On Tech: Maybe Amazon has no master plan

Plus, Facebook's Australia feud ends with a whimper.

View in browser|nytimes.com Continue reading the main story March 16, 2021 Maybe Amazon has no master plan Timo Lenzen By Shira Ovide What if America's most successful companies are sometimes clueless? Recent articles about Amazon's projects in groceries and robots in the home show that even America's most ambitious company can fumble around. In one, more details emerged about the company's chain of supermarkets — not Whole Foods but another one — that show Amazon still hasn't figured out how to sell us milk and chips. The company also has a team of 800 people working on what so far seems to be something like an Echo speaker on wheels. Never underestimate Amazon. But we also shouldn't assume that the wildly successful tech giants have it all figured out. Sometimes, these companies may just be throwing spaghetti at the wall. Facebook's efforts to turn WhatsApp into the default method of customer interactions with businesses may be less a grand design than the company's only good option. When Amazon made a big splash a few years ago with promises to reimagine American health care, maybe it didn't really have a clue. When Google, Facebook and SpaceX say they will bring internet access to more people using balloons, drones or satellites, they haven't necessarily cracked a complex challenge. Many of these are worthwhile efforts. We should all believe in the power of innovation to solve problems. But the public and policymakers should also not put too much faith in what is sometimes expensive, real-world market research by giant companies. Continue reading the main story ADVERTISEMENT Let me go back to one of Amazon's high-profile projects in groceries. To sum up the company's last 15 years: Amazon operated a grocery-delivery service for a decade without much success. Then nearly four years ago it bought the Whole Foods chain of 500 grocery stores for more than $13 billion. That hasn't been a smash. Now Amazon is building a different chain from scratch with stores that Bloomberg News described as somewhere between a Trader Joe's and larger supermarkets. The optimistic view of Amazon's grocery meandering is this is merely the first step of the company's master plan. Maybe! There have been news reports that Amazon has dreams of heavily automated stores and plans to eliminate cash registers in lots of places. Maybe Amazon wants to use its grocery outposts as prep centers for deliveries of fresh fish and dish soap. I am eager to see Amazon's big ideas. But for 15 years there hasn't yet been evidence of Amazon's grand theory of groceries or an ability to translate imagination into reality. Meanwhile, some companies in China cleverly mix the best of in-store shopping with delivery. Britain's Ocado and Market Kurly in South Korea are tackling inefficiencies in getting groceries to people's doors. The best ideas in groceries are not coming from Amazon. Continue reading the main story ADVERTISEMENT This is where I add that it's possible I will look like an idiot for writing this. Groceries, robots for the home, pharmaceutical drugs and health insurance are all areas worthy of innovation. It's just helpful to think of Amazon's efforts as experiments — sometimes bad ones — rather than fully baked marvels of creation. Mostly, I worry that we'll put too much faith in what may be low-stakes tinkering for tech giants but high-stakes problems for the rest of us. It's not helpful if some policymakers are holding off on transit projects to see if driverless cars might be the answer to transportation nightmares. (They won't.) I write a lot about the power of big technology companies and the harm that can result. But believing tech superpowers have it all figured out can be harmful, too. If you don't already get this newsletter in your inbox, please sign up here. Continue reading the main story ADVERTISEMENT Facebook's Australia feud ends with a whimper You know what's not awesome? Australians getting stuck in the middle of a business negotiation between Rupert Murdoch and Mark Zuckerberg. Do you remember a month ago — I know, these days it feels as if time has no meaning — when Facebook blocked all news from the app in Australia? This came after a new law in the country required Google and Facebook to pay news organizations for links to their articles. The law may be misguided or it might be clever. I don't know. Certainly, Google and Facebook didn't like it — but they took opposite approaches, at least at first. Google chose to grit its teeth and sign contracts to pay several news organizations, including News Corp, owned by Murdoch. Facebook's response was to make a ruckus, criticize the law, and stop people and news organizations from sharing or viewing news links on its app in Australia. (Facebook later temporarily lifted the news blackout.) Then on Monday, Facebook did pretty much what Google did a month ago: It signed a deal to pay for material from Murdoch's company. Maybe this fight that was supposedly over the good of the public was really just a tussle between billionaires? I don't want to let the rather meh conclusion obscure the important underlying issues. Google and Facebook gobble up a significant portion of advertising sold in the world. That makes life harder for news organizations and other companies that support themselves with advertising. Lots of people and government officials are trying to figure out what, if anything, should be done about this. U.S. lawmakers are debating a bill that would give smaller news organizations collective bargaining power to cut deals with Facebook and Google — not dissimilar to what happened in Australia. (It's also not unlike a proposal I wrote about in 2009. ) Whether these are wise steps or whether news organizations deserve special help at all is a worthy debate. Unfortunately, in Australia the important questions were muddled by rich companies bickering over power and money. If you've found this newsletter helpful, please consider subscribing to The New York Times — with this special offer. Your support makes our work possible. Before we go … A secret labor settlement, relevant again: After a contentious effort to unionize Amazon warehouse workers in east-central Virginia, the company issued a 22-point promise that it wouldn't retaliate against people for supporting a union in the future. My colleague David Streitfeld recounts that formerly secret agreement with federal regulators and how it's relevant to the company's current labor unrest. Hacking all your text messages for $16: A Vice News reporter found multiple hackers-for-hire who were able to reroute all his text messages and use the access to break into his online accounts. It's a scary tale that shows a lack of accountability in the sprawling mess of our text messaging system. Streaming has helped change the sound of music: For the Times Opinion section, Nate Sloan and Charlie Harding explain how the pop music structure of verse and chorus started to change because of multiple factors, including the desire to make songs that grab people on Spotify or TikTok. Hugs to this The comedian and actress Tiffany Haddish found out she won a Grammy Award while recording a children's TV show. Watch as she and the kids are absolutely delighted by this news. We want to hear from you. Tell us what you think of this newsletter and what else you'd like us to explore. You can reach us at ontech@nytimes.com. If you don't already get this newsletter in your inbox, please sign up here. Continue reading the main story Need help? Review our newsletter help page or contact us for assistance. You received this email because you signed up for On Tech with Shira Ovide from The New York Times. To stop receiving these emails, unsubscribe or manage your email preferences. Subscribe to The TimesGet The New York Times app Connect with us on: Change Your EmailPrivacy PolicyContact UsCalifornia Notices The New York Times Company. 620 Eighth Avenue New York, NY 10018

We’re in for a lot of pluck

The next year will be great, but what then?

