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Imho, what was happening in the Silicon Valley economy looks much more like displacement of value rather than creation of value (1). Google/Facebook have displ

Imho, what was happening in the Silicon Valley economy looks much more like displacement of value rather than creation of value (1). Google/Facebook have displaced other ad formats, redirecting money to themselves. AWS have displaced IT technicians in other corporations, redirecting money to themselves. Apple is selling overpriced commodity hardware, redirecting money to themselves. Uber is displacing taxis, redirecting money to themselves. In other words, it's barely above zero-sum game. And US productivity statistics are clear - the aforementioned corporations grew 500%-1000% in their profits and valuations since 2010. Meanwhile, the US productivity has grown by 4.7%. Had the SV tech been a clear net positive to the economy, the productivity growth would look different. When the tech/telecom was truly creating new value (1995-2005), the productivity growth was at 27% that decade. (1) with notable exceptions: Microsoft really is creating value where one didn't exist before. So is Netflix, Amazon's venerable logistics and Tesla's drive to decrease battery costs

JumpCrisscross 5y ago
> the aforementioned corporations grew 500%-1000% in their profits and valuations since 2010. Meanwhile, the US productivity has grown by 4.7%. Had the SV tech been a clear net positive to the economy, the productivity growth would look different This is not necessarily true. The American economy is huge. Sections can grow slowly, sections can grow fast, all adding value while the bulk grows moderately. > When the tech/telecom was truly creating new value (1995-2005), the productivity growth was at 27% that decade 4.7% growth accumulates to close to 60% over ten years. (EDIT: I misread the original comment.)
- dukeyukey 5y ago
  > 4.7% growth accumulates to close to 60% over ten years. Sure, but I think OP meant productivity growth for the whole decade was 4.7%, not annually (though I'd like to see a source for that).
  - JumpCrisscross 5y ago
    > OP meant productivity growth for the whole decade was 4.7% Fair enough. Real U.S. total factor productivity growth from 2009 to 2019 was 5.8%; from 1995 to 2005 12% [1]. [1] https://fred.stlouisfed.org/series/RTFPNAUSA632NRUG https://fred.stlouisfed.org/series/RTFPNAUSA632NRUG
concordDance 5y ago
I think the ability to google things has provided immense, incalculable value, even if it's not value showing up in gdp figures.
- ponow 5y ago
  There are "personal values" and there is "exchange value". The latter shows up in GDP. Isn't the problem with search also similar to education? Its effect is indirect on the both the consumer of education and within that consumer's society: when education is "useful", it enables all kinds of increased trade, not necessarily in education proper. To do a proper experiment, I suppose we'd need to compare otherwise identical individuals with differing education. Similarly, we could compare people whose only significant difference is the amount of search using Google, and assess their effects on GDP. Daunting to carry out these experiments, but possible in principle, no?
  - CydeWeys 5y ago
    I'm old enough to have programmed a couple decades ago when you mostly had to rely on experimentation and manuals to figure things out. The experience today is much more streamlined. What might have taken me an entire afternoon to figure out in olden times can now take a single minute Google search. My productivity is substantially better now with the likes of Google, Stack Overflow, and all the other similar resources.
aikinai 5y ago
> Apple is selling overpriced commodity hardware This hasn’t been true since the 90s. And the rest of your examples are similarly ignorant of the incredible pace of innovation coming from a lot of these companies. Google ads might not be changing the world, but their peripheral technology certainly is. AWS and Amazon’s core business as well.
- FredPret 5y ago
  Just one correction; targeted ads have enabled the existence of many small businesses. Want to launch a board game aimed at left-handed nerds in a specific city? Before, you’d need a big media campaign that would also reach many right-handed non-nerds, wasting a lot of money. Now, you just need a few thousand $’s worth of targeted ads.
  - splithalf 5y ago
    Targeted ads are unethical and should be eliminated, the abuses are too obvious to enumerate. Prostitution and drugs have also enabled the existence of many small companies.
    - FredPret 5y ago
      Everything has an upside and a downside. Eliminating all targeted ads will lead to entrepreneurship being restricted to the rich or the well-connected, which is not only unethical but anathema to me and many others. I think the way forward is somewhere in the middle, targeted ads with restrictions and opt-outs. Polarization isn't a path to progress. As an aside, prostitution doesn't have to be the crime magnet it is today (in medieval Europe the Church ran brothels!) And while most drugs are unambiguously bad, some are considered safe enough to be traded openly and very profitably - caffeine, alcohol, nicotine, and now marijuana.
      - systemvoltage 5y ago
        I agree. It’s interesting to look at Trade fairs and exhibitions. “Furniture industry fair” is targeted ads so to speak and benefit the industry by bringing producers to consumers under a single roof.
sateesh 5y ago
