’s Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages. First thought: not for everyone. It’s big picture tech cycle theorizing about economic history. Yet I found it first rate, and can see why it’s popular with some Silicon Valley investors. In particular Marc Andreessen cites Perez so often, I finally bought the book. It got me thinking. Our current tech cycle is well captured by… Continue reading The current Perez tech cycle is software driven. Which is great, except now monopoly is eating the world.

Last week Adam Ozimek posted an interesting piece Big Data Versus Hayek. He noted how centralized algorithmic price setting, for real estate, airlines and hotels, was displacing local and decentralized decision making. Because it works better and is more profitable. And how this development was very “un-Hayekian.” Friedrich Hayek of course famously arguing centralized planning and pricing could never do… Continue reading The algorithmic hand is replacing the invisible hand. But Hayek still applies.

Amazon’s hard fought battle with book publisher Hachette has been widely covered, as Amazon brutally squeezes their supplier for lower ebook prices. More here. Despite all the coverage, I think the much less discussed Kindle Unlimited announcement is more important. With Kindle Unlimited, Amazon is charging $10/month for all you can read ebooks. Though the terms differ, it’s similar to other ebook subscription services… Continue reading Internet economics is relentlessly pulling ebooks and libraries towards subscription streaming.

I’m an unabashed fan of Matthew Yglesias’ writing. See how he starts this recent explainer on Piketty’s book on inequality:

As widely reported, Facebook acquired messaging service WhatsApp on Feb 19. My preferred take is from Ben Thompson here. For a more skeptical view see Arnold Kling (here and here) or Matthew Yglesias (here). But rather than debate the acquisition, I want to narrowly focus on WhatsApp’s freemium model. You get the first year free and pay $1/year for… Continue reading WhatsApp’s first year free model deserves to be emulated

One of the great pleasures of following the tech world is seeing it rocket makers and doers to the top. Brilliant people guided by powerful intuitions, with little tolerance for theory. Never boring! But theory distrust has a downside, as shown by last week’s mixed reaction to the excellent rant about the game Dungeon Keeper… Continue reading Internet pricing, Dungeon Keeper and the case for Minimum Viable Free Product (MVFP).

Tyler Cowen’s excellent and widely discussed Average is Over argues computers will accelerate our existing trend toward a more stratified society. People adept at teaming up with computers will get richer, while those who aren’t will get left behind. Hence the title. Average is Over. What I found most striking was Cowen’s causal mechanism. He argues… Continue reading Average is Over could use more focus on the Zero Marginal Cost Economics of software

The announcement that deservedly got the most attention at the Oct 22 Apple event was Apple dropping the price of their consumer software to zero. iOS was already free, but now the free list includes Mac OS X, iWork (spreadsheet, word processing, presentations), and iLife (photo editing, video editing, music editing). The New York Times… Continue reading Business Models for Free Software