Mar 31, 2019

The fortunes of Silicon Valley stem from inefficiency

Illustration: Sarah Grillo/Axios

Clive Thompson is out with a new book, "Coders," excerpted in Wired. In it, he talks about engineers' aesthetic of efficiency — how "coders’ eyes blaze when they talk about making something run faster," and how they dream of doing such things at previously unimaginable scale.

The other side: Silicon Valley coders might love to make processes leanly efficient, but the irony is that Silicon Valley's billions come from inefficiencies.

  • The efficient way to allow individuals and brands to market themselves on the internet is to create a site where they can do so for free — Craigslist, perhaps. Facebook built such a site — but then started ensuring that brands' posts would not be seen unless Facebook itself got paid.
  • Apple could efficiently funnel its news-service revenue to the publishers who actually produce the content; instead, it's reportedly taking 50% of the money for itself.
  • The efficient way to match drivers with passengers, or homeowners with short-term renters, is to create a real-time marketplace that people pay a small fee to access. The inefficient way is to go to great lengths to ensure that payment is routed through the platform, allowing companies like Uber or Airbnb to take an arbitrarily large slice of the transaction.

The bottom line: Software has value, but it also has zero marginal cost. In an efficient world, the cost of software would trend toward zero. Instead, companies spend billions of dollars attempting to buy a dominant market position that then allows them to extract monopoly rents. Coders might love efficiency, but capitalism rewards rent seeking.

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Top Trump ally sounds 2020 election alarm over coronavirus response

Photo: Jim Watson/AFP via Getty Images

There is growing concern among top conservative leaders that the Trump administration isn't addressing the long-term economic impact of the coronavirus, several sources tell Axios. One top adviser said if the recovery is bungled it could cost President Trump the election.

What we're hearing: "The next 4-8 weeks is really going to decide whether Trump gets reelected," Stephen Moore, Trump's former nominee for the Federal Reserve board, told Axios. If the administration mishandles its economic recovery efforts, he said, Trump is "in big trouble."

Coronavirus dashboard

Illustration: Aïda Amer/Axios

  1. Global: Total confirmed cases as of 10 p.m. ET: 1,600,427 — Total deaths: 95,506 — Total recoveries: 354,006Map.
  2. U.S.: Total confirmed cases as of 10 p.m. ET: 465,329 — Total deaths: 16,513 — Total recoveries: 25,410Map.
  3. Public health latest: U.S. has expelled thousands of migrants under a CDC public health orderDr. Anthony Fauci said social distancing could reduce the U.S. death toll to 60,000.
  4. Business latest: The Fed will lend up to $2.3 trillion for businesses, state and city governments — After another 6.6 million jobless claims, here's how to understand the scale of American job decimation.
  5. 2020 latest: Top conservative leaders are concerned the Trump administration isn't addressing the virus' long-term economic impact.
  6. States latest: FEMA has asked governors to decide if they want testing sites to be under state or federal control.
  7. World latest: Lockdowns have led to a decline in murders in some of the world's most violent countries — Boris Johnson is moved out of the ICU but remains in hospital with coronavirus.
  8. In Congress: Senate in stalemate over additional funding for small business relief program.
  9. 1 SNL thing: "Saturday Night Live" will return this weekend in a remotely produced episode.
  10. What should I do? Hydroxychloroquine questions answeredPets, moving and personal healthAnswers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk.
  11. Other resources: CDC on how to avoid the virus, what to do if you get it.

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Federal court temporarily blocks coronavirus order against some abortions

Gov. Greg Abbott. Photo: Tom Fox-Pool/Getty Images

A federal judge ruled Thursday that clinics in Texas can immediately offer medication abortions — a pregnancy termination method administered by pill — and can also provide the procedure to patients nearing the state's time limits for abortions.

Driving the news: The decision comes after federal appeals court ruled 2-1 on Tuesday in favor of an executive order by Republican Gov. Greg Abbott that prohibits abortions during the coronavirus outbreak.

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