The NYT (here) talks about items that traditional growth measures like GDP omit or mis-state. Created during the 1930’s, these tools are constantly being revamped to reflect changes in consumer tastes, preferences, and the corresponding weights of components in the “typical” basket of goods and services. Still, what is counted is stuff that is traditionally produced (read: manufactured) and consumed, stuff that has a price. Despite hedonic adjustments for innovation and the consequent quality improvements, much does not get counted. Martin Feldstein points to how increasingly prescribed statins have significantly lowered the incidence of heart disease, but the benefits of that well-being does not get captured anywhere. Furthermore, in this digital age it is not these goods, but many services that we consume-most must have a value but do not have an obvious price. Free software updates that we periodically download, streaming services, wikipedia instead of a trek to the library are some examples. Ad revenue is the ubiquitous substitute for a number to capture the economic value of such services, but how good a number is it really? Have to wonder if global growth is being understated.
Meanwhile, the FT (here), talks about demonetization in India offering opportunities for insurers. Not just insurance, but the abililty to market various financial products was somewhat sneakily given to the newly licensed payment banks which offer mobile banking services to the cashless economy. Of course, “free’ insurance upto a max is bundled with their offerings. Potentially a $60 billion-plus market, says the FT and I think of Fairfax Holdings cashing OUT part of their ICICI Lombard stake for a cool $ 1 billion couple of weeks ago (here). Nice.
And from Al Jazeera (here), admittedly a tiny, symbolic step towards reducing global dollar hegemony as the BRICs have been wanting to do for some time.