Social Media as Part of GDP is Non-existent

This article  in The New Yorker is short, sweet, and interesting.

Highlights:

  • “digital goods and services are everywhere you look, but their impact is hard to see in economic statistics” (because most content online is given away for free and/or stolen. also, hard to track.)
  • “You may think that Wikipedia, Twitter, Snapchat, Google Maps, and so on are valuable. But, as far as G.D.P. is concerned, they barely exist.”
  • ““information sector” of the economy—which includes publishing, software, data services, and telecom—has barely grown since the late eighties, even though we’ve seen an explosion in the amount of information and data that individuals and businesses consume.”
  • “New technologies have always driven out old ones, but it used to be that they would enter the market economy, and thus boost G.D.P.—as when the internal-combustion engine replaced the horse.  Digitization is distinctive because much of the value it creates for consumers never becomes part of the economy that G.D.P. measures.”
  • “Figuring out the invisible value created by the Internet is no easy task. One strategy that economists have used is to measure how much time we spend online (on the assumption that time is money).” (Funny. All the time we spend trolling on Facebook is counted as created value and real dollars.)
  • “The enormous gains for consumers in the digital age often come at the expense of workers. Wikipedia is great for readers. It’s awful for the people who make encyclopedias. Although the digital economy creates new ways to make money, digitization doesn’t require a lot of workers: you can come up with an idea, write a piece of software, and distribute it to hundreds of millions of people with ease.”

GDP as a measure was developed in 1930’s. They need to come up with a new method of tracking the value created by the Internet, but I’m not convinced that “time=money” in this case.

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