What is the best way for businesses to use data in a way that feels ethical to consumers and does not spark a regulatory backlash? This question is sparking endless angst in today’s C-suites. All manner of policy responses have been suggested, but one simple and important place to start is to change the way we talk about it. Borrowing an idea from cultural anthropology and describing this exchange as “barter” will clarify the minds of regulators and investors to focus on the scale and nature of long-concealed exchanges that now lie at the heart of the tech world, and how to create a more acceptable framework that protects consumers.
The use of consumer data today is expanding exponentially — as is public and political criticism of these practices. Just think of the political scandals that exploded a couple of years ago around Cambridge Analytica. Or regulators around the world examining whether social media platforms such as Facebook have abused their monopoly powers.
The new bipartisan bills calling for tighter tech regulation that are now circulating in the U.S. Congress — and the appointment of Lina Khan to head the Federal Trade Commission — will only inflame this debate.
So, what is the best way for businesses to use data in a way that feels ethical to consumers and does not spark a regulatory backlash? This question is sparking endless angst in today’s C-suites. All manner of policy responses have been suggested: breaking up tech giants, redefining monopoly controls, introducing new privacy laws, and letting consumers “own” their data to name a few.
One simple and important place to start is to change the way we talk about it. Policy makers, economists, techies, lawyers, business leaders, and consumers should borrow an idea from cultural anthropology and consider the concept of “barter.” Doing this will clarify the minds of regulators and investors to focus on the scale and nature of long-concealed exchanges that now lie at the heart of the tech world, and how to create a more acceptable framework that protects consumers.
At first, this might sound odd. After all, anthropology is one of the least-known social sciences — it’s probably most famously associated with Indiana Jones. And the word “barter” conjures up images of swapping meat for berries — an image that seems far removed from the modern C-suite, let alone Silicon Valley.
Economists tend to assume that barter is a prehistoric practice that disappears whenever societies invent money — that, at least, was the scornful view of Adam Smith, the 18th century intellectual, and it has shaped economic thinking today. Most Western executives have absorbed a cultural assumption that because “money makes the world go round” — to cite the cliché — the most important things in an economy are measured in monetary units and/or organized with money. Transactions that happen without money (i.e. those which are “free”) are thus downplayed and/or ignored.
Anthropologists, however, have a much broader vision of how the economy works. They look at how exchanges bind societies together in a broad sense and know that money-based exchanges are only one of the flows that bind us together. Systems of social credit, gifts, and barter matter too, even if they are rarely discussed in public and cannot be easily factored into an economic model.
Looking at what is hiding in plain sight — i.e. non-monetary flows — can help frame the modern digital economy. After all, what drives the business strategy of companies such as Facebook, Google, and numerous others, is partly an exchange that does not entail money: Consumer data is being collected in exchange for the provision of internet services, just as berries might be swapped for meat.
I would argue that “barter” is the best word to describe this exchange. And if this phrase was inserted into the language of the C-suite and policy making today, with a broader anthropological perspective, this could deliver several benefits. Most notably:
1. It would make everyone aware of both sides of the transaction.
The idea that the modern tech economy depends on two-way — not one-way — flows is often lost in the public debate about data usage. Consumers are not just giving up data (which they sometimes hate), they’re also getting services in return (which they almost always like). Since they don’t want to lose the latter, they continue to deal with social media sites, even amid political outcry.
2. It illuminates the point that consumers don’t seem to want to pay for these transactions with money.
In recent years, tech companies, have offered internet users ways of “selling” their data for money, and paying for internet tools (with money). For example, in 2019, Facebook, created a “Study” app that paid users for access to their data for market research purposes. But consumer interest and uptake has been low. Maybe that reflects inertia. But I suspect it reflects the fact that digitization has made barter so efficient that Adam Smith’s assumption about the evolution of societies is wrong.
3. It draws attention to scale and significance of these transactions for the wider economy.
At present, these flows tend to be excluded from economic measurements (such as gross domestic product data) and investors’ models of company valuations. This is a big mistake: This barter trade needs to be acknowledged to get an accurate picture of how the economy really works, and what companies are worth.
4. It could help policy makers understand today’s corporate monopoly power.
In recent decades, American regulators tended to assume that the best way to tell whether a corporate monopoly exists (or not) is whether consumer prices were high. Khan, the new head of the FTC, is among those who have argued that this approach is outdated, since companies are using monopoly powers even when prices are low. Talking about “barter” might help frame this more effectively.
5. It would make it easier to build a data system that feels more ethical to consumers.
The current system is provoking endless controversy. This isn’t necessarily because consumers want to abolish the use of barter; they probably do not, given how efficient it is. What is needed, however, is an effort to change the terms of the barter trade to give consumers more power. How? By forcing companies to provide far more transparency in these trades and letting consumers control the duration of a trade (i.e. how long data is retained). Most important of all, consumers should be free to cut barter deals with different providers to create competition — which means that regulators should put the onus on tech companies to provide easy data portability, just as financial regulators put the onus on banks to make it easy for consumers to change bank accounts.
