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from Edward Hadas:

Growth in a rich and crowded world

Perky, productive robots, or nothing more than a few new smartphone apps? Cascading innovation, or just a few tweaks? Economists and technologists are debating what the future holds.

Pessimists like Robert Gordon of Northwestern University see decades of slow growth ahead, with little scope for big leaps forward. The optimists, among them Erik Brynjolfsson and Andrew McAfee of the Massachusetts Institute of Technology, expect new technological glories. Both sides are more wrong than right.

Everyone is wrong when the wrangling is numerical. Arguments based on GDP and productivity growth are too circular to resolve anything. A main cause of any slowdown in reported productivity numbers is a judgment that innovations are becoming less valuable. So a reported slowdown cannot logically be used to support the argument that technology is advancing more sluggishly.

The problem is that productivity measures depend upon what economists call hedonic adjustments. Consider a new model car that costs 2 percent more than the vehicle it replaces in a price index. The price change is clear, but the two cars aren’t identical. The new model will, at a minimum, have fancier electronics.

from Breakingviews:

The perks and pitfalls of depending on Jack Ma

By John Foley 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Buy a share in Alibaba and you place your trust in Jack Ma. The Chinese e-commerce giant’s founder, executive chairman and spiritual sultan will remain a controlling force even after the company completes its massive initial public offering later this year. The $100 billion-plus question for prospective shareholders is whether they can depend on him to always act in their best interests.

from Breakingviews:

China’s “De-IOE” campaign takes a bite out of tech

By Rob Cyran 

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

China’s “De-IOE” campaign is taking a bite out of some Silicon Valley stalwarts. For those unfamiliar with the term, it’s being used by tech executives to describe Beijing’s nudging of state enterprises to wean themselves off U.S. software and service firms, chiefly IBM, Oracle and EMC. The drive, which has been going on for at least a year, but accelerated after Washington indicted Chinese army officials, has dimmed the brightest star in Big Tech’s otherwise dull constellation.

from Breakingviews:

Supercharged IPO tax spoils need splitting

By Robert Cyran

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Initial public offerings that generate extra tax spoils are in the spotlight. KKR and Silver Lake are listing web hosting company GoDaddy, three years after buying it for $2.25 billion. The use of what’s called an “Up-C” structure means the company will float with big potential tax deductions on its books. In GoDaddy’s case, investors and sponsors will both benefit. But other IPOs with Up-Cs have seen more dubious arrangements.

from Breakingviews:

Doubling down on First Data may be KKR’s best bet

By Jeffrey Goldfarb and Richard Beales

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

Doubling down on First Data may have been KKR’s best bet. The extra cash just injected into the payment processor means the $29 billion acquisition has now absorbed over $10 billion of equity, one of the highest sums ever for a leveraged buyout. A Breakingviews analysis, however, suggests that a return finally beckons.

from Breakingviews:

Gowex collapse leaves egg on many faces

By Fiona Maharg-Bravo

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The collapse of Gowex has ramifications beyond Spain’s junior stock market for riskier companies. The Spanish wifi provider has said its chief executive admitted falsifying the accounts, days after investment firm Gotham City Research attacked the company. With Gowex held up as the poster child for Spanish entrepreneurialism, its impending failure will make life harder for other small firms.

from Breakingviews:

Solving the second-class stock conundrum

By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own. 

Over dinner in San Francisco recently, an activist investor and an internet entrepreneur got into a heated discussion. The two men, with a gap of about two decades between them, were debating the practice of many young, growth businesses in the technology world – though it happens elsewhere too – to issue multiple classes of stock, generally one for hoi polloi investors in public offerings and another for founders and other insiders with super-charged voting powers.

from Breakingviews:

Review: Rebooting banking – with Google’s help

 By Dominic Elliott

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Brett King may be, as his own author’s note claims, “the foremost global expert on retail banking innovation.” But his latest book is let down by an excess of acronyms and gushing advertorial.

from Breakingviews:

U.S. drought could spark economic water warfare

By Kevin Allison and Antony Currie

The authors are Reuters Breakingviews columnists. The opinions expressed are their own.

The withering drought afflicting California and the southwest United States could spark economic warfare over water. Scarce rains have left large swaths of the country dry for, in some areas, several years. That’s happening as industries from beverages to semiconductors grow concerned about whether they will have adequate access to water in the future. For cities and states situated around the Great Lakes, as well as water technology firms, it presents a flood of opportunities.

from Counterparties:

Uber valuation

Fancy taxi app Uber just closed a new round of funding that valued the company at $18.2 billion, less than a year after being valued at $3.5 billion. Despite the company “operating in 128 cities in 37 countries around the world with hundreds of thousands of transportation providers and millions of consumers connecting to our platform,” there are a lot of people who don’t think it’s worth that much.

Dan McCrum does some back-of-the-envelope math and figures out that, using some optimistic assumptions, Uber needs 60 million users to justify an $18 billion valuation. That’s not a lot compared to other major smartphone apps, but it is a huge chunk of the global taxi-taking population. “It’s equivalent to the entire populations of San Francisco, Los Angeles, New York, Chicago, London, Washington DC, Paris, Toronto, Tokyo and Hong Kong combined”, he says.

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