Thoughts about Paul Krugman's remarks on the information economy

(Cross-posted from my comments at Paul Krugman's blog. These were approved, and you can read them, and perhaps see some followups.)

Paul Krugman:
What do I mean by the role of rents? Consider the changing identity of the most valuable company in America. For a long time, it was GM, then Exxon, then IBM. These were companies with huge visible production activities: GM had more than 400,000 employees, which was amazing when you consider that the overall national work force was much smaller than the one we have today, Exxon had oil refineries. IBM was an information technology company, but it still had many of the attributes of an old-style manufacturing giant, with many factories and a large, well-paid work force.
But now it’s Apple, which has hardly any employees and does hardly any manufacturing. The company tries, through fairly desperate PR efforts, to claim that it is indirectly responsible for lots of US jobs, but never mind. The reality is that the company is basically built around technology, design, and a brand identity.—http://krugman.blogs.nytimes.com/2013/06/19/how-are-these-times-different/
I am delighted to see you considering these issues. These are very important questions, and of great interest to writers, musicians, illustrators, publishers, and so on, as well as to media device manufacturers like Apple and Amazon.

Kraw… It is a half-truth to say that "Apple has hardly any employees and does hardly any manufacturing." Their subcontractors have many employees in China. In the long run, it doesn't seem likely that the brand will survive; touch-screen computing devices are becoming commodities and other firms can also hire good designers and marketers.

Apple stands in the relation to the various content producers—publishers, recording firms, television and movie producers, and so on—as NBC used to stand to RCA. NBC was founded by RCA as a way to sell radios and transmission equipment. Apple instead licenses content. Amazon, on the other hand, is following the Sarnoff model; it is becoming a publisher. It is also following the Walton model, and pressing hard on the price of its "suppliers;" if the Amazon model of publishing becomes the standard, very few professional writers will be able to make a living at it.

One especially significant area of products: applications, especially games. By and large, apps are not portable between platforms without considerable effort. It is apps that make the platform brands like iPad, PSP, and X-Box so strong.

Kraw…

No economic thoughts here, but perhaps some grist for the mill.

Comments

Post a Comment

Popular posts from this blog

The General Intelligence of Robots

“Artificial intelligence” researchers mean by the phrase “general intelligence” two things. One is simply a machine learning system that can, like humans, use its knowledge for many different tasks. This is not something that has currently been built; language models produce language, stable diffusion models produce images, and neither seem to have any concepts of the underlying realities these words and images reflect. The second is the “general intelligence,” g , derived from intelligence tests, which is believed by some to be a unifying reality behind intelligence test scores. In a paper on GPT-4 from Microsoft a Wall Street Journal Editorial by Linda Gottfredson, Mainstream Science on Intelligence is cited as providing a definition of general intelligence. It’s an appalling piece, repeating debunked claims about racial differences in intelligence and claiming as scientific consensus hypotheses that are at best debatable and at worst outright false.
Read more

A Grand Unified Theory of Bad New Economy Firms

The wildly successful internet economy firms mostly operate by evading laws. New technology which has allowed firms to move their business to less-regulated jurisdictions and a generation of deregulation and favorable court decisions have allowed these firms to be bad places to work and bad places to do business with. Here’s a catalog of some of their abuses: Evasion of local laws through national operations . Amazon notoriously picks jurisdictions with lax labor laws for its warehouses. Uber simply ignores local laws until penalized. When penalized, they initiate political campaigns to get the laws overridden at the state level. Extortionate business practices . Doordash infamously underpays its workers. Grubhub notoriously overcharges restaurants . Uber has the resurrected long-illegal practice of raising taxi rates when demand is highest. Monopolistic practices . Enforcement in this
Read more

Richard M. Stallman and the Failure of the Free Software Foundation

(Note: since the writing of the following, the Free Software Foundation has tweeted: “The FSF board unanimously condemns misogyny, racism, and other bigotry as well as defamation, intimidation, and unfair attacks on free thought and speech.” They are rejecting the criticism of Stallman as unfair and, in so doing, they aligned themselves with neo-Nazis and white supremacists. They have put themselves beyond redemption and any fair hearing for their ideas. No-one wants to listen to the logic-chopping of rape apologists – it is as bad as listening to Southern racists excusing slavery.)   This is outside of my usual ambit, and it is about cooperative software development rather than market economics, but it seems to belong here more than anywhere. People who follow free and open source software by now know that alleged harasser and rape apologist Richard M. Stallman has, by a secret process, been restored to the board of directors of the Free Software Foundation. Stallman has lon
Read more