adplus-dvertising
Connect with us

Economy

The world economy’s shortage problem – The Economist

Published

 on


FOR A DECADE after the financial crisis the world economy’s problem was a lack of spending. Worried households paid down their debts, governments imposed austerity and wary firms held back investment, especially in physical capacity, while hiring from a seemingly infinite pool of workers. Now spending has come roaring back, as governments have stimulated the economy and consumers let rip. The surge in demand is so powerful that supply is struggling to keep up. Lorry drivers are getting signing bonuses, an armada of container ships is anchored off California waiting for ports to clear and energy prices are spiralling upwards. As rising inflation spooks investors, the gluts of the 2010s have given way to a shortage economy.

The immediate cause is covid-19. Some $10.4trn of global stimulus has unleashed a furious but lopsided rebound in which consumers are spending more on goods than normal, stretching global supply chains that have been starved of investment. Demand for electronic goods has boomed during the pandemic but a shortage of the microchips inside them has struck industrial production in some exporting economies, such as Taiwan. The spread of the Delta variant has shut down clothing factories in parts of Asia. In the rich world migration is down, stimulus has filled bank accounts and not enough workers fancy shifting from out-of-favour jobs like selling sandwiches in cities to in-demand ones such as warehousing. From Brooklyn to Brisbane, employers are in a mad scramble for extra hands.

Yet the shortage economy is also the product of two deeper forces. First, decarbonisation. The switch from coal to renewable energy has left Europe, and especially Britain, vulnerable to a natural-gas supply panic that at one point this week had sent spot prices up by over 60%. A rising carbon price in the European Union’s emissions-trading scheme has made it hard to switch to other dirty forms of energy. Swathes of China have faced power cuts as some of its provinces scramble to meet strict environmental targets. High prices for shipping and tech components are now triggering increased capital expenditure to expand capacity. But when the world is trying to wean itself off dirty forms of energy, the incentive to make long-lived investments in the fossil-fuel industry is weak.

300x250x1

The second force is protectionism. As our special report explains, trade policy is no longer written with economic efficiency in mind, but in the pursuit of an array of goals, from imposing labour and environmental standards abroad to punishing geopolitical opponents.

This week Joe Biden’s administration confirmed that it would keep Donald Trump’s tariffs on China, which average 19%, promising only that firms could apply for exemptions (good luck battling the federal bureaucracy). Around the world, economic nationalism is contributing to the shortage economy. Britain’s lack of lorry drivers has been exacerbated by Brexit. India has a coal shortage in part because of a misguided attempt to cut imports of fuel. After years of trade tensions, the flow of cross-border investment by companies has fallen by more than half relative to world GDP since 2015.

All this might seem eerily reminiscent of the 1970s, when many places faced petrol-pump queues, double-digit price rises and sluggish growth. But the comparison gets you only so far. Half a century ago politicians got economic policy badly wrong, fighting inflation with futile measures like price controls and Gerald Ford’s “whip inflation now” campaign, which urged people to grow their own vegetables. Today the Federal Reserve is debating how to forecast inflation, but there is a consensus that central banks have the power and the duty to keep it in check.

For now, out-of-control inflation seems unlikely. Energy prices should ease after the winter. In the next year the spread of vaccines and new treatments for covid-19 should reduce disruptions. Consumers may spend more on services. Fiscal stimulus will wind down in 2022: Mr Biden is struggling to get his jumbo spending bills through Congress and Britain plans to raise taxes. The risk of a housing bust in China means that demand could even fall, restoring the sluggish conditions of the 2010s. And an investment boost in some industries will eventually translate into more capacity and higher productivity.

But make no mistake, the deeper forces behind the shortage economy are not going away and politicians could easily end up with dangerously wrong-headed policies. One day, technologies such as hydrogen should help make green power more reliable. But that will not plug shortages right now. As fuel and electricity costs rise, there could be a backlash. If governments do not ensure that there are adequate green alternatives to fossil fuels, they may have to meet shortages by relaxing emissions targets and lurching back to dirtier sources of energy. Governments will therefore have to plan carefully to cope with the higher energy costs and slower growth that will result from eliminating emissions. Pretending that decarbonisation will result in a miraculous economic boom is bound to lead to disappointment.

The shortage economy could also reinforce the appeal of protectionism and state intervention. Many voters blame empty shelves and energy crises on the government. Politicians can escape responsibility by excoriating fickle foreigners and fragile supply chains, and by talking up the false promise of boosting self-reliance. Britain has already bailed out a fertiliser plant to maintain the supply of carbon dioxide, an input for the food industry. The government is trying to claim that labour shortages are good, because they will raise economy-wide wages and productivity. In reality, putting up barriers to migration and trade will, on average, cause both to fall.

The wrong lessons at the wrong time

Disruptions often lead people to question economic orthodoxies. The trauma of the 1970s led to a welcome rejection of big government and crude Keynesianism. The risk now is that strains in the economy lead to a repudiation of decarbonisation and globalisation, with devastating long-term consequences. That is the real threat posed by the shortage economy.