You are arguing that Google/FB displaced ad formats, and cite Netflix is an exception. Isn't what Netflix doing also "displacing of pre-existing formats".
jopsen 5y ago
> Uber is displacing taxis, redirecting money to themselves. I lived in San Francisco 2013-2018, before Uber I very rarely used taxis -- to/from the airport maybe. Having moved back to Denmark, I again very rarely use taxis. But when I lived in the US, I used Uber many times each week. Sometimes to/from work. But taxis in Denmark is easily 5x as expensive, and generally unavailable on-demand. So now I was forced to buy a car, and call someone if I get a drink. Point being: Uber certainly replaced taxis, but they also grew the market dramatically. The taxi industry is just a casualty, the pie Uber created is much bigger.
- kawsper 5y ago
  Have you tried using Moove? It's the same on-demand concept of Uber, but it's Dantaxi that are behind it with certified taxi drivers: https://moove.taxi https://moove.taxi
  - ericmay 5y ago
    Is there something special about certified taxi drivers? Do they have a test to pass on driving skills or?
    - jopsen 5y ago
      Special drivers licenses, etc. insurance, etc. I'll be honest: the few times I've used a Danish taxi, they've been very good. In general it's like hiring black car service in the US.
  - jopsen 5y ago
    I'll give it a shot :) Pick up time 8 minutes in Aarhus as of writing. If I go to Ikast it's 24 minutes. And a 10min ride is 25 USD. A hour ride is about 200 USD. Might try it if I ever need a taxis, but it's still a bit pricey.
- ABCLAW 5y ago
  I think the point is that you used the service when VC money was being used to subsidize your ride. This is zero sum. Obviously the market for rides increases once the cost is artificially depressed. From the UX perspective, Uber combines payment processing and ride ordering in an app. Obviously an improvement over calling a Taxi dispatcher and telling them when/where to pick you up. But is that billions of dollars in value? Or is the majority of that value just being scooped up from previous incumbents? The economics of the industry haven't changed dramatically - it's expensive to pay people to be your chauffeur.
simonh 5y ago
I people freely move from one service or product to another, usually it's because the new service is cheaper or better than the old service or product. That's direct value to the end user right there. Moving to AWS from running your own data centres is vastly more cost effective for most companies, you can build systems faster, you can scale them instantly, you can move resources between regions easily, you can focus on your company's core competencies. AWS creates massive value, that's why we use it. I used to look up the phone numbers of restaurants in a phone book, but now I use Google. That doesn't mean they are equivalent to me and they provide the same value. Looking up a restaurant on Google Maps is quicker, I can do it from anywhere, I can look at reviews and I can see exactly where it is and get routing direction. The experience now is orders of magnitude more powerful and that creates huge value for customers and businesses. Apple hardware is highly customised, and dramatically better than anything their customers have with better performance and advanced features like machine learning and secure authentication all implemented in custom hardware. That's been true on the phones for many years, and now with their in house designed desktop processors it's true for the Mac as well. Although the Mac has had unique custom hardware like the T1 and the 5K iMac video system for a while too. You cannot buy hardware like it anywhere else, at any price.
- withinboredom 5y ago
  > You cannot buy hardware like it anywhere else, at any price. Strange, I bought a PC with 2x the specs at the same price as a maxed out Mac…
  - ChuckNorris89 5y ago
    I'm no Mac user but the value of a Mac to its users has more to do with its seamless integration with all other Apple products and services rather than a purely utilitarian perspective in raw specs/performance per dollar. This has no value to me as their pricing is out of my budget and I don't like the idea of being locked into a proprietary ecosystem, which is of course down to everyone's personal preference, but judging by sales numbers, it looks like Apple's ecosystem has gotten some things really on point.
fakedang 5y ago
Correction, AWS hasn't replaced IT, just added a bunch of requirements now for it eg:AWS certifications. They replaced the hardware aspect though.
splithalf 5y ago
It’s a small fraction but Amazon creates content too, maybe even more now with mgm, and content creation looks less like displacement, though there’s some of that too (not enough IMO)
gumby 5y ago
> Imho, what was happening in the Silicon Valley economy looks much more like displacement of value rather than creation of value (1). Google/Facebook have displaced other ad formats, redirecting money to themselves… I see your point but mostly disagree with it. The cost to advertise has dropped so while they have displaced some TV ads (still the largest) and most print ads, more people are able to advertise* so they are in a technical sense providing a different and better service to the market. By analogy you say the same about cars, which “merely” displaced peoples’ “transportation spend” away from horses. * I don’t think the growth of advertising has necessarily been particularly good; apart from the spying, people still only have 16 or so hours of consciousness per day so there is a zero sum and intrusive quality to ads. I’m just addressing your economic point.

