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Illustration: Sarah Grillo/Axios

Everything is a service, these days. Here's investor Mikal Khoso:

Today you can rent living space flexibly based on your needs (AirBNB, Stoop), commute from that space without ever buying a car (Wheels, Uber, Lyft), rent clothes to fill your closet (Le Tote), rent specific appliances based on your needs (Joymode) and rent the furniture you fill your apartment with (Fernish).

Why it matters: There's a lot to be worried about in this brave new world where our entire lives are dominated by rentiers, even if investors like Khoso have managed to persuade themselves that everybody wins.

  • Companies in the rental business are worth untold billions, whether they're renting out software (Oracle, Salesforce, SAP, Slack) or goods and services (IBM, Uber, Lyft, Airbnb). The people who rent out the information-economy pipes (Comcast, Verizon, AT&T) are big enough to eat any media company for breakfast (NBC Universal, Yahoo, Time Warner). When Netflix pivoted from DVDs-by-mail to streaming, the one thing that stayed sacrosanct was its subscription-based business model.
  • The move to a rental economy has been good for consumers — so far. According to research by Austan Goolsbee and Peter Klenow, inflation in the digital world is much lower than inflation in the economy as a whole, with a difference of more than 1 percentage point per year.

What's next? Price hikes are certain in a digital economy where many companies are burning cash at an unsustainable rate.

  • Lyft alone lost $911 million in 2018; Uber lost twice as much.
  • The entire minotaur business model is based on buying a dominant position in a market and then exploiting that position. Once they have stopped growing and their markets mature, for instance, companies like Salesforce and Slack have astonishing latitude to raise their prices before their clients even think about switching.

Ownership is a hedge against rental price increases. That's true in the housing market, as economists Todd Sinai and Nicholas Souleles have shown. But it's true in other rental markets, too. Owning a car is a hedge against price hikes at Uber; owning your own computer server is a hedge against price hikes at AWS, and so forth. Renting might be cheaper, but it's also more uncertain.

  • Inflation isn't monolithic; it hits different people differently. (In 2014, apparently, it was hitting Republican billionaires quite hard.) In a world where prices on Amazon fluctuate by the second, the cognitive cost of inflation — the amount of time we spend thinking about how much things cost — can be substantial even when inflation itself is low.

The bottom line: A world of continuously variable price is unstable and uncertain, even when overall inflation is low.

Go deeper

Ina Fried, author of Login
6 mins ago - Technology

The feds' dangerous data-grab game

Illustration: Sarah Grillo/Axios

Recent revelations about Trump-era data grabs by federal authorities have put the U.S. in a tricky spot as it competes with China to lead the digital age.

The assumption in the West is that U.S. tech companies only provide the government with data when it follows the rules and goes after specific suspects — while, in China, tech companies are forced to share everything with the government.

36 mins ago - Health

The Obamacare wars end in a whimper

Illustration: Shoshana Gordon/Axios

Existential threats to the Affordable Care Act just aren’t what they used to be.

The big picture: The anti-Obamacare fire on the right may not be fully extinguished — it still throws off some smoke and a few sparks every once in a while — but it has petered out into irrelevance, dismissed as a distraction even by some of the same conservatives who helped to stoke it in the first place.

Health care ruling saves Republicans from themselves

Illustration: Aïda Amer/Axios

The Supreme Court saved the health care system from imploding Thursday by dismissing a Republican challenge to the Affordable Care Act. But it also saved the GOP itself from another round of intraparty chaos.

Why it matters: Most GOP lawmakers privately admit (and some will even say publicly) they don't want to deal with health care again. The issue generally isn't a good one for them with voters — as they learned the hard way after they failed to repeal the ACA in 2017.