By Denny Gulino
WASHINGTON (MaceNews) – What is more basic to an understanding of the economy’s current state than the government’s quarterly report on gross domestic product? A lot, it turns out.
That is the premise of a two-day forum being held by the International Monetary Fund which has drawn economic data experts from around the world. The presentations Monday include those who see the statistical ground moving under their feet – how GDP price measures are missing so many “digital goods” that greatly increase welfare, with a price at zero.
Also speaking are those for whom the massive measurement edifice represented by GDP is a monument to human statistical achievement, perhaps to be embellished by some tweaks, but unchallenged as the best measure there is – and perhaps could be – of human progress.
Around the edges of the forum, however, are the tentacles of change, creeping through the cracks that hint at forces at work that are quietly moving the switches and dials of statistical reality. They suggest the massive GDP report is becoming a numerical fossil, a history lesson of declining relevance.
How could that happen to a report now so familiar to reporters who inhabit the data “lockups,” to the analysts who look forward to those quarterly reports and their many revisions, and to the traders and their machines that can move mountains of money by reflex on GDP day?
First those “digital goods” intangibles. Example: “Open source” software, written by unpaid enthusiasts, not employees. Yet their work product can come to be worth billions. Make that tens of billions, according to a National Science Foundation presentation. The software is used by firms to generate more billions in profits. Those products are used by millions, sometimes for free.
Or consider those whose “digital goods” involve “intertemporal transfers,” in which extra hours are created by the fact that we can both binge watch TV at the same time we’re ordering groceries to be delivered.
Surveys show, in fact, that so many hours are devoted to digital activity of one sort or another, that there must be major overlaps between work and home “production.” The implication, it was suggested by another presenter, is that what appear in GDP reports to be slow growing, moderately productive economies may actually be growing too fast to be sustainable.
Outside the IMF’s Conference Room No. 1, in its relatively new “Headquarters 2” building, a vast expanse lit by the glass roof many stories above, little tables dot the floor. On each, for the use of anyone, are two or three tablets firmly anchored. The Internet is routinely available, and incidentally, all the research papers presented at the conference (at www.imf.org/en/News/Seminars/Conferences/2018/04/06/6th-statistics-forum).
Seemingly benign, the little tablets wait like patient sentinels, ready to march into the conference room when the signal comes, to usurp the jobs of all the professors inside. That was the intimation of one of the presenters who dryly explained what may someday soon make the GDP report obsolete.
He was Renda Achyunda, a young statistician from Statistics Indonesia. He is developing a much broader index to measure not only the type of price and income data in the national accounts, but so much more.
As climate change robs welfare and potential production even as “digital goods” enhance health care, and factories add to income while their environmental costs subtract from other aspects of human welfare, this index collects data points by the thousands from the far reaches of Indonesia to draw a picture of net progress and net degradation. Among the many data sources it depends on is one that is current daily, not months old like the ordinary GDP.
The index uses screen scraping software and complex algorithms to work on the immense amount of data available in, yes, Google Trends. On the surface Trends logs the search terms people are using. Deeper down, the data show the use by region of health care, the environmental balance sheets, the real up-to-the-minute spooling of reality.
How current is government data? How deeply does the data reflect how people are using “digital goods” to enhance their lives, trade wage hours for personally productive hours?
Whether it’s a GE jet engine, sending data from 5,000 sensors, to artificial intelligence performance analysis, or an old house reporting through its sensors to an insurance company that notes your teenage son is vaping in his bedroom, the value equation is being constantly altered by the digital economy.
Big data generated by every facet of modern life is creating a lot of impatience in industry and the markets, that can’t wait for the GDP report’s already outdated information.
Yet this story must end at this point, as the digital economy answers to one of its stubbornly inflexible imperatives: battery capacity.