Monday, January 12, 2015

New economy

What do we know? Our economic data are not very good -- and probably getting worse as more of the economy creates hard-to-measure consumer surplus.  What do we pay for all the cool stuff we get for free on the Web?  Next to nothing.  How will we measure GDP and other stand-byes. Measurement challenges will hamper our understanding -- and forget about macro-economic forecasts.

This is why I do not understand the declinists and stagnationsts. New-economy industries (e.g. Silicon Valley) employ fewer people than in-its-heydey old-economy (e.g. Detroit). But this is just the start.

Many people have used Uber-type taxi services and understand its vast advantages. Networking and apps have been fashioned to reduce transactions and vetting costs to the extent that an army of new drivers (and autos) can step forward to serve another army of new customers.  Note that the app technology involved is stuff that is here now.  (Transportation economists used to worry about all the empty seats in all the cars out there. What to do?)

The Economist looks at the emerging phenomena in "There's an app for that."  Some call it the "sharing economy."  But we ain't seen nothin' yet -- and it's way beyond taxis. As new apps connect buyers and sellers in  a variety of fields, applications that we have not yet imagined will emerge.

More unemployed (and under-employed) labor will find things to do. More unemployed (and under-employed) capital, such as cars parked in garages, will find new work.

No surprise that start-up funding is growing.


I cannot decide whether peer-to-peer professional cuddling is part of the new economy.