By acknowledging the word “barter” — and talking about what is hidden in plain sight — the private sector could and should reshape the current debate itself, embracing a broader vision of how our data economy works. Instead of talking about this in terms of a negative (i.e. “free” or the absence of money), we need a positive, active term.
Or, if you prefer, ponder another cultural wrinkle that economists and techies also often ignore: the original linguistic root of the word “data,” which comes from the Latin word dare, meaning “to give.” This might seem surprising in our modern numbers-obsessed world. Or maybe not: that original root meaning is a small reminder of the exchanges that bind us together, with far more than just money. We ignore this at our peril today. Think of that when you next toss that “data” word around.
China's economy didn't bounce back in the second quarter, China Beige Book survey finds – CNBC
BEIJING — Chinese businesses ranging from services to manufacturing reported a slowdown in the second quarter from the first, reflecting the prolonged impact of Covid controls.
That’s according to the U.S.-based China Beige Book, which claims to have conducted more than 4,300 interviews in China in late April and the month ended June 15.
“While most high-profile lockdowns were relaxed in May, June data do not show the powerhouse bounce-back most expected,” according to a report released Tuesday. The analysis found few signs that government stimulus was having much of an effect yet.
Shanghai, China’s largest city by gross domestic product, was locked down in April and May. Beijing and other parts of the country also imposed some level of Covid controls to contain mainland China’s worst outbreak of the virus since the pandemic’s initial shock in early 2020.
In late May, Chinese Premier Li Keqiang held an unprecedentedly massive videoconference in which he called on officials to “work hard” — for growth in the second quarter and a drop in unemployment.
Between the first and second quarters, hiring declined across all manufacturing sectors except for food and beverage processing, according to the China Beige Book report.
The employment situation likely won’t start to improve until China stimulates its economy more in the fall, China Beige Book Managing Director Shehzad H. Qazi said Wednesday on CNBC’s “Squawk Box Asia.”
So far, there’s been little sign that stimulus has kicked in, especially in infrastructure, said Qazi who is based in New York.
“Transportation, construction companies aren’t telling you they’re getting new products,” he said. “They’re telling you they’ve slowed investment, their new projects have actually slowed.”
Inventories surge, orders drop
Unsold goods piled up, except in autos. Orders for domestic consumption and overseas export mostly fell in the second quarter from the first. Orders for textiles and chemicals processing were among the hardest-hit.
The only standout domestically was IT and consumer electronics, which saw orders rise during that time. Orders for export grew in three of seven manufacturing categories: electronics, automotive and food and beverage processing.
“Weak domestic orders and expanding inventories indicate the presumed second-half improvement will be unpleasantly modest,” the report said.
The authors noted the services sector saw the greatest reversal. After accelerating in growth in the first quarter, services businesses saw revenue, sales volumes, capex and profits drop in the second quarter.
Across China, only the property sector and the manufacturing hub of Guangdong saw any year-on-year improvement, the China Beige Book said.
Official second-quarter gross domestic product figures are due out July 15. GDP grew by 4.8% in the first quarter from a year ago.
U.S. Economy Shrank Worse-Than-Expected 1.6% Last Quarter As Recession Fears Grow – Forbes
The economy last quarter posted its worst annualized showing since the pandemic-induced recession in 2020, the government said in an updated release Wednesday, blaming an unexpected decline in economic activity on the omicron variant of Covid-19 and decreased government assistance.
The U.S. economy shrank at an annual rate of 1.6% in the first quarter of 2022—the first decline since the second quarter of 2020, the Bureau of Economic Analysis reported Wednesday in a worse-than-expected update to last month’s figure, which showed a decline of 1.5%.
The update primarily reflected softer-than-expected spending on business inventories and residential investments, which was only partially offset by an uptick in consumer spending, the government said.
In the first quarter, a record wave of Covid-19 cases spurred by the omicron variant resulted in continued restrictions and business disruptions, while government assistance programs including forgivable loans to businesses and social benefits to households expired or tapered off—further preventing growth, according to the release.
Broad declines in exports, government spending and business inventories, along with increased imports, spurred the overall decline, the government said.
The overall drop stands in stark contrast to the economy’s better-than-expected growth of 6.9% in the fourth quarter, the fastest rate in nearly 40 years, thanks in part to a jump in exports and increased inventory investments by car dealers.