View in browser|nytimes.com Continue reading the main story March 16, 2021 By Paul Krugman Opinion Columnist If private-sector economists are anywhere near right, the U.S. economy is about to experience a spectacular boom. Economists surveyed by Bloomberg expect 5.5 percent growth this year; those surveyed by The Wall Street Journal expect almost 6 percent; Goldman Sachs expects 8 percent. We haven't seen anything like this since the Morning in America boom of 1983-1984, a boom that lives on in conservative legend as proof of the magical power of tax cuts, even though every subsequent promise of a tax-cut miracle has failed. But Ronald Reagan's boom wasn't all it was cracked up to be, and the same will to some extent be true of President Biden's. Rapid short-term growth will be a partial vindication of Keynesian economics, the notion that government spending can boost a depressed economy. But this kind of growth is only possible when the economy starts out way down, and the bigger test is what happens later. To understand why forecasters are so optimistic, it helps to know about one of Milton Friedman's lesser-known analyses: his "plucking" model of the business cycle (a model that was somewhat at odds with his other work, but that's another story.) Friedman suggested that we think of the economy's potential growth path — the maximum amount it could produce — as a tilted board, and its actual path as a wire string attached to that board. When the economy experiences a recession, it's as if someone pulled the string away from the board; when the recession ends, it's as if the string has been released, and springs back to the board. Continue reading the main story ADVERTISEMENT Ordinarily, the speed at which the plucked string springs back — the speed of the recovery — depends on how far it was pulled back. So you expect fast growth after a deep recession, which is what happened under Reagan — the double-dip recession of 1979-82 left the economy deeply depressed — and seems set to happen now. This story doesn't always work. Recovery from the 2008 financial crisis was sluggish, partly because of an overhang of excess debt, partly because Republicans in Congress slowed the recovery with destructive fiscal austerity. But this time Democrats have pushed through a very aggressive stimulus, and in combination with the fading pandemic this suggests that we're in for a lot of pluck. But then what? Springing back from a recession is one thing; achieving longer-run prosperity is something quite different. That is, what we really want to know is how things look after the plucking is over. By that measure, the Reagan experience doesn't look that great. The recession — the downward pluck that made a couple of years of rapid growth possible — began in 1979. How did performance over the next decade look, and how did it compare with the previous decade (which also, as it happens, began with a recession)? Because income inequality surged, it depended on where you sat in the income distribution: Continue reading the main story ADVERTISEMENT Morning for some AmericansT. Piketty, E. Saez, and G. Zucman For the bottom half of the U.S. population, the '80s were pretty bad: income stagnated or even fell a bit. For the middle class, they were ordinary: incomes grew at about the same rate as they had the previous decade. But for the affluent, and above all for the 1 percent, it was a great time. Which, of course, helps explain why the legend of Reaganomics continues to be promoted by right-wing propagandists. Will Bidenomics do better? The American Rescue Plan is startlingly favorable to Americans with lower incomes. But a lot depends on whether key elements like the child cash allowance and enhanced health care subsidies become permanent, and on whether this big bill is followed by another big bill — this time one that invests in the future. Continue reading the main story ADVERTISEMENT Quick Hits All about plucking, and why it's somewhat inconsistent with Friedman's other work. Brookings has a sort of plucking picture of what the Biden package will do, basically getting us back to that board. Mitch McConnell admits that a boom is coming, but says Biden has nothing to do with it. Some Republicans are predicting runaway inflation, because of course they are. Feedback If you're enjoying what you're reading, please consider recommending it to friends. They can sign up here. If you want to share your thoughts on an item in this week's newsletter or on the newsletter in general, please email me at krugman-newsletter@nytimes.com. Facing the Music Quite the horn soloYouTube No particular reason for this, just a few minutes of joy. IN THE TIMES Democrats, Pushing Stimulus, Admit to Regrets on Obama's 2009 Response In pitching President Biden's relief package, Democrats have said their 2009 stimulus efforts under Barack Obama were insufficient. Those close to Mr. Obama have noticed. By Astead W. Herndon What Biden and F.D.R. May End Up Having in Common President Biden promised to be "the most pro-union president you've ever seen." Following through on that might mean going it alone. By Steven Greenhouse 17 Reasons to Let the Economic Optimism Begin A reporter who has tracked decades of gloomy trends sees things lining up for roaring growth. By Neil Irwin The Financial Crisis the World Forgot The Federal Reserve crossed red lines to rescue markets in March 2020. Is there enough momentum to fix the weaknesses the episode exposed? By Jeanna Smialek Read the full Opinion report here. Continue reading the main story Need help? Review our newsletter help page or contact us for assistance. You received this email because you signed up for Paul Krugman from The New York Times. To stop receiving these emails, unsubscribe or manage your email preferences. Subscribe to The TimesGet The New York Times app Connect with us on: Change Your EmailPrivacy PolicyContact UsCalifornia Notices The New York Times Company. 620 Eighth Avenue New York, NY 10018