Defining digital trade should occur within an independent digital market.

Defining Digital Trade

There is no set definition of “digital trade“. Depending on the organization, digital trade is used interchangeably with “e-commerce.” To give you an idea of the variance in definitions, consider the following:

“The production, distribution, marketing, sale, or delivery of goods or services by electronic means.” — World Trade Organization

“Purchases and sales conducted over computer networks. E-commerce can involve physical goods as well as intangible (digital) products and services that can be delivered digitally. ” — United Nations Conference on Trade and Development

“The delivery of products and services over either fixed-line or wireless digital networks. It excludes commerce in most physical products, such as goods ordered online and physical goods that have a digital counterpart, such as books and software, and music and films sold on CDs or DVDs.” — United States International Trade Commission

“The direct exchange of digital goods, and digitally enabled exchanges of services or labour. The exchange of personal communications is included in the definition.” — McKinsey Global Institute

What strikes me about most of the definitions is that “digital” refers to an alternative method of delivery of goods and services versus the actual construction of the market itself. The value from digitization is likely lower costs to producers and distributors and to consumers likely benefits are lower costs of product acquisition, assuming the costs of shipping and handling resulting from online shopping don’t exceed the costs of shopping in person.

Where’s the Surprise?

But beyond this, where is the “surprise” from using a communications medium like the internet to engage in e-commerce? In my opinion, the real value, the surprise, should be beyond the actual goods and services exchanged.

The pursuit of time saving, one of the benefits of online trade, is nothing new. Today I saw two women walk into Starbucks and grab coffee ordered via an app. The value for them was getting in and out of the coffee shop with the coffee versus sitting down in a Starbucks at 7:45 am with a group of people admittedly looking a bit too scruffy.

But is this enough, the time saving to the consumer and the costs savings to the producer to treat digital trade separately from traditional trade?

The Value in Digital Trade is in the Independence of a Digital Market

As currently constructed, digital trade is more an infrastructure adjunct to traditional, physical trade. True digital trade will happen when there are pure digital players exchanging data that can only be created in cyberspace through cyberspace. A true digital market and the digital trade that occurs within should be separate from human intervention where machines are responsible for analyzing, organizing, and distributing information and knowledge over digital networks.

One example of this digital market independence is occurring in the financial markets. In an article for Forbes.com, Bernard Marr shares how artificial intelligence is being used by hedge funds to trade stocks. According to Mr. Marr, what is extraordinary is an artificially intelligent machine making trades without the assistance of a data scientist. Mr. Marr goes on further to say that:

“Artificially intelligent machines analyze inordinate amounts of data at extraordinary speeds that is impossible for humans. They learn from the information they analyze to improve their trading acumen. This information includes market prices to corporate financial reports and accounting documents to social media, news trends, and macroeconomic data. Once the information is analyzed by thousands of machines, the machines then “vote” on what action to take and the best trades to make. “

While Mr. Marr doesn’t go on to discuss AI machines on the other side of the trade, I can envision the next step where an AI machine for Trader x exchanges shares with an AI machine for Trader y making a market entirely without human assistance. This exchange of shares or information and the making of a market for information independent of human intervention is the true digital trade.

Conclusion

While the commercial internet is three decades old, I don’t think we are at a stage yet where we can say we have complete digital trade. At best, digital trade is a subset of cross border trade and robust markets for autonomous trade between pure digital players in cyberspace is around the corner with the innovation and inclusion of artificial intelligence. The definitions we have now for digital trade should be changed to reflect the creation of true digital markets.

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Does Facebook’s business model disrupt the political information markets?

Facebook is engaging in a war against misinformation and divisiveness in the United States as perpetrated via social media, according to published reports by Bloomberg and The Atlanta Journal Constitution. Having done a 180 degree turn from its position last year that its platform was not used to cause a disruption of public opinion leading up to the 2016 presidential election, Facebook is using artificial intelligence tools to identify inauthentic posts and user behavior.  With teams comprised of data scientists, policy experts, and engineers, Facebook is blocking fake accounts and vetting news stories posted on its site.

Critics doubt that Facebook’s attempts to thwart future social media influence will outweigh its incentives to distribute fictional political stories that keep people glued to Facebook while providing advertisers with millions of pairs of eyeballs.  Facebook, according its 10-K annual report, garners almost of its revenues from advertising.  In 2017, advertising made up 98% of Facebook’s revenues.  According to Facebook’s 10-K, at the top of the list of factors that could adversely impact advertising revenues: decreases in user engagement, including a decline in the time spent using the company’s products.

Having used Facebook for eleven years, I witnessed the increase in the use of the platform as a tool for political engagement.  Facebook has expanded opportunities for voters to vet politicians and their policies.  I have seen a significant number of posts, including memes and video, that got the facts wrong; that showed no knowledge of process, politics, or economics.  Cynicism, fear, passion, inaccuracies, sincerity, patriotism, anarchy, and indifference all run rampant on Facebook.  But do I buy the argument that messages placed on Facebook by Russian agents spread so much misinformation that America became suddenly divided overnight? That “Russian interference led to a Trump victory?

No.  The divisiveness was already there.  Giving a couple hundred million Americans the ability to quickly share their thoughts, accurate or not, on the political news of day simply tore away the scab.

Further evidence of divisiveness in American politics: print, broadcast, and cable media.  American media is meeting the demand of a divided public, with Fox News occupying the Right and MSNBC and CNN serving the frenzied Left.

What Washington may truly be afraid of is that politicians have less control over the channels through which they are vetted.  On the one hand, Jeffrey Rosen, president of the Constitution Center, shared the following with The Atlantic’s Jeffrey Goldberg:

“Twitter, Facebook, and other platforms have accelerated public discourse to warp speed, creating virtual versions of the mob.  Inflammatory posts based on passion travel farther and than arguments based on reason.  We are living, in short, in a Madisonian nightmare.”

On the other hand, Americans may be taking to Facebook, YouTube and Twitter in search of alternative opportunities to criticize the political packages and action plans that politicians offer in exchange for votes and increases in taxes.  The divisiveness may be stemming from an increased lack of enchantment with democracy itself.  After all, according to Professor Yuval Harari, democracies are “blips in history” depending on “unique technological conditions” and losing credibility as democracy faces more questions about its inability to provide for and maintain a middle class.

Democracy is hard up to explain why almost all the nine million jobs created post recovery from the 2007-2009 recession have been “gig work” paying little to no benefits.  Democracy has yet to come up with a solution to a wealth gap that the Left invests time in describing, laying blame at the feet of the rich yet coming up with no solutions for a society that prides itself on equal access to the ballot but still comes up short on adequate access to capital.

To the question whether Facebook’s business model has disrupted the political information markets, I would, for now, answer yes.  Facebook has contributed to bringing unreasonable, uninformed voices into the arena. I for one do not want to be lead or have policy fed by impassioned, unreasonable voices, no matter what part of the spectrum they fall on.  What the political class may have to look at for in the near term is that democracy may be less of a facilitator of a peaceful transfer of power between its factions as the mob continues to peel away the scab.