JumpCrisscross 5y ago

> the aforementioned corporations grew 500%-1000% in their profits and valuations since 2010. Meanwhile, the US productivity has grown by 4.7%. Had the SV tech been a clear net positive to the economy, the productivity growth would look different This is not necessarily true. The American economy is huge. Sections can grow slowly, sections can grow fast, all adding value while the bulk grows moderately. > When the tech/telecom was truly creating new value (1995-2005), the productivity growth was at 27% that decade 4.7% growth accumulates to close to 60% over ten years. (EDIT: I misread the original comment.)

dukeyukey 5y ago
> 4.7% growth accumulates to close to 60% over ten years. Sure, but I think OP meant productivity growth for the whole decade was 4.7%, not annually (though I'd like to see a source for that).
- JumpCrisscross 5y ago
  > OP meant productivity growth for the whole decade was 4.7% Fair enough. Real U.S. total factor productivity growth from 2009 to 2019 was 5.8%; from 1995 to 2005 12% [1]. [1] https://fred.stlouisfed.org/series/RTFPNAUSA632NRUG https://fred.stlouisfed.org/series/RTFPNAUSA632NRUG

concordDance 5y ago

I think the ability to google things has provided immense, incalculable value, even if it's not value showing up in gdp figures.

ponow 5y ago
There are "personal values" and there is "exchange value". The latter shows up in GDP. Isn't the problem with search also similar to education? Its effect is indirect on the both the consumer of education and within that consumer's society: when education is "useful", it enables all kinds of increased trade, not necessarily in education proper. To do a proper experiment, I suppose we'd need to compare otherwise identical individuals with differing education. Similarly, we could compare people whose only significant difference is the amount of search using Google, and assess their effects on GDP. Daunting to carry out these experiments, but possible in principle, no?
- CydeWeys 5y ago
  I'm old enough to have programmed a couple decades ago when you mostly had to rely on experimentation and manuals to figure things out. The experience today is much more streamlined. What might have taken me an entire afternoon to figure out in olden times can now take a single minute Google search. My productivity is substantially better now with the likes of Google, Stack Overflow, and all the other similar resources.

aikinai 5y ago

> Apple is selling overpriced commodity hardware This hasn’t been true since the 90s. And the rest of your examples are similarly ignorant of the incredible pace of innovation coming from a lot of these companies. Google ads might not be changing the world, but their peripheral technology certainly is. AWS and Amazon’s core business as well.

FredPret 5y ago
Just one correction; targeted ads have enabled the existence of many small businesses. Want to launch a board game aimed at left-handed nerds in a specific city? Before, you’d need a big media campaign that would also reach many right-handed non-nerds, wasting a lot of money. Now, you just need a few thousand $’s worth of targeted ads.
- splithalf 5y ago
  Targeted ads are unethical and should be eliminated, the abuses are too obvious to enumerate. Prostitution and drugs have also enabled the existence of many small companies.
  - FredPret 5y ago
    Everything has an upside and a downside. Eliminating all targeted ads will lead to entrepreneurship being restricted to the rich or the well-connected, which is not only unethical but anathema to me and many others. I think the way forward is somewhere in the middle, targeted ads with restrictions and opt-outs. Polarization isn't a path to progress. As an aside, prostitution doesn't have to be the crime magnet it is today (in medieval Europe the Church ran brothels!) And while most drugs are unambiguously bad, some are considered safe enough to be traded openly and very profitably - caffeine, alcohol, nicotine, and now marijuana.
    - systemvoltage 5y ago
      I agree. It’s interesting to look at Trade fairs and exhibitions. “Furniture industry fair” is targeted ads so to speak and benefit the industry by bringing producers to consumers under a single roof.

sateesh 5y ago

You are arguing that Google/FB displaced ad formats, and cite Netflix is an exception. Isn't what Netflix doing also "displacing of pre-existing formats".