What To Watch For
Economists are widely calling for a return to growth this quarter, thereby avoiding the two consecutive quarters of negative GDP growth that constitute a technical recession, but a growing wave of experts have warned odds of a recession next year are growing. In a research note on Monday, analysts at S&P Global Ratings said aggressive Federal Reserve policy to combat ongoing price spikes will usher in low economic growth this year and potentially risk a recession, warning: “What’s around the bend next year is the bigger worry.” S&P put the odds of a recession in 2023 at 40%—more than the 35% odds Morgan Stanley issued last week.
Though the economy quickly bounced back after the Covid recession in 2020, the Fed’s withdrawal of pandemic stimulus measures, Russia’s invasion of Ukraine and lingering Covid restrictions have heightened market uncertainty this year. Last quarter, the stock market posted its worst showing since the market crash in early 2020, with the S&P falling 5% and the tech-heavy Nasdaq 9%. “Recession risks are high—uncomfortably high—and rising,” Mark Zandi, chief economist at Moody’s Analytics, said in a recent note. “For the economy to navigate through without suffering a downturn, we need some very deft policymaking from the Fed and a bit of luck.”
In an email after April’s initial report, which estimated a 1.4% decline despite expectations for 1% growth, Bankrate analyst Mark Hamrick said the lackluster performance serves as a reminder of the “volatile and complicated times in which we live,” but that the contraction is “less worrisome” because key drivers of economic growth, such as consumer and business spending, have been holding up despite the widening trade deficit and big swings in business inventories.
Sudan’s economy dominated by military interests: Report – Al Jazeera English
C4ADS report says crackdown on patronage networks was a contributing factor to last October’s coup.
The Sudanese military and security forces have a sprawling monopoly over the country’s economy, a system that must be tackled to restore the country’s transition to democracy, a report has concluded.
The report, by the Center for Advanced Defense Studies (C4ADS), was published on Wednesday alongside a database that identifies 408 entities controlled by security elites, including agricultural conglomerates, banks, and medical import companies.
Under Sudan’s former civilian-military transitional government, which was tasked with guiding Sudan’s transition towards democracy, an anti-corruption committee was formed to confiscate assets from figures who made a fortune under the former President Omar al-Bashir.
Observers have argued that the confiscations struck at the core of the military’s patronage networks and played a significant role in compelling senior officers to topple the civilian administration in a coup last October, which has been followed by months of protests.
But C4ADS said that countries that seek to support democracy in Sudan have the tools to weaken the country’s “deep state”.
“Governments, non-governmental organizations (NGOs), and private companies have a role in dismantling Sudan’s deep state through economic sanctions, de-risked aid, and increased due diligence around private investments,” the authors of the report said.
The report zoomed in on two major banks, Omdurman National Bank (ONB) and Khaleej Bank, which the military and security forces use to access global financial networks, respectively.
The military – through a web of front charities – owned 86 percent of the shares in the former, according to the report.
Khaleej Bank, meanwhile, was controlled mainly by joint ventures that belong to the United Arab Emirates and the Rapid Support Forces (RSF) – two players that have strong political and economic relations.
The latter is a paramilitary force that evolved out of tribal militias that rebel forces called the Janjaweed, which committed massacres in the western province of Darfur.
The report estimated that the family of RSF leader Mohamad Hamdan Dagalo – better known as Hemeti – controls 28.35 percent of the shares in Khaleej Bank.
The report also reviewed Zadna International Company for Investment Ltd, a majority-army-owned agricultural conglomerate, on whose board of directors Hemeti’s brother, Abdel Rahim Dagalo, sits.
The company has run numerous irrigation schemes and leased out plots of land to private investors, according to Suleiman Baldo, an expert on the predatory economy in Sudan and the founding director of the Sudan Transparency and Policy Tracker.
“The story about Zadna is that it was a public company that was simply taken over by the military, which is monopolising its revenue and not giving the ministry of finance access to any of it. That’s the problem with Zadna,” Baldo said.
The spokesperson for Sudan’s military, Nabil Abdullah, denied accusations that the army has a monopoly over civilian sectors in the economy, and said that Sudan’s former civilian administration was unwilling to assume partial control of military-owned companies.
“[The army] has no economic control [of the country]. This is a lie and misleading,” Abdullah told Al Jazeera.
The report by C4ADS said otherwise. The nonprofit followed policy experts, rights groups, and United States officials in calling for targeted sanctions on enterprises owned by the military and the RSF.
Baldo acknowledged that such a move could unintentionally hurt everyday civilians who are already struggling to survive after billions of dollars worth of development assistance and debt relief were halted in response to the coup.
He added that sanctions may not be necessary since the US has already released a business advisory that warns of reputational risks to Western companies that try to partner with military enterprises in Sudan. The findings published by C4ADS could further deter foreign companies and institutions from conducting business in the country.
“Even without the sanctions, the deterrence effect that sanctions cause already exists,” Baldo said.
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