This article appeared in the Leaders section of the print edition under the headline “The shortage economy”

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Economy

The Crypto Bull Run Is Igniting The Web3 Creator Economy – Forbes

Published

 on


Protection and monetization of digital IP has long been one of the most promising areas for Web3 disruption, offering to better protect IP while returning more value to creators. Development to date has focused on leveraging the capabilities of NFTs to introduce digital scarcity while using smart contracts to better enforce the distribution of royalties. Nevertheless, it’s fair to say that no solution has yet proven compelling enough to attract significant adoption from the established creator economy, which was reported by Goldman Sachs
GS
in 2023 to be worth around $250 billion.

The bear market of the last two years has undoubtedly played a part, with Crunchbase stating that funding for Web3 projects “cratered” by 74% year over year in 2023, making it more difficult for projects to advance their roadmaps.

However, over the same period, a new threat to the creator economy has emerged: The growing prevalence of AI-based tools. With a new bull market now underway, has the moment arrived for Web3 creator tools?

300x250x1

A Sea Change For Creators

AI is a double-edged sword that has the potential to both make and break the burgeoning creator economy. Generative AI paves the way for a new wave of creators and modes of creation; however, the human ramifications could be significant. Traditional creators, including the New York Times
NYT
, are already mounting lawsuits over the unfair use of their work to train algorithms. Plus, there’s the impending risk that human creativity could get drowned out by a wave of AI-generated content.

There’s also the question of monetization. Each successive wave of digitalization tends to strip value from creators, leading to concerns that the rise of AI will further erode the ability of creatives to monetize their work.

While many are still debating the scale of the AI threat, creators are seeking any solution to better protect their work and future earning opportunities, while regulators and policy hawks are keen to see more transparency in AI-generated content. The fact that this is an election year in dozens of countries where AI-based content is already playing a headline role also adds a political and democratic imperative to the equation.

Reigniting The Web3 Creator Fire

The new bull market in crypto is now giving fresh impetus to projects and investors who understand the opportunity for Web3-based creator tools but have been waiting for the right time to move into the market. Korea’s largest VC firm, Hashed, recently put the creator economy and protection of intellectual property at the top of its 2024 call for startups, and the theme will be central to this year’s Korean Blockchain Week (KBW). The flagship KBW: Impact conference event is organized by FACTBLOCK and co-hosted by Hashed.

!function(n) if(!window.cnxps) window.cnxps=,window.cnxps.cmd=[]; var t=n.createElement(‘iframe’); t.display=’none’,t.onload=function() var n=t.contentWindow.document,c=n.createElement(‘script’); c.src=’//cd.connatix.com/connatix.playspace.js’,c.setAttribute(‘defer’,’1′),c.setAttribute(‘type’,’text/javascript’),n.body.appendChild(c) ,n.head.appendChild(t) (document);
(function() function createUniqueId() return ‘xxxxxxxx-xxxx-4xxx-yxxx-xxxxxxxxxxxx’.replace(/[xy]/g, function(c) var r = Math.random() * 16 ); const randId = createUniqueId(); document.getElementsByClassName(‘fbs-cnx’)[0].setAttribute(‘id’, randId); document.getElementById(randId).removeAttribute(‘class’); (new Image()).src = ‘https://capi.connatix.com/tr/si?token=206af0af-26b4-4bf2-9503-bed717f112a4’; cnxps.cmd.push(function () cnxps( playerId: ‘206af0af-26b4-4bf2-9503-bed717f112a4’).render(randId); ); )();

I reached out to Simon Kim, CEO and Managing Partner at Hashed, who shared, “We foresee that integrating content into Web3-based creator applications will enhance user retention and drive sustainable growth, fundamentally transforming the overall user experience. The progression of AI technology will be a catalyst in accelerating this trend, further bridging the gap between innovative content creation and blockchain technology. Blockchain is a pivotal force in redefining the landscape of content creation, offering novel pathways for IP management and monetization.”

Even AI Creators Need A Hand

Along with names such as a16z and Paris Hilton’s VC fund, Hashed also participated in last year’s $54 million round for Story Protocol, one of the standout successes in an otherwise flat funding year. Story Protocol is a “programmable IP layer” that aims to simplify the enforcement of rights, allow creative remixing, and streamline the monetization process for both original and subsequent creations while minimizing the operational barriers that often hinder the creative industry.

Perhaps somewhat paradoxically, the project recently made headlines thanks to a partnership that will allow user-generated AI models created on Ritual to be recorded and accredited to their creators with each use.

However, competition to capture the Web3 opportunity for the creator economy is rapidly heating up across the space.

In December, Web3 gaming giant Animoca Brands confirmed the company’s commitment to supporting the creator economy and advancing Web3 over the coming year. Although primarily known for its game portfolio, Animoca also operates an ed-tech platform that enables co-publishing rights for educational content, allowing creators to distribute monetized content directly to students. The CEO highlighted the lack of control and monetization opportunities for creators in the Web2 space.

