Instant economics
A real-time revolution will up-end the practice of macroeconomics The pandemic has hastened a shift towards novel data and fast analysis
Few predicted $80 oil, let alone fleets of container ships waiting outside Californian and Chinese ports. ......... Today prices are rising faster than expected and nobody is sure if inflation and wages will spiral upward. For all their equations and theories, economists are often fumbling in the dark, with too little information to pick the policies that would maximise jobs and growth. ......... The world is on the brink of a real-time revolution in economics, as the quality and timeliness of information are transformed. Big firms from Amazon to Netflix already use instant data to monitor grocery deliveries and how many people are glued to “Squid Game”. The pandemic has led governments and central banks to experiment, from monitoring restaurant bookings to tracking card payments. The results are still rudimentary, but as digital devices, sensors and fast payments become ubiquitous, the ability to observe the economy accurately and speedily will improve. That holds open the promise of better public-sector decision-making—as well as the temptation for governments to meddle. .............. America’s gnp estimates date to 1934 and initially came with a 13-month time lag. In the 1950s a young Alan Greenspan monitored freight-car traffic to arrive at early estimates of steel production.
Ever since Walmart pioneered supply-chain management in the 1980s private-sector bosses have seen timely data as a source of competitive advantage. But the public sector has been slow to reform how it works. ............. The financial crisis would have been a lot less harmful had the Federal Reserve cut interest rates to near zero in December 2007, when America entered recession, rather than in December 2008, when economists at last saw it in the numbers.
.............. Patchy data about a vast informal economy and rotten banks have made it harder for India’s policymakers to end their country’s lost decade of low growth. The European Central Bank wrongly raised interest rates in 2011 amid a temporary burst of inflation, sending the euro area back into recession. The Bank of England may be about to make a similar mistake today. .............. today’s star economists, such as Raj Chetty at Harvard University, run well-staffed labs that crunch numbers ........... More machines and objects are being fitted with sensors, including individual shipping containers that could make sense of supply-chain blockages. Govcoins, or central-bank digital currencies (cbdcs), which China is already piloting and over 50 other countries are considering, might soon provide a goldmine of real-time detail about how the economy works. .......... Good data during crises could let support be precisely targeted; imagine loans only for firms with robust balance-sheets but a temporary liquidity problem. Instead of wasteful universal welfare payments made through social-security bureaucracies, the poor could enjoy instant income top-ups if they lost their job, paid into digital wallets without any paperwork. ........... The biggest danger is hubris.
With a panopticon of the economy, it will be tempting for politicians and officials to imagine they can see far into the future, or to mould society according to their preferences and favour particular groups. This is the dream of the Chinese Communist Party, which seeks to engage in a form of digital central planning. ...... no amount of data can reliably predict the future. Unfathomably complex, dynamic economies rely not on Big Brother but on the spontaneous behaviour of millions of independent firms and consumers. Instant economics isn’t about clairvoyance or omniscience. Instead its promise is prosaic but transformative: better, timelier and more rational decision-making.
The company is more than a social network. It also has a reputation problem
Nearly 3bn people use its products every month. ........ It has launched a digital wallet (Novi) and may yet offer a currency (Diem).
........ Mr Zuckerberg expects people eventually to associate his firm more with the “metaverse”, a virtual space for work, play and more, than with social media. This week Facebook said it would hire 10,000 people to work on the metaverse. ........ In 2015 Google set up Alphabet, a holding company for the search engine and its many side projects. Under this model, Facebook would become just another app within a wider family, albeit by far its biggest earner. ......... the Facebook brand has become tarnished. The social network is blamed for stoking everything from teenage anorexia to insurrection at the us Capitol. .......... Normally, a brand facing a reputational crisis might dump its unpopular ceo. But Mr Zuckerberg’s position is unassailable, which may explain why he would want to dump the brand instead.
