Of Two Minds
APR 23, 2018
A business that sells a product or provides a service may do so at breakeven, or even at a loss, and still make profits by selling what they get from their customers for free.
Google and Facebook are obvious examples. But in the current economy, any business that aggregates data about its customers has a valuable, salable asset that they obtain from the compendium of consumer data they accrue day in, day out.
Further, big data, the statistical expression of consumer behavior en masse, increasingly drives the decision-making process of every company, even those that are as far away from Silicon Valley as Boeing.
Here's how I'm connecting the dots of data collection/data mining and the new model for maximizing profitability: the entire model of "capitalism" (maximizing return on capital and labor) has shifted from getting rich making stuff/providing services to distributing/marketing goods and services in a cartel structure.
In this economy, the essential role is played by big data/data mining. Wal-Mart, Amazon, Facebook, Google et al have no interest in where the goods and services are made/generated; the big profits are in the distribution/marketing (i.e. exploiting large data sets) and gathering and selling these large data sets.
Let's stipulate that those corporations whose entire value proposition is manufacturing expertise will continue to extract profits from manufacturing. But this doesn't mean that this manufacturing remains exclusively in the domestic economy, or that Big Data isn't increasingly a core value-generator for manufacturers.
Boeing is a good example. In terms of trade, it's noteworthy that Boeing is careful to have major airliner components manufactured in major markets for its aircraft: Japan and China come to mind.
Since Boeing's value is increasingly based on how well it meets the needs of its airline customers (setting aside its government defense contracts for the moment), then the value proposition shifts to Big Data/data mining and analysis of passengers, routes, etc. by the airlines.
Thus, Big Data informs what they want from Boeing, and Boeing is thus as reliant on data mining as any politico seeking to exploit large data sets mined by Facebook.
ORIGINAL SOURCE: Connecting the Dots of Big Data, Soaring Corporate Profits and Trade Wars by Charles Hugh Smith at Of Two Minds on 4/22/18