The global economy is baffling economists, particularly those employed at central banks
http://www.businessinsider.com/spotify-problem-for-economists-2016-9
http://www.businessinsider.com/spotify-problem-for-economists-2016-9
Spotify is causing a major problem for economists
- Thread starter Banjo
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This is a very real issue, although I learned about it from economists and aspiring economists 10 years ago so I'm not sure it's "baffling" them. Another place it's an issue when you look at trade deficits and surpluses. While it's easy to measure in and out of physical goods, IP and services are only measured through a balance of payment system which is archaic and in no way designed to capture Spotify type data. As a result, IP and service righ economies like the U.S. probably have a significantly overstated trade deficit while product rich economies like China have a significantly overstated trade surplus. It's basically a measurement problem rather than an understanding problem, but the measurement isn't easy to do so it's not something we can solve overnight.
This is an excellent article, and a great post. Thank you for sharing.
In many markets, the information age has fundamentally changed how transactions take place. So many products and services that previously had to be physically mailed or shipped can now be sent more quickly and cheaply over the wire. From music, x-rays, computer code, legal briefs, financial data... no more physical production necessary. It's just bits and bytes.
From a tech speculation perspective, perhaps the easiest way to profitability is to look at the different markets and say:
1. Which old-school products or services are making the most money? Whose dollars are we going to take?
2. How can we virtualize it; transform it from physical to informational form, and offer the same functionality at a lower price by cutting out the physical manufacture--cutting out the middle-man?
3. Take the customers, and the profits.
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