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Tech is the problem. The internet is global (or perhaps two or three regions), and winner takes all - so global value creation is being experienced everywhere,
by lifeisstillgood 2y ago
Tech is the problem. The internet is global (or perhaps two or three regions), and winner takes all - so global value creation is being experienced everywhere, but being monetised in the US stock market.
Take tech out of the equation and the US is pretty much on par with EU, and China and India are just burning the coal for everyone else.
- jebarker 2y agoCan you expand on this? What do you mean by "monetized in the US stock market"?
- tiffanyh 2y agoI'm not GP, but they probably meant "realized" (not "monetized")
- jebarker 2y agoI guess I still don't understand though. Is the claim that tech innovation in the rest of the world is being turned into money in the US only? If so, why is that happening?
- roflc0ptic 2y agoThe claim here is that the tech innovation is occurring in the US. It adds value globally, but most of the profits from that value are being realized in the US b/c the innovation is by US companies. There’s no natural law that says technical innovation must occur in NA, but due to contingent historical conditions, it is occurring here. Thus, the gains are being realized in the US stock market b/c it’s the one capitalizing the winners.
- jebarker 2y agoI see, thank-you for clarifying.
- dingnuts 2y ago>It adds value globally, but most of the profits from that value are being realized in the US this is contradictory. profits are added value. if value is added globally, there are extra profits (likely as cost savings by other industries adopting tech)
- bigs 2y agoThey’re generalising to say the world uses Apple, Google, Microsoft, Zoom, Cisco, Tesla, and so on… US tech stocks. We use them and they gain revenue and profit. Of course there are many successful tech co’s outside the US but (and I haven’t looked) I imagine the US tech stocks must overshadow every other countries tech sector.
- chgs 2y agoUS cultural dominance for one thing, then success begets success - lots of VC money in the US because the US is rich which gets invested which returns even more and makes it richer. US businesses more likely to work with US suppliers, US customers more likely to buy from US businesses, then those dominant domestic positions can be used to expand globally far easier than say a Spanish firm can expand into the US.
- jventura 2y agoI think the parent poster means that tech companies such as Apple, Nvidia and others are traded in US stock exchanges..
- bananaquant 2y agoI second that. In addition, most of those companies use a portion of their revenue to buy back their shares, pushing their price up. So, the value created worldwide ends up growing the US stock market.
- majormajor 2y agoAnd then even more specifically - at least in terms of local problems - that pushes up the value of compensation for a lot of people in the SF Bay Area which inflates the cost of land there. Staying out of whether or not the concentration is a problem at the national/international level, is there any realistic alternative short of massive protectionism a la China to force home-grown tech companies in other parts of the world?
- bananaquant 2y agoThe US has a massive advantage of being the largest economy, having a vast single market, issuing the world's reserve currency, and having unique hubs like the Bay Area attracting the best and brightest. It would be hard to replicate its success elsewhere without having some of the above prerequisites.
- aussiegreenie 2y ago>being the largest economy, having a vast single market America is NOT the largest market the EU is MUCH BIGGER. And it is not "America" that commercialises technology, but a small portion of California called The Valley.
- aeonik 2y ago
- francisofascii 2y agoFrom a stock market perspective, if you look at a graph of Vanguard FTSE All World ex US ETF (ticker VEU), it looks like normal growth, but looks vastly different from say Vanguard Total Stock market (ticket VTI) which shows phenomenal growth. This is because VTI includes US tech stocks and VEU doesn't. Take out the tech stocks and maybe VTI would look like VEU.
- narcindin 2y agoTo be clear VTI is only US stocks and VEU is everything else. It is confusing because "Vanguard Total Stock Market" contains only United States equities.
- nradov 2y agoHow is that a "problem"? What is preventing other countries from building tech winners? The USA isn't launching missiles to destroy the next foreign Nvidia or Meta competitor.
- stcroixx 2y agoI don't think it's a problem. What's preventing other countries from building something similar to the US tech companies is a combination of regulation and culture.
- sangnoir 2y agoIs that so? What's the best American drone company again? Consumer ones, not the MQ-9 Reaper type.
- stcroixx 2y agoToys? Not a priority. RCAT is the best American drone company. I won't disagree communists can produce efficiently, but that comes with a culture that guns down their own like the protesters in Tiananmen square.
- lern_too_spel 2y agoYou could just as well ask what is preventing every other state in the US from building tech winners.
- nradov 2y agoWhat is preventing every other state in the US from building tech winners? The majority of large tech companies are headquartered in CA and there are a few others in WA, TX, NY, and ID. There used to be quite a few in MA and even FL was in the running for a while. What caused them to fall behind within a few decades, while other states never really got started? Some are hopelessly handicapped by horrible geography or low population density but others like CT or IL would appear to have all the necessary ingredients.
