01-02-2017, 02:58 PM
Quote:No I am not.
Yes, you really are.
Quote:GDP is a measure of the economy. To really understand things you need measures.
Not a perfect one, like many measures. Come on, Mike, I know you've worked with bioreactors and the like before, you always have to be aware of what you're actually measuring and how that measure is being derived, and consequently how it can mislead. GDP has long been known to omit black market and home production, to count disaster relief and the like as growth (the classic broken window fallacy), to aggregate away distribution issues, to omit externalities (both positive and negative) if they do not have explicit price tags, etc. It's not a perfect snapshot of all economic activity, it's just a measure of the market value of final goods and services produced. To really understand things, you do need measures, but you also need to understand that those measures are just abstractions that necessarily simplify and distort the full picture, and you need to take that into account. You gotta be smarter than your tools, Mike.
Besides...
Quote:A firm that offers product for free produces no value direct to the consumer.
That is one of the stupidest things I have ever read here, and I have nothing but contempt for most of the people who still post here. The subjective theory of value has been well-established for well over a hundred years. No one would ever exchange anything if they did not value what they were getting more than what they actually had, which means both parties must value the commodities being exchanged as being worth either less or more than the actual price, with the parties having differing opinions on which is which.
The value to each party of the good or service in question is derived from the perceived benefit that that thing would provide to them, nothing more. This value need not be expressed in monetary terms, and your blinkered insistence otherwise is one of the more egregious examples of the reification fallacy I have seen recently. The money (time, effort, etc.) spent to acquire something is a cost (in most cases, there are instances wherein the expense paid above and beyond that of an equivalent is countered by the perceived status benefit accruing from paying more. See fashion, etc.) to the consumer, which is weighed against the value that that thing provides.
Quote:A firm that offers product for free produces no value direct to the consumer. Of course they provide value to advertisers, but advertisers provide no value direct to the consumer, either. They provide value to individual firms. If a particular firm, using internet advertising (employing 10), gains business at the expense of competitors (who did not use digital advertising) so that they grow by 100 employees while the competitors shrink by 150 employees the internet firms have delivered real value to their advertising customers and they in turn have delivered real value to their customers, and the overall economy has lost 40 jobs. How one evaluates this depends on perspective. From the perspective of the businessman or investor, its a huge gain. But from the pov of the state, it's not.
Advertising can provide direct benefits to consumers by directing their attention to goods or services they would not otherwise know about, but yes, in general the benefits of advertising accrue to firms, not individual consumers. And the situation given as an example above may or may not benefit the state, depending on how the freed up resources (people, money, etc.) are redeployed. The original arguments for outsourcing industry (as told to the American people, there was a fair amount of geopolitical reasoning embedded as well) implied that giving up lower-value added activities like textile and furniture manufacturing would allow the US economy to be more productive by providing those things at lower cost, and reallocating t once devoted to the production and purchase of native equivalents to more valuable activities, in the same way that rising agricultural productivity freed people and resources to work in industry and services. The discontent that bubbled up so memorably in 2016 stemmed from the fact that 40-50 years on, the benefits from this and other policy decisions were much more diffuse (or, conversely, concentrated in different segment of the population than the people losing out) than the costs.
Quote:As to you second point, I did not ignore that. The hardware and infrastructure of the information economy constitute the fraction of this economic that functions as a leading sector. In the late 1970's almost nobody had personal computing power at home (I did as early as 1977). There was very little reason to had such a thing then. The only folks were geeks like my dad who put in our system (using home-built terminal, TV for video and a 1960;s teletype printer (110 baud) for hard copy). When I finally got my own PC in 1983, I had tons of bootleg software, which I rarely used except for the word processor and some games. I booted up VisiCalc, starred at the screen for five minutes, said what the fuck is this good for and went back to writing BASIC programs which is what I wanted the PC for. My point is there was a wave of home hardware installation in the 1980's long before the internet. This was a classic leading sector, like cars. I shelled out $6000* for my first machine in 1983, $3500 for my second in 1987, and $1800 for my third in 1993. Note all of there were purchased before the net.
By the 1990's there was plenty of reason to have a PC, games first and foremost. Over the first decade of the information revolution in my household we were shelling out about $1000 a year on hardware and a smaller amount on software. The PC revolution was functioning a real leading sector. We were spending money on this new thing while at the same time we were spending the same on all the old stuff. During the second decade, expenditures on hardware and software declined, but there was a new thing--internet. So that means $350 a year for dial-up. Internet was totally cool, got into MUDing, hosted a MUD for a while by renting space on a server in Grand Rapids for $50 a month. In 1997 I finally put our my first webpage, which is still available on the wayback machine:
http://web.archive.org/web/2004020301504.../stock.htm. I had gotten into financial commentary as a way to wean myself off MUDing.
By around 2000 everything was free. I had all the space I wanted for nothing on the CSF server. I could upload stuff for nothing. Everything was cool. The came the tech wreck. The free stuff was withdrawn. Then came cell phones and then smart phones. These cost money, but they directly replace telephony and the old internet. The companies offering the new service grow the old ones go way. On net no real change on a per capita basis. And it shows up in the aggregate statistics, GDP growth has been subdued since 2000 and the wages of college-educated workers stopped rising around then too.
Part of the problem was the the total system participating in this K-wave was expanded by trade policy, which meant that much of the manufacturing income that would previously have gone to American laborers was instead sourced to factories overseas. Consumers (and certain companies) benefited, but for many those benefits did not exceed the costs from lost income and investment.