Free, money and crises

Appearing in In The Black magazine, July 2021

The Flip Side of Free: Understanding the Economics of the Internet
By Michael Kenda
MIT Press, $50, 249 pages

One of the traditional principles of economics is that there is no such thing as ‘free’. Kende, an academic specialising in Internet governance and regulation, asks a simple question: in the Digital Age, does that principle still hold?

Maybe, he answers, but it needs to be re-worked. The ‘free’ wi-fi in Starbucks, for example, is free for customers but the company pays a fee for it, which is presumably passed on or absorbed. But the real cost might be elsewhere. The sign-on contract (which virtually no-one reads) gives Starbucks the right to collect and use customers’ data however they choose. This is, Kende discovers, a common arrangement.

Kende sees data collection and its connection to targeted advertising as a key driver of the Internet’s evolution. Looking broadly, he also examines how open-source protocols have shaped the technology, and where it might be going. He is a firm believer in the benefits of the Internet but accepts that there are the downsides. Kende puts forward some options for reform, including legal mechanisms to stop uncompetitive behaviour from the tech giants and to provide privacy protection. Easier said than done, but nevertheless Flip Side is a fascinating account of how we got to here.

Preparing for the Next Financial Crisis
By Olivier de Bandt, Francoise Drumetz and Christian Pfister
Taylor & Francis, $94, 386 pages

Ever since the Global Financial Crisis, policymakers have sought to strengthen the finance sector, particularly the major banks. This book, aimed mainly at advanced students and researchers but likely to be of interest to many in the broad finance community, reviews the work that has been done. It finds that results have been patchy at best, with much of the good effort on debt reduction being overturned by the COVID-19 crisis. The US has done fairly well in improving the underlying health of its financial sector but even before the pandemic Europe remained in a shaky position. The sovereign debt crisis of the eurozone has been pushed into the background in the past few years but it has not gone away.

However, there has been some important progress on international agencies and standards, and most governments have developed more tools for macroprudential management. This is good news for the long-term outlook but the concluding section of the book discusses a number of emerging challenges, including cyber-risks, crypto-assets and climate change. All of these are daunting but the book’s authors believe that there are now avenues for global co-operation and information sharing that can provide a foundation for action.

Your Money, Your Investments: Preserving and Growing Your Wealth in Good and Tough Times (2nd ed.)
By Ben Fok
Marshall Cavendish, $26, 240 pages

Dr Fok is a very experienced financial adviser based in Singapore, and also a prolific writer of articles and columns. This book collects his articles into a coherent package, with an emphasis on the volatile financial environment of the past few years. He notes that in Singapore, as in many other countries, a significant part of the population is preparing to move into retirement, and he discusses a range of suitable strategies to ensure a comfortable future. He realises that many people like to do their own investing but suggests that a financial planner can provide useful guidance regarding retirement, including drawing up timelines and assessing the level of security needed.

The stock market can be a good way to generate wealth but he underlines the need to do careful research about sectors and companies. Leave derivatives and other complex products to the professionals, he advises, and look for long-term growth. When the market dips – as it inevitably, occasionally will – do not panic; hold your position and ride it out. A broad-based portfolio, with some investments in other areas, is a good hedge against downturns. The overall message is: know what you want, plan carefully, and stick to your strategy.

Downloadable Resources

Temp job advice

This interesting blog article on the Hayes Recruitment site provides advice on being interviewed for a temporary assignment or contract role, and how the process differs from an interview for a permanent position. The applicant needs to be able to show that they can step into the role immediately, often with minimal supervision. Questions are likely to focus on technical skills, with a discussion of past jobs and roles. Interviewers are also likely to ask the reasons for seeking a temp job as opposed to a permanent role. Useful advice, and the site has several related articles on non-permanent work.

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CFO future

The Corporate Reporting Survey from accounting giant EY uses the views of over a thousand CFOs and financial controllers to map the path ahead, with an emphasis on how reporting can be re-designed for the post-pandemic era. The critical issue is to balance resilience and flexibility with the stability needed to generate sustainable, long-term value for stakeholders. Related to this is the need to integrate social and environmental issues with financial reporting. Most senior finance leaders are willing to use or create innovative tools to generate new outcomes, although there is also an acknowledgement of the difficulties down the road.

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Female focus

Women Are The Business is an award-winning podcast series from the Faculty of Business and Economics at the University of Melbourne, focusing on the hurdles women face at work and in life. Some articles are based on academic research while others use the perspective of real-life experience. There are important pieces on the reasons for the gender pay gap, the impact of flexible work arrangements, and the expectations placed on working women. The podcast series includes interviews with prominent women in business, and the panel discussion on how to promote greater gender equality in the recovery period is particularly interesting.

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Indonesian opportunities

Global bank HSBC is in a good position to assess the future for many Asian countries, and this report on Indonesia identifies opportunities and challenges. The Indonesian government was quick to implement a range of fiscal and monetary initiatives to combat the COVID-19 crisis, and the economy weathered the storm fairly well. The bond market is likely to do well over the next year, with large corporations, state-owned enterprises and government all seeking to raise funds to finance the next stage of the recovery.

The report includes an interview with HSBC’s Sean Henderson, co-head of debt capital markets, Asia Pacific.

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Changes to working

Patty McCord was formerly the Chief Talent Officer at Netflix, and she now works as a consultant on workplace issues. In this Ted Talk she draws on her experience to review the changes brought about by the pandemic, discussing what is likely to be permanent. One change is that the crisis has led many people to re-consider how much of their time they want to commit to work. Another relates to the importance of good communication skills, especially if organisations are going to be flatter, more dynamic, and with a higher proportion of people working with flexible, customised arrangements.

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