- seydor 2y agoTech is not a 'problem'. It has replaced Finance in the pecking order of power relationships. Since US controls it , it can exert control everywhere where its tech goes. China shielded itself from it early on.
- staunton 2y ago> Tech [...] has replaced Finance in the pecking order of power relationships Not at all obvious to me. Is there any particular measurable thing you're referring to, or is this just your personal feeling?
- sangnoir 2y agoFollow the money. Which companies are better at vacuuming money from all over the world into their countries of origin and exporting the rules, norms and regulations that everyone else -including domestic competition - has to play by. Is HSBC/JP Morgan more effective at this than Google/Apple?
- pm90 2y agoAs far as I see, tech has destroyed the “legacy media” almost completely. Only the older generation pays any attention to it: all the young people get their news from TikTok and podcasts; even the older generation has gotten brain rot from falling into Facebook/Youtube attention algorithm hell. And that is just one part of it. Look all around you and tech is everywhere, from apps to hail cabs to get groceries. Our lives are now so fully immersed and our decisions dictated by tech companies its fucking insane. That is a lot of power.
- seydor 2y agoFinance people used to run the world economies, but nowadays finance and banks are heavily dependent on the tech ecosystem to function. Tech can even do finance without much capital (hence fintech) but not vice versa. That's why tech companies can command huge margins from finance institutions
- slibhb 2y ago> Tech is the problem. The internet is global (or perhaps two or three regions), and winner takes all - so global value creation is being experienced everywhere, but being monetised in the US stock market. I don't really understand what you mean. While their reach is global, it's largely American companies that are creating the tech value, no?
- chmod775 2y agoThey're creating "value" the same way the British Empire did for China around 1800. It's almost 1:1 the same dynamic. Bad decision-making of individuals is exploited to make them act against the best interests of their country and ultimately themselves, causing money to flow outwards in exchange for virtually nothing, which is then used to import things of actual value from the hapless victims. A modern twist on this is also using that money to buy up anything of value in the victim country and renting it back to its citizens, taking the exploitation to a whole other level. China was wise to this trick already, which is why they've shielded themselves from the very beginning. Most countries haven't learned the lesson yet, but slowly the EU is waking up as well and pushing back.
- cscurmudgeon 2y agoBy this logic, US should wisen up and go protectionist/isolationist against China (ban TikTok, tariffs on cheap products to make them on par with US goods with better environmental and labor regulations) and EU (no more subsidizing their GDP by defending global trade).
- chmod775 2y agoNo it doesn't follow. I have absolutely no clue where you're getting that from. The point was that exporting low-margin high-labor goods and importing high-margin low-labor goods with addictive properties and possibly even negative value is a bad deal for your economy. Especially if the latter could be trivially provided domestically, but isn't due to existing network effects, or shouldn't exist at all (in the case of addictive substances). You're arguing against the import of very low margin labor-intensive physical goods. How did you get there? I have no idea.
- eduction 2y ago>Take tech out of the equation and the US is pretty much on par with EU Disagree. It's not just the nature of the technology itself but the whole ecosystem -- including VC and education -- in Sillicon Valley that develops cutting edge computer tech, plus generally looser business regulation in the US and a culture of greater optimism nationally, especially relative to EU. Certainly having a unified market (not just in regulation, government, and currency but also linguistically) has helped too especially given the network/winner-take-all effects of tech you mention. Yes the nature of technology is part of it. But it's not everything. It's a whole gestalt. I mean, consider where we are right now, who set it up, who hangs out there, etc.
- RajT88 2y agoThe US has the highest disposable income per capital out of the whole world: https://en.m.wikipedia.org/wiki/Disposable_household_and_per_capita_income https://en.m.wikipedia.org/wiki/Disposable_household_and_per... For all the workers are living paycheck to paycheck, they are sitting on a gigantic monetizable pile of money. Consider this: the most popular languages in YouTube videos are English and Spanish. And did you ever notice how most videos, when they talk about units, talk about Dollars, Miles, Inches, Pounds and Degrees Fahrenheit? That is why... To be a wealthy YouTuber seems to mean catering to people in North America (the US specifically).
- layer8 2y ago> English and Spanish Part of the causality is the other way around: The largest language communities attract the most monetization. Europe being compartmented into 24+ languages is one reason that it’s harder to monetize.
