- Superstition ain't the way, about China's data: about the apparent unreliability of certain figures and the search for more reliable indicators. Some quotes: "Provincial GDP figures do not add up to the national total. Quarterly and annual growth do not always mesh... Growth has not dipped below 6.7%, even as prices slipped into deflation in late 2015... As far back as 2000, scholars turned to indicators like electricity consumption as a statistical refuge from what one called the "wind of falsification and embellishment" rustling the official data. But electricity is a less reliable guide as an economy evolves away from power-hungry industry toward low-wattage services." The article discusses the combination of rail freight, electricity and bank lending to gauge the national index, an index called the "Li Keqiang index" in honor of the China's premier who suggested it. The Federal Reserve Bank of San Francisco has improved the index by fitting it to GDP figures from 2000-2009 but, while its predictive power remained strong until 2012, it decreased afterward, perhaps because of the boom in financial services that recently boosted China's GDP. The article also describes other attempts at constructing more insightful indices with more data. Goldman Sachs has even combined 89 products. An issue remains to convert those output figures into monetary data. Official GDP figures, though, may be improving thanks to technology advances.
- Called to account: The disturbing prosecution of Greece's chief statistician. This is a must-read, about the high price Greece's chief statistician, Andreas Georgiou, who also has 21 years experience at the IMF, is paying for trying to keep the numbers honest. His crime has been to estimate that the government's budget deficit in 2009 was 15.4% of GDP, which has been confirmed by the European Commission as accurate. His detractors blame him for the panic that led to Greece's bail-out in 2010 and for harsh conditions imposed by Greece's creditors. The Economist writes: "Courts have rejected these charges three times. But on August 1st the Greek supreme court reopened the case." Georgiou is also facing separate charges for "refusing to allow ELSTAT's board to use a vote to decide on the level of the deficit. Statistics are not supposed to work by ballot."
- Fashion forward, about Zalando, which sells shoes and clothes online in Europe. (This business model is old-news in the United States but not in Europe.) Part of its success can be attributed to the close attention it pays on data. It also targets higher-value, brand-conscious shoppers, while Amazon targets more price-conscious customers, so hopes to retain the lead in the market even as Amazon and Alibaba builds their offerings in Europe.
- Leaving for the city: a Schumpeter's column about how lots of prominent American companies are moving downtown. The main example is that of General Electric, who is moving from Fairfield, CT to the Boston waterfront in the new innovation district and apparently won't have a car park to encourage people to take public transportation. And since I saw the innovation district at length when I was back at MIT for my sabbatical two years ago, I can only say this is the sort of ideas that look good on paper and will distress employees when they see what the Silver Line is like. On the other hand, this might have the unexpected side effect of encouraging employees to get home in time for dinner and spend time with their families since they're not going to want to take the Silver Line late. Taking public transportation to work sounds appealing when you're in your 20s and live in an apartment in the city a few bus stops away from your workplace. If you want your kids to go to a top school district like Brookline or Newton, the commute is going to seem less appealing. And I mention this about Boston but it is true of other cities as well. My guess is that at some point the tax incentives are going to lose their luster. The Schumpeter columnist recommends reading "The Big Sort" by Bill Bishop and explains: "It argues that Americans are increasingly clustering in distinct areas on the basis of their jobs and social values. The headquarters revolution is yet another iteration of the sorting process that the book describes, as companies allocate elite jobs to the cities and routine jobs to the provinces." But Fairfield, CT was never a backwater. Additionally, the part of the column that distinguishes between mass headquarters in sunbelt cities and executive-headquarters in elite cities was quite interesting. For a good view of the future, read the part of the column about San Francisco.
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