A discussion of competition and “superstar” firms at an exclusive economic policy conference in Jackson Hole, Wyoming, threw up a spirited defense of global trade, while central bankers were also warned of the low level of trust they have among the public.
“We should think twice about undermining the discipline of openness” and the competition that is created by global trade, Bank for International Settlements general manager Agustin Carstens said during Saturday’s session of the annual meeting hosted by the Federal Reserve Bank of Kansas City in Grand Teton National Park.
Delegates debated evidence that economic concentration — best illustrated by companies like Amazon.com Inc, Alphabet Inc’s Google, and Apple Inc — is eroding competition and hurting workers, consumers and overall economic growth.
Part of the fallout of superstar firms is the resentment of economic elites among workers not employed by dynamic, growing companies, said Raghuram Rajan, a University of Chicago professor and former governor of the Reserve Bank of India.
Central bankers are the “quintessential elite,” he said. “They talk about global effects and don’t talk about local mainstream effects. They’re over-educated and talk in a language no one else can understand.”
That remoteness, combined with their role in the rescue of big banks in the global financial crisis, has led to a “tremendous loss of trust” in central bankers, he said.
There is also the so-called “Amazon effect” that might be relevant for central bankers, according to a paper presented by Harvard Business School economist Alberto Cavallo.
Cavallo’s main finding was that competition from Amazon has led to a greater frequency of price changes at more traditional retailers like Walmart Inc, and also to more uniformity in pricing of the same items across different locations.
The shift has led to a greater influence of movements in the US dollar exchange rate and gas prices on retail prices, he found.
“The implication is that retail prices are becoming less ‘insulated’ from these common nationwide shocks,” Cavallo wrote. “Fuel prices, exchange-rate fluctuations, or any other force affecting costs that may enter the pricing algorithms used by these firms are more likely to have a faster and larger impact on retail prices than in the past.”
The Cavallo study also showed that from 2008 to last year, as online purchases accounted for an ever-growing share of total retail sales, the average duration of prices of goods sold at large US retailers like Walmart fell from about 6.5 months to about 3.7 months.
The implications have subtle significance for monetary policy because so-called “sticky prices” — the notion that sellers are not able to change prices right away in response to changes in supply and demand — is precisely what gives interest rates power in mainstream models to have any effect on the economy at all.
In those models, if prices adjust instantaneously in response to shocks, then there is no role for central bankers to guide supply and demand back into equilibrium.
“Labor costs, limited information and even ‘decision costs’ [related to inattention and the limited capacity to process data] will tend to disappear as more retailers use algorithms to make pricing decisions,” Cavallo wrote.
Among the rows of vibrators, rubber torsos and leather harnesses at a Chinese sex toys exhibition in Shanghai this weekend, the beginnings of an artificial intelligence (AI)-driven shift in the industry quietly pulsed. China manufactures about 70 percent of the world’s sex toys, most of it the “hardware” on display at the fair — whether that be technicolor tentacled dildos or hyper-realistic personalized silicone dolls. Yet smart toys have been rising in popularity for some time. Many major European and US brands already offer tech-enhanced products that can enable long-distance love, monitor well-being and even bring people one step closer to
Malaysia’s leader yesterday announced plans to build a massive semiconductor design park, aiming to boost the Southeast Asian nation’s role in the global chip industry. A prominent player in the semiconductor industry for decades, Malaysia accounts for an estimated 13 percent of global back-end manufacturing, according to German tech giant Bosch. Now it wants to go beyond production and emerge as a chip design powerhouse too, Malaysian Prime Minister Anwar Ibrahim said. “I am pleased to announce the largest IC (integrated circuit) Design Park in Southeast Asia, that will house world-class anchor tenants and collaborate with global companies such as Arm [Holdings PLC],”
Sales in the retail, and food and beverage sectors last month continued to rise, increasing 0.7 percent and 13.6 percent respectively from a year earlier, setting record highs for the month of March, the Ministry of Economic Affairs said yesterday. Sales in the wholesale sector also grew last month by 4.6 annually, mainly due to the business opportunities for emerging applications related to artificial intelligence (AI) and high-performance computing technologies, the ministry said in a report. The ministry forecast that retail, and food and beverage sales this month would retain their growth momentum as the former would benefit from Tomb Sweeping Day
Thousands of parents in Singapore are furious after a Cordlife Group Ltd (康盛人生集團), a major operator of cord blood banks in Asia, irreparably damaged their children’s samples through improper handling, with some now pursuing legal action. The ongoing case, one of the worst to hit the largely untested industry, has renewed concerns over companies marketing themselves to anxious parents with mostly unproven assurances. This has implications across the region, given Cordlife’s operations in Hong Kong, Macau, Indonesia, the Philippines and India. The parents paid for years to have their infants’ cord blood stored, with the understanding that the stem cells they contained