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Bill Gates writes on Gates Notes: The Blog of Bill Gates that when he entered Harvard in 1973, the drawing below "was basically how the global economy worked."

From Gates Notes: The Blog of Bill Gates

The big picture: "There are two assumptions you can make based on this chart. The first is still more or less true today: as demand for a product goes up, supply increases, and price goes down. If the price gets too high, demand falls. The sweet spot where the two lines intersect is called equilibrium. ... Everyone wins."

  • "The second assumption this chart makes is that the total cost of production increases as supply increases. ... Software doesn’t work like this. Microsoft might spend a lot of money to develop the first unit of a new program, but every unit after that is virtually free to produce."

Why it matters: "The portion of the world's economy that doesn't fit the old model just keeps getting larger."

  • "That has major implications for everything from tax law to economic policy to which cities thrive and which cities fall behind."
  • "[T]he rules that govern the economy haven’t kept up. This is one of the biggest trends in the global economy that isn’t getting enough attention."

"If you want to understand why this matters, the brilliant new book Capitalism Without Capital by Jonathan Haskel and Stian Westlake is about as good an explanation as I’ve seen."

  • "What the book reinforced for me is that lawmakers need to adjust their economic policymaking to reflect these new realities."

Be smart: "Measurement isn’t the only area where we’re falling behind — there are a number of big questions that lots of countries should be debating right now."

  • "Are trademark and patent laws too strict or too generous? Does competition policy need to be updated? How, if at all, should taxation policies change? What is the best way to stimulate an economy in a world where capitalism happens without the capital?"
  • "We need really smart thinkers and brilliant economists digging into all of these questions."

Go deeper

Off the Rails

Episode 2: Barbarians at the Oval

Photo illustration: Sarah Grillo/Axios. Photo: Jim Watson/AFP/Getty Images

Beginning on election night 2020 and continuing through his final days in office, Donald Trump unraveled and dragged America with him, to the point that his followers sacked the U.S. Capitol with two weeks left in his term. This Axios series takes you inside the collapse of a president.

Episode 2: Trump stops buying what his professional staff are telling him, and increasingly turns to radical voices telling him what he wants to hear.

President Trump plunked down in an armchair in the White House residence, still dressed from his golf game — navy fleece, black pants, white MAGA cap. It was Saturday, Nov. 7. The networks had just called the election for Joe Biden.

Fringe right plots new attacks out of sight

Illustration: Aïda Amer/Axios

Domestic extremists are using obscure and private corners of the internet to plot new attacks ahead of Inauguration Day. Their plans are also hidden in plain sight, buried in podcasts and online video platforms.

Why it matters: Because law enforcement was caught flat-footed during last week's Capitol siege, researchers and intelligence agencies are paying more attention to online threats that could turn into real-world violence.

Kids’ screen time up 50% during pandemic

Illustration: Sarah Grillo/Axios

When the coronavirus lockdowns started in March, kidstech firm SuperAwesome found that screen time was up 50%. Nearly a year later, that percentage hasn't budged, according to new figures from the firm.

Why it matters: For most parents, pre-pandemic expectations around screen time are no longer realistic. The concern now has shifted from the number of hours in front of screens to the quality of screen time.