What is Software Worth?

When is the value of something not its true value? When you’re adding up Gross Domestic Product (GDP) of course. That may sound ridiculous, given that the rise and occasional fall of GDP is the yardstick by which we measure how we’re doin’ as an economy. Isn’t it just the sum total of all the goods and services that we produce?

The short answer is “no”, but the long answer is “yes”. It depends a lot on what you mean by “goods” or “service” or “produce”. If that sounds like a huge amount of fudge for something so important, you may want to just enjoy the chocolate induced coma for a bit. Because some goods, like computers and software, have been falling in price but increasing in potential and quality dramatically for a while. Hardware is “hedonically adjusted” to take care of this, but software isn’t. And that difference might be extremely important.

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Ireland Stands for Equality

A storm had been brewing in the North Atlantic, but as of this weekend the clouds had passed over the Irish Sea. As is common with the nasty storms that come from the roiling sea, the landscape was left forever changed – softened, gentler, and deeply appreciative of the all too rare sun.

The storm that passed over Ireland was the debate on whether to enshrine Marriage Equity in the Constitution, a document that has weathered similar storms in the scant 78 years since it was adopted. This time, however, Ireland was changing not just to catch up with the times but to lead them. It’s worth discussing on both sides of the stormy Atlantic and around the world.

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Devouring the Dreams (and Cash)

Big incentives lure a big employer into town. It’s the dream many rural regions coping with high unemployment and a “brain drain” of their best and brightest long for and have often put up big subsidies to make it happen. Sadly, however, the dream doesn’t last long and many small cities which put their futures on the line saw the big employer move on. We’ve seen this happen for decades, and usually call it “corporate welfare”.

Today is no different, except for one thing – business is moving much faster and the net time from groundbreaking to heartbreaking is only a few years. That was the experience in Dubuque Iowa and Columbia Missouri who spent a total of $84M luring IBM to expand in their towns. Six years on, a struggling IBM has let go of half of their staff in those places.

How effective are these subsidies? And why does this keep happening?

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Betting on Low Interest

When will the Fed raise interest rates? If you ask investors, the answer is “Not this year”. Bets have been placed on bond futures which imply that the Fed Funds Rate will be no higher than a quarter of a percent at the end of the year – hardly any rise at all.

But if you ask the Fed, it’s going to come soon. Why doesn’t anyone believe them?

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Productivity Panic!

Last week the Bureau of Labor Statistics (BLS) announced labor productivity declined for the second straight quarter. It’s a worrisome figure for many reasons, the most important being that this is usually the signal of an upcoming recession. Headlines in the financial world were quick to fret that this is the first back-to-back decline since 2006, a strong signal in advance of the big recession in 2007.

Should we be worried? This is never a good sign, but the situation is very different. There are very good reasons why there is a decline in productivity and they all have the potential for signaling a recession ahead. But it also may be the last gasp of the bizarro economy where good news comes to us in the form of bad news, at least at first.

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Rue, Brittania

The election is coming up, and boy is it getting crazy. Not the US election – there’s still a year and a half of nonsense to endure before that. I’m talking about the UK House of Commons election on 7 May. It will certainly test the limits of their parliamentary system, probably moving it into a more funkadelic system in the process.

I had to, I love that joke. Somebody’s gotta bring da funk.

The problem is the UK is more divided along fundamental lines than it has been in a very long time. Given the large number of parties that are likely to achieve seats (12) the election will almost certainly solve nothing, only marking the start of tortured negotiations that will last for three weeks. They’d like to have a government by the annual Queen’s Speech on 27 May, so there is a deadline, but it will be hard to meet.

It’s worth watching in the US if for no other reason than the turmoil they are experiencing is similar to ours, expressed very differently in a different system.

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