Best columns: Business
A new age of low growth
The Washington Post
It’s been eight years since the recession ended, and unemployment is low, the stock market is booming, and consumer confidence is surging. “Yet the economy doesn’t feel as good as it looks,” said Robert Samuelson. We can’t seem to shake an underlying sense of anxiety. The explanation, according to a new study by a top Morgan Stanley analyst, is that we are entering “a new era of low economic growth.” The expectations we have, both here and abroad, for regular upticks in GDP “are no longer realistic, because the global economy has changed in ways that reduce growth.” Between World War II and 2008, the U.S. economy usually grew by 3 percent or more a year, spurred by population growth, easy credit, and the expansion of global trade. But those forces are decelerating sharply; families are having fewer children, banks aren’t lending as much, and cross-border trade is slowing. That means 1.5 percent growth could be the new normal, both for the U.S. and other developed nations. The consequences will be political as much as economic. For decades, advanced democracies have relied on steady growth to raise living standards while paying for a social safety net to protect people from “capitalism’s worst excesses.” At best, this model “desperately needs repair.” At worst, it may already be broken.
How Netflix killed piracy
“A hacker who unsuccessfully tried to hold Netflix for ransom has achieved an unexpected result,” said Leonid Bershidsky: He’s shown that subscriptionbased business models are making online piracy “pointless.” Someone named “TheDarkOverlord” recently stole most of the new season of Netflix’s Orange Is the New Black and demanded the streaming service pay a ransom to keep it off the web. When Netflix refused to pay, the episodes were posted on the website Pirate Bay, where anyone with a file-sharing program could download them for free. But “it’s safe to say” Netflix won’t regret its decision. Peer-to-peer file-sharing traffic, which is often used to share pirated content, now represents only 1.7 percent of peak internet traffic, down from 60 percent in 2003. By comparison, Netflix accounts for 35 percent. “Consumers are motivated by convenience,” and the ease of a Netflix subscription now trumps using an awkward, legally ambiguous technology that doesn’t allow for instant, high-quality streaming, especially if the offerings are limited. Incidents of software and music piracy are also declining, thanks to affordable subscription services that have made downloads simple and risk-free. Film studios, however, are still vulnerable, if only because they insist on protecting their theater revenues by not releasing films online concurrently. Perhaps they’ll soon catch on, which would make the theft of a blockbuster movie “nearly pointless, as it has been in TheDarkOverlord’s case.”