From Piracy To IP Protection

Many might remember Limewire, perhaps best known as the scourge of noughties musicians. In 2007, the Electronic Frontier Foundation estimated that it was on one in three computers to obtain pirated MP3 files. However, the project recently launched a Web3 creator studio on Polygon
MATIC
, initially focused on imagery but with plans to expand to music and audio files.

Users can access a range of AI tools to manipulate files or create new works. All creations are minted as an NFT
NFT
on the Polygon blockchain, while royalties are paid out automatically based on the use or sale of the content. Ultimately, Limewire could go from being a facilitator of pirated music to a monetization tool for musicians: Quite the redemption arc, particularly so in this new era when the Web2 streaming model has evolved to hurt musicians’ revenues.

However, some are taking the royalty payments a layer deeper to mitigate future protocol risk. Projects including Enjin and Rarible have embedded royalty payment functionality into the blockchain programming itself, meaning that its application-agnostic and royalty payments should continue uninterrupted for as long as the blockchain is in operation.

As these developments are still in their infancy, it will be intriguing to see how they are received by a creator economy that’s grappling with the full impact of AI tools. However, the combined factors of a new bull market, AI’s opportunities and challenges, and the chance to better monetize and protect IP amid declining revenues on Web2 platforms mean that the timing for Web3 creator tools to make a strategic market entry could not be better.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Economy

Britain's economy went into recession last year, official figures confirm – The Globe and Mail

Published

 on


Open this photo in gallery:

People walk over London Bridge, in London, on Oct. 25, 2023.SUSANNAH IRELAND/Reuters

Britain’s economy entered a shallow recession last year, official figures confirmed on Thursday, leaving Prime Minister Rishi Sunak with a challenge to reassure voters that the economy is safe with him before an election expected later this year.

Gross domestic product shrank by 0.1 per cent in the third quarter and by 0.3 per cent in the fourth, unchanged from preliminary estimates, the Office for National Statistics (ONS) said on Thursday.

The figures will be disappointing for Mr. Sunak, who has been accused by the opposition Labour Party – far ahead in opinion polls – of overseeing “Rishi’s recession.”

300x250x1

“The weak starting point for GDP this year means calendar-year growth in 2024 is likely to be limited to less than 1 per cent,” said Martin Beck, chief economic adviser at EY ITEM Club.

“However, an acceleration in momentum this year remains on the cards.”

Britain’s economy has shown signs of starting 2024 on a stronger footing, with monthly GDP growth of 0.2 per cent in January, and unofficial surveys suggesting growth continued in February and March.

Tax cuts announced by finance minister Jeremy Hunt and expectations of interest-rate cuts are likely to help the economy in 2024.

However, Britain remains one of the slowest countries to recover from the effects of the COVID-19 pandemic. At the end of last year, its economy was just 1 per cent bigger than in late 2019, with only Germany faring worse among Group of Seven nations.

The economy grew just 0.1 per cent in all of 2023, its weakest performance since 2009, excluding the peak-pandemic year of 2020.

GDP per person, which has not grown since early 2022, fell by 0.6 per cent in the fourth quarter and 0.7 per cent across 2023.

Sterling was little changed against the dollar and the euro after the data release.

The Bank of England (BOE) has said inflation is moving toward the point where it can start cutting rates. It expects the economy to grow by just 0.25 per cent this year, although official budget forecasters expect a 0.8-per-cent expansion.

BOE policy maker Jonathan Haskel said in an interview reported in Thursday’s Financial Times that rate cuts were “a long way off,” despite dropping his advocacy of a rise at last week’s meeting.

Thursday’s figures from the ONS also showed 0.7 per cent growth in households’ real disposable income, flat in the previous quarter.

Thomas Pugh, an economist at consulting firm RSM, said the increase could prompt consumers to increase their spending and support the economy.

“Consumer confidence has been improving gradually over the last year … as the impact of rising real wages filters through into people’s pockets, even though consumers remain cautious overall,” Mr. Pugh said.

Britain’s current account deficit totalled £21.18-billion ($36.21-billion) in the fourth quarter, slightly narrower than a forecast of £21.4-billion ($36.6-billion) shortfall in a Reuters poll of economists, and equivalent to 3.1 per cent of GDP, up from 2.7 per cent in the third quarter.

The underlying current account deficit, which strips out volatile trade in precious metals, expanded to 3.9 per cent of GDP.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Economy

How will a shrinking population affect the global economy? – Al Jazeera English

Published

 on


Falling fertility rates could bring about a transformational demographic shift over the next 25 years.

It has been described as a demographic catastrophe.

The Lancet medical journal warns that a majority of countries do not have a high enough fertility rate to sustain their population size by the end of the century.

300x250x1

The rate of the decline is uneven, with some developing nations seeing a baby boom.

The shift could have far-reaching social and economic impacts.

Enormous population growth since the industrial revolution has put enormous pressure on the planet’s limited resources.

So, how does the drop in births affect the economy?

And regulators in the United States and the European Union crack down on tech monopolies.

The gender gap in tech narrows.

Adblock test (Why?)

728x90x4

Source link

Continue Reading

Trending