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The siphon and the forge

The tech industry has won at capitalism. From America to China, from Amazon to Alibaba, from Alphabet to Tencent, the most valuable and most dynamic companies in the world are engineering corporations. But what kind of capitalism? Because there are really two different modes, two ways to get rich.

One is to claim a share of the fortune that already exists. This is the capitalism of Wall Street, of Russia1, of cronies and rent-seekers, of the infamous” resource curse .” Patently the more wealth there is around you, the more incentivized this approach becomes. Call it the siphon.

The other is to create brand-new asset; fabrication better goods, offer better services, designing better hardware, write better software. This is — or “mustve been” — the capitalism of Silicon Valley, of China2, of rocket ships and electric cars, of Moore’s Law. Obviously this is the purer, more idealistic sort of capitalism. Call it the forge.

It seemed obvious that public opinion has turned crisply agains the tech industry of late 😛 TAGEND

There’s been a steep drop off in the share of Americans who say tech companies have a positive impact on the country- and this true among both Reps& Dems

NEW from @pewresearch https :// t.co /8 PyowIvZeQ pic.twitter.com/ Jw4KFWIk7D

— Monica Anderson (@ MonicaRAnders) July 31, 2019

Isn’t that surprising? After all, Silicon Valley is building more and better things for us all, while Wall street, having offered basically no generally beneficial financial inventions in decades, is greedily siphoning off roughly a one-quarter of all American profits; the pharmaceutical industry is investing vastly more on marketing than on R& D; and the rest of the US health-care industry is basically a huge kludge of a bloodsucking siphon.

So why has tech, the forge of the contemporary world, saw itself in the crosshairs of a backlash?

I set it to you that this is in part because while tech likes to portray itself as a forge, in many prominent instances, it is actually a siphon. Consider Facebook, Twitter, and Google. All are unquestionably forges, whose new products have done many good things. But that’s not their business simulation. Their business model, their original sin, is that siphon called advertising.

You could once have argued that advertising is a forge, in that is shapes customers is conscious of desirable products, just as you could once have argued Wall Street was a forge, in that it shapes capitalism more efficient. No longer, in both cases. Online display/ social-media advertising has become the tech equivalent of high-frequency trading: a pure siphon.( You can, however, make a good case for Google’s AdWords as a forge .)

People know when they’re being siphoned. What’s more, service industries being siphoned from is the media, which is unsurprisingly now inclined to train its own guns on tech as a result.

It’s not just ads. A more nuanced panorama is that ” siphon” and “forge” are two demises of a range, and numerous notable tech companies are closer to the former than the latter. Every app aimed at the wealthy-urbanite target market is essentially a siphon is targeted at the wallets of the rich.( Yes, forge engineering is often simply affordable by the rich at first, too; but that’s very different from servants-as-a-service .) WeWork was, apparently, largely a siphon for SoftBank.

When people are angry at Amazon, Uber, and Lyft for how they treat warehouse workers, Whole Foods salesclerks, and drivers, it’s in huge duty because it seems to them like the wealthiest industry in the world is acting like a siphon geared to drain the minimal opulence of striving workers, rather than a forge building new systems to empower and enrich us all.

Of course some of this criticism is unfair. And what almost every tech luminary truly wants is to follow the Elon Musk model, wherein his stint at PayPal — which, like all payments companies3, is at least half siphon, albeit one largely aimed at even less appealing competitives — money the forges of SpaceX and Tesla.

But all too often, the road to a siphon is paved with good purposes of a forge. Say what you want about Wall Street, at least they’re not phonies; high-frequency traders and hedge fund rarely pretend to be inducing the world a better place for anyone but themselves and their clients. This perceived hypocrisy is especially acute for corporations like Facebook and Twitter, which offer ” free” products from their forges … carefully engineered to optimize the siphons on which they survive.

In retrospect it’s surprising it took this long for the tension between the siphon and the forge to explosion into the cultural dissonance in which social media, and gig-economy apps, and indeed much of the publicly visible tech industry , now exists. While that tension continues, it’s hard to imagine this dissonance diminishing.

1 An oversimplification — again, it’s really more a spectrum than a binary — but not an invalid one. 2 An oversimplification — again, it’s really more a range than a binary — but not an invalid one. 3 Excepting those which create whole new various kinds of pays, such as M-Pesa.

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