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11/18/2013

Comments

Krysta Huber

As we have discussed in class, people tend to take a change in GDP as a stand-alone indication of the state of the economy, whether that be good or bad. This author of this article says that if GDP is "rising briskly, we know that the economy is doing well. If not, we know it’s time to worry. The basic assumption is simple: the more stuff we’re producing for sale, the better off we are." But this doesn't paint the whole picture. GDP is a measure of the size of the economy - GDP information alone can't tell us how the economy is fairing. This is a major flaw leading up to Surowiecki's curiosity as to how we can accurately measure economic growth when in this online era, many things are free. And although he is somewhat incorrect, I do think he raises an interesting question - how do our technological advances fit into economic growth when they're free and we can't necessarily see their effects, as is the case with Twitter? We could certainly argue that social media like Twitter boosts our economy for the sake of spreading ideas and connecting people around the world. But these characteristics can't really be measured with a number. We can only draw correlations. The author says that economists have used time spent online to measure the value of the Internet which can definitely shed some light. But as technology and the Internet continue to have such a presence in every day life, economists will have to generate a better measuring tool.

Lizz Platt

The rule of information freely available and distributed through the digital economy does hurt the GDP, but the GDP should not be the only factor when determining what is best for society. The GDP is a simple model to measure the transactions in the economy. One piece of information the GDP does not account for is human capital. In order to continue progressing as a society, we must invest in human capital and with the digital economy, this can be achieved. Wikipedia and Goggle do rob encyclopedia makers of profit, but these sites are more practical to today’s society and allow people to have knowledge at their fingertips at all times. This knowledge, in theory, increases the productivity of people and encourages new innovations. New industries have grown out of the digital age creating new jobs and businesses. Pairing an increase in productivity of human capital with other factors such as political stability, investment, and public capital, aids in growth of the economy and the nation in the long run. Without the digital age, society and the economy would not have grown in the way that it did in the last two decades, and the United States would have been forced looked for growth in other fields.

Matt Kinderman

Lizz is completely accurate in that the GDP is only an economic indicator and by no means the only important measure of growth. Perhaps, what I gained most from this article is a need for additional measures of calculating the benefits that free internet sites have. Krysta mentioned the benefits to human capital that Wikipedia has for example. There needs to be a way of measuring the benefits to consumers. Pre-internet, buying encyclopedias would mean yes, consumption, but only by those able to afford it. With Wikipedia, that consumption can now be spent in other sectors of the economy, while additionally and more importantly, individuals who did not have previous access to the knowledge through encyclopedias now have the same access to develop their human capital via free websites (a significant technological advancement.) The benefits to society in this regard are endless. Thus, the importance of expanding technological infrastructure should be stressed. The infrastructure itself has a direct result on GDP, and the benefits from this technological infrastructure is real, even though the intermediary companies such as Wikipedia and google maps don’t present an immediate return to GDP.

Katie Barnes

I agree with the people above. It is important to note that digital goods and services are everywhere you look, but their impact is hard to see in economic statistics, as one would except. There has to be some development in measuring technological services in the economy and its effect on GDP. What the MIT economist, Brynjolfsson acknowledges, that the information sector of the economy has hardly grown since the 1980's, despite the exponential growth and accessibility consumers have seen from companies such as Apple, Microsoft, Facebook, and twitter. I would have liked this article to discuss how these multi-billion dollar corporations' values are justified - such as recognition of advertising etc.

Emily Utter

I think this is a very interesting article. In this era, more people spend more time mindlessly wandering the internet than doing anything else. And the best part about it is that even though were spending a lot of our time there, we don't have to pay for it. If we were to measure the amount of time spent on the internet in dollar form, it would be hundreds of billions of dollars that will never be collected by anyone. Not only are we not collecting this revenue, free apps and products are replacing technology that we used to pay for. An example the article gives is free apps like google maps and map quests are replacing GPS purchases. There are other examples as well, but all point to the fact that people are paying less than they did a few years back. So not only are we not collecting a large sum of money, the economy is also receiving less money from technology purchases than the use too. This is very bad for our economy, especially when we are in a recession. People don't want to have to spend their money aimlessly, and the internet provides them with a way to get almost anything for free.

Mitchell Brister

This article was extremely interesting. It shows how limited the effectiveness of GDP is in determining how well and economy is doing. This gap between how the economy is doing and the GDP number is only getting larger with increasing free technology. This reminds me of the derivatives market which continues to blow my mind. In the same way as free technology, derivatives don't go into the GDP, but to a huge extent. I think that it is only a matter of time before an economist comes up with some new measure of evaluating the economy that will better incorporate these two things. Sounds like a Nobel prize idea to me.

Kelsey Richardson

This article is a perfect example of what, as classmates have discussed above, an imperfect indicator G.D.P. is as a measure of economic wealth. Wealth of a society can sometimes be difficult to measure because it is not always easily quantifiable. Trade-offs and opportunity costs are not always monetary. The world is changing and with the technological revolution comes wealth that is technically free. However, society is much better off with the invention of Google, Google and Apple Maps, Skype, etc.
These innovations allow for more time in a day due to their quickness and effectiveness, easily obtainable knowledge and human connection that was previously unheard of, better trade and exchange and so much more. The benefits are endless—providing more to more people. I do agree that this wealth is difficult to measure. But just as we have evolved to create such innovations, it is hard to believe that we will not be able to come up with a measure of quantifying it.
It is been discussed perhaps measuring the time we spend using these applications, which is not a bad idea. The article also stated that there was a concern about the decreased job opportunities that come with technological advancements. Although I agree that the issue is definitely a short term concern, it seems to me that, again, as a society we will overcome this concern and that it has the potential provide immense progressiveness, opportunity and economic growth in the long-run.

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