- RajT88 2y agoSee, that occurred to me, but the Units thing makes me think it is not as big as you would think. Most of the English speaking world runs partly or fully on Metric. ...and there are many Australian YouTubers who talk about prices in US Dollars. Once you notice this, it is hard to ignore the per capita disposable income argument. The disparity is wild when you run the numbers.
- layer8 2y agoI don’t know. For example, I see a lot of US citizens complaining that the price of the Apple Vision Pro is ridiculous and unaffordable for what it is, or similar about the Mac memory and storage upgrade pricing. Or even for streaming subscription prices. If you were right, those prices shouldn’t be a big deal. As for the currency unit, everyone knows what a USD is worth, much less than AUD or CAD or GBP or whatever. The reasons to use USD are the same as for language choice.
- 2y ago
- gruez 2y ago>China and India are just burning the coal for everyone else. The actual effect of this is far less than you think. While it's true there's some amount of "exporting" of emissions from rich countries to china/india, the effect is small. Consumption based emissions (ie. accounting for imports) for US is only 11% higher than territorial emissions. Meanwhile the difference for China is also 11% (in the opposite direction, of course). https://ourworldindata.org/consumption-based-co2 https://ourworldindata.org/consumption-based-co2
- thuanao 2y agoIf you remove non-industrial and financial activity from US GDP, the economic picture is bleak. US and G7 have been steadily deindustrializing while BRICS have been doing the opposite. US GDP is misleading in the sense that it increasingly includes a large portion of economic activity that isn't actually producing tangible wealth.
- epolanski 2y agoBut as an average European I realistically have all I need and most of my needs are either food/commodities or non-industrial services.
- zeroonetwothree 2y agoThat’s not how a global economy works (comparative advantage etc). An analogy would be that if you remove employment activity from my household finances then our economic picture is bleak.
- thuanao 2y agoComparative advantage only works without trade barriers, and when the USA has something people want to import cheaper than elsewhere. The USA doesn’t have competitive exports. The USA is the largest net importer. By an order of magnitude. The USA is deeply in debt in both nominal financial terms and in real trade terms. What's the USA's comparative advantage? Nukes and dollars. Demand for dollars and rent seeking via the post WWII global financial system. But G7 is no longer the only game in town. They have become the consumers while the rest of the world has become the producers. Moreover, the leadership in China is fully aware of the macroeconomic situation and USA leadership doesn’t even appear to know how tariffs work.
- dyauspitr 2y ago>China and India are just burning the coal for everyone else. India has 19 nuclear reactors it is planning to complete by 2030. 7 under construction now to be completed by 2026.
- dartharva 2y ago..which is still a ridiculously smaller number than what it should be aiming for.
- dyauspitr 2y agoThere are 65 nuclear reactors planned to be built by 2030 across the world. One third of that by one country isn’t a small number. Most of the rest are in China so the statement I was responding to is doubly meaningless.
- boulos 2y agoThe article discusses this and disagrees. Even in the same sectors and with the top 7 companies removed, sectors in the US have higher P/E ratios due to higher projected growth rates.
- rsanek 2y agoThe article quotes Draghi as saying “If we exclude the tech sector, EU productivity growth over the past 20 years would be broadly at par with the US,” so I think it agrees.
- boulos 2y agoOh! My edit didn't go through. I had tried to change "the article" to "the article at https://on.ft.com/41jw5ZY https://on.ft.com/41jw5ZY".
- anon291 2y agoall industries today are 'tech'. It's silly to continue this 1970s classification of everything. Google should be reclassified under the equivalent of Dewey Decimal system publishers and magazine printers. Netflix is a movie producer. Adobe is an art supplies producer Few companies today: apple, microsoft, etc qualify as tech.
- 0xDEAFBEAD 2y ago>The internet is global (or perhaps two or three regions), and winner takes all - so global value creation is being experienced everywhere, but being monetised in the US stock market. This argument could be made for many industries. E.g. Boeing and Airbus together control almost 100% of the global passenger jet market. "Passenger jet value creation is being experienced everywhere, but being monetized in the US and EU stock market."
- sourcepluck 2y agoI think it was in the book "Cypherpunks" (the one with Julian Assange, Jacob Appelbaum, Andy Müller-Maguhn and Jérémie Zimmermann) where one of them said something about the last few decades with the move to total dependence on digital technologies in so many ways, and it being the largest transfer of power in the history of the species. If someone has the exact quote, I'd welcome it... Anyway, the idea stuck with me. Anyone who wants to reject the point will have an easy time as it's such a broad claim, but I think it's worthy of reflecting on, and perilous to ignore. There's a lot of ink splattered about technology these days, of course, but it's still rare enough that the larger picture of what's going on historically in terms of power structures is seriously reflected on.