jopsen 5y ago

> Uber is displacing taxis, redirecting money to themselves. I lived in San Francisco 2013-2018, before Uber I very rarely used taxis -- to/from the airport maybe. Having moved back to Denmark, I again very rarely use taxis. But when I lived in the US, I used Uber many times each week. Sometimes to/from work. But taxis in Denmark is easily 5x as expensive, and generally unavailable on-demand. So now I was forced to buy a car, and call someone if I get a drink. Point being: Uber certainly replaced taxis, but they also grew the market dramatically. The taxi industry is just a casualty, the pie Uber created is much bigger.

kawsper 5y ago
Have you tried using Moove? It's the same on-demand concept of Uber, but it's Dantaxi that are behind it with certified taxi drivers: https://moove.taxi https://moove.taxi
- ericmay 5y ago
  Is there something special about certified taxi drivers? Do they have a test to pass on driving skills or?
  - jopsen 5y ago
    Special drivers licenses, etc. insurance, etc. I'll be honest: the few times I've used a Danish taxi, they've been very good. In general it's like hiring black car service in the US.
- jopsen 5y ago
  I'll give it a shot :) Pick up time 8 minutes in Aarhus as of writing. If I go to Ikast it's 24 minutes. And a 10min ride is 25 USD. A hour ride is about 200 USD. Might try it if I ever need a taxis, but it's still a bit pricey.
ABCLAW 5y ago
I think the point is that you used the service when VC money was being used to subsidize your ride. This is zero sum. Obviously the market for rides increases once the cost is artificially depressed. From the UX perspective, Uber combines payment processing and ride ordering in an app. Obviously an improvement over calling a Taxi dispatcher and telling them when/where to pick you up. But is that billions of dollars in value? Or is the majority of that value just being scooped up from previous incumbents? The economics of the industry haven't changed dramatically - it's expensive to pay people to be your chauffeur.

simonh 5y ago

I people freely move from one service or product to another, usually it's because the new service is cheaper or better than the old service or product. That's direct value to the end user right there. Moving to AWS from running your own data centres is vastly more cost effective for most companies, you can build systems faster, you can scale them instantly, you can move resources between regions easily, you can focus on your company's core competencies. AWS creates massive value, that's why we use it. I used to look up the phone numbers of restaurants in a phone book, but now I use Google. That doesn't mean they are equivalent to me and they provide the same value. Looking up a restaurant on Google Maps is quicker, I can do it from anywhere, I can look at reviews and I can see exactly where it is and get routing direction. The experience now is orders of magnitude more powerful and that creates huge value for customers and businesses. Apple hardware is highly customised, and dramatically better than anything their customers have with better performance and advanced features like machine learning and secure authentication all implemented in custom hardware. That's been true on the phones for many years, and now with their in house designed desktop processors it's true for the Mac as well. Although the Mac has had unique custom hardware like the T1 and the 5K iMac video system for a while too. You cannot buy hardware like it anywhere else, at any price.

withinboredom 5y ago
> You cannot buy hardware like it anywhere else, at any price. Strange, I bought a PC with 2x the specs at the same price as a maxed out Mac…
- ChuckNorris89 5y ago
  I'm no Mac user but the value of a Mac to its users has more to do with its seamless integration with all other Apple products and services rather than a purely utilitarian perspective in raw specs/performance per dollar. This has no value to me as their pricing is out of my budget and I don't like the idea of being locked into a proprietary ecosystem, which is of course down to everyone's personal preference, but judging by sales numbers, it looks like Apple's ecosystem has gotten some things really on point.

fakedang 5y ago

Correction, AWS hasn't replaced IT, just added a bunch of requirements now for it eg:AWS certifications. They replaced the hardware aspect though.

splithalf 5y ago

It’s a small fraction but Amazon creates content too, maybe even more now with mgm, and content creation looks less like displacement, though there’s some of that too (not enough IMO)

gumby 5y ago

> Imho, what was happening in the Silicon Valley economy looks much more like displacement of value rather than creation of value (1). Google/Facebook have displaced other ad formats, redirecting money to themselves… I see your point but mostly disagree with it. The cost to advertise has dropped so while they have displaced some TV ads (still the largest) and most print ads, more people are able to advertise* so they are in a technical sense providing a different and better service to the market. By analogy you say the same about cars, which “merely” displaced peoples’ “transportation spend” away from horses. * I don’t think the growth of advertising has necessarily been particularly good; apart from the spying, people still only have 16 or so hours of consciousness per day so there is a zero sum and intrusive quality to ads. I’m just addressing your economic point.