🌌 Reshaped #15
Facebooks into online shopping, Chinese GDP growth targets, the podcast industry, DIY community labs, Asian capitalism and much more
Welcome to a new issue of Reshaped, a newsletter for those who do not want to miss a thing about the huge transformations of our time.
This is a shorter issue, but the tech sector has some interesting news you should not miss. Moving to the economic field: is China really abandoning its GDP growth objectives?
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News
Business and Finance
📱 Last Tuesday, Mark Zuckerberg announced the launch of Facebook Shops, a new online marketplace free for businesses on Facebook and Instagram (Axios). Due to its enormous user base (more than 2.5 billion monthly users worldwide), Shops has the potential to seriously challenge industry leaders Amazon and eBay while exploiting the positive trend of online shopping. The partnership with growing e-commerce service providers like Shopify shows how strong the new initiative could prove to be. All of that happens while Mark Zuckerberg is attempting to regain full control of Facebook, even in those areas he has been less interested in (The New York Times).
🔒 Clubhouse, a new invite-only social network for venture capitalists and tech enthusiasts, closed a $10 million deal with a16z and is now valued at $100 million (Forbes). As Erin Griffith and Taylor Lorenz put it, VCs show once more that they claim to play big with innovation, but they end up investing in the nth social networking app (The New York Times). With a crazy valuation, of course. I enjoyed reading about Clubhouse through the lenses of Alex Danco’s positional scarcity framework: his post is a very recommended reading.
🔊 Spotify announced that the popular podcast The Joe Rogan Experience will become exclusive of the platform (The Verge). This is not only a major move in the consolidation of the podcast market — something Spotify has been working on during the past years with huge spending on acquisitions and new technologies — but also a potential threat for user privacy.
Spotify’s complete control over data and its push for ad targeting might lead to a world in which podcast ads more closely resemble web ads in that they’re targeted to individual listeners. That might be okay with some people, but others have already expressed concerns over the privacy implications. Listening data for podcasts is more sensitive than music, for example, because people listen to niche shows about potentially telling topics.
📉 For the first time since 1994, China abandoned the yearly annual GDP growth target for 2020, after a 6.8% contraction in the first quarter of the year (Financial Times). For more on that, see the dedicated section below.
🛑 The US Justice Department is said to be ready to file an antitrust suit against Google this summer in a move that could only be compared to the Microsoft case in the ‘90s (The New York Times). In the last months, the DOJ has gathered information from competitors in sectors like search engines, news, and advertising to build solid knowledge about Google’s practices. If they decide to go further, a new chapter in antitrust enforcement will finally start. However, breaking up Big Tech might be useless without forward-looking regulation, designed to provide privacy while allowing new entrants to fairly compete with existing businesses.
Science and technology
🔥 Shutdowns all around the world caused carbon emissions to fall by more than 8%, but the reopening of our economies could jeopardize this effect, with minimum impact on the overall 2020 global emissions (Nature).
💫 The space race is now a competition between the egos of Elon Musk and Jeff Bezos, the CEO of SpaceX and the owner of Blue Origin, respectively (BBC). Meanwhile, SpaceX got a definitive approval for its first mission with a human crew (Space).
🐝 In an evolutionary adaptation, bumblebees bite plants to force them to flower more rapidly, which explains the phenological synchrony between plants and pollinators (Scientific American).
China is still a growth machine
For the first time since 1994, the Chinese government will not release its annual GDP growth target. The shock caused by COVID-19 caused a 6.8% contraction in GDP in the first quarter of 2020. The deficit-to-GDP ratio will exceed 3.6%, with an increase in public debt to boost the economy. Chinese prime minister Li Keqiang admitted the country will have to tighten the belt. On the other hand, the ruling party fears that the negative consequences on the economic growth objectives of the decade will endanger the legitimacy of its power. Instead of GDP growth, the government announced a stronger focus on inflation, urban job creation, personal income, and rural poverty. This made some analysts and scholars comment positively on the decision to stop focusing solely on GDP figures.
For sure, the announcement is a strong signal that Chinese leaders are not giving up in their effort to maintain high expectations about the future of the country. The fight against poverty or unemployment, however, would have been at the core of their political agendas in any case. The Chinese social contract is unstable and needs to be repaired — which, due to the structure of the contract itself, means either allowing for more freedom or improving social conditions. Indeed, the Chinese social contract is quite simple to understand: a ruling party is granted unlimited power and, in exchange, promises unprecedented growth and better living standards to the population.
Having pursued growth at an incredible pace during the last decades, China is now affected by strong inequalities — on at least two axes, class (rich-poor) and geography (urban-rural) — and corruption. Environmental and labor conditions also contribute to the first cracks of the social contract. Hence, in order to maintain the power granted by the latter, the ruling party needs to open a new season for the country, aimed at redistributing the incredible rewards of the economic growth to maintain social order, welfare balance, and political power.
Not surprisingly, the ruling party is doing so by betting even more on growth, having planned to invest $1.4 trillion in six years until 2025 to foster the technology landscape of the country. National champions like Huawei and Alibaba will have privileged access to the enormous internal market to grow and challenge foreign competitors. But, most of all, they will provide Xi Jimping with the technological base on which to structure its mass surveillance program. This means working on both sides of the social contract: strengthening the power of the party on one hand while providing localized employment on the other. In the meanwhile, the growing fears of Chinese national champions among Western countries are already pushing for countermeasures. The most recent is the stricter set of rules adopted by Nasdaq, which will make it harder for Chinese companies to go public.
To conclude, the decision of staying prudent on target disclosures seems to be nothing more than that. There is no sign of a going back from the idea of “growth at all costs” that has characterized China in the last decades. For sure, some balancing measures will be taken to restructure the social contract, but this has nothing to do with a slower growth pace.
Alternative perspectives
⚗️ On The New Yorker, Margaret Talbot explains how community laboratories seeking to democratize access to science work, especially during the pandemic. If science is often a prerogative of institutional or business actors that follow the rule of the market, community labs adhere to do-it-yourself (DIY) principles that put together scientists to make science and technology discoveries more accessible. The emergency caused by COVID-19 could help those communities gain legitimacy in the eyes of traditional scientists.
The D.I.Y.-bio movement, which emerged in the early two-thousands, seems almost evolutionarily adapted to its historical moment. It echoes aspects of startup culture, especially the early days of personal computing, with its garage-based origin stories. First came the hardware, then the software; now even the wetware of life can be created in people’s homes. D.I.Y. bio reflects popular skepticism about professional authority and gatekeeping, but it is not skeptical about learning or expertise. […] The D.I.Y.-bio movement also feeds off the notion of the side hustle and the rise of Maker Faire events, which have lent hobbyists a cool new legitimacy. To some budding scientists who want to make a difference in the world, the challenges of climate change and pandemic disease have made biology more compelling than, say, computer science.
🐄 On the London Review of Books, Eli Zaretsky argues that the end of slavery made the fitness and well-being of the workforce a burden for the employer. However, this even strengthened the management of society as a herd by the wealthiest classes. According to the author, this approach explains the response to one of the greatest tradeoffs imposed by the pandemic: closing the economy or letting people die.
Under slavery, the masters had an interest in maintaining the health and even longevity of the slaves, who were their main form of property. After abolition, however, maintaining the health of free workers turned into a burden, especially as the cost of medicine rose. […] The wealth produced by the ‘modern’ techniques of herd management was enormous, and it sustained some of the most beautiful homes, colleges and art institutions in the world, available to the master class and their children. There was no longer any need to fear rebellion because it was always possible to quiet discontent by pulling one of the herd into the master class. There was, however, one flaw in the system: a certain number of proles needed to be kept alive, and that drained money from the engorged and hypertrophied rich.
✏️ A new paper by K. Sabeel Rahman and Jocelyn Simonson examines the correlation between the exposition of the weakest communities to the consequence of COVID-19 and their influence in the policymaking processes that ultimately generate social and economic systems. Social movements made up of those underprivileged people are rising to rethink social governance and institutional design to reduce inequalities. The paper analyzes, in particular, the push for community control in policing and economic development.
These normative concepts of contestation and control find expression among social movements seeking to radically democratize policymaking. Grassroots groups working for racial and economic justice in the United States have for decades sought to put forward methods of transforming the relationship between the state and marginalized groups, especially poor people of color. These social movements have long used a “structural” lens, where the causes of inequality, racial disparities, and even violence cannot be reduced to the actions of individual people or policies. Instead, a structural approach centers on the relations of power over time, on the interactions between seemingly disparate policy areas, and on how ideologies that separate out class from race, or race from gender, reify the inequalities around us.
Other readings
🎢 On The New Yorker, John Cassidy explains why investors are taking high risks by trusting in a V-shaped recovery, which, like in many other major financial events, is heavily influenced by the narratives around stock trends.
🍵 In a wonderful essay on Aeon, Andrew Liu recalls the early tea industry in China to explain the role of Asia in the structuring of modern capitalism, especially for labor-intensive sectors.
📚 The Los Angeles Review of Books reports an interview by Alex Langstaff to some leading historians, asked to explain how history is used to better understand the roots and the consequences of the current pandemic.
💰 According to The Economist, sovereign wealth funds might face a reduction in governmental support in the coming months, due to falling revenues.
👐 On The Atlantic, Timothy Mclaughlin provides a clear analysis of the future of Hong Kong, which is slowly falling under stricter Chinese control.
Thanks for reading.
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Have a good weekend!
Federico