Is Big Data an Economic Big Dud?

IF pencil marks on some colossal doorjamb could measure the growth of the Internet, they would probably be tracking the amount of data sloshing through the public network that spans the planet. Christened by the World Economic Forum as “the new oil” and “a new asset class,” these vast loads of data have been likened to transformative innovations like the steam locomotive, electricity grids, steel, air-conditioning and the radio.

The astounding rate of growth would make any parent proud. There were 30 billion gigabytes of video, e-mails, Web transactions and business-to-business analytics in 2005. The total is expected to reach more than 20 times that figure in 2013, with off-the-charts increases to follow in the years ahead, according to Cisco, the networking giant.

How much data is that? Cisco estimates that in 2012, some two trillion minutes of video alone traversed the Internet every month. That translates to over a million years per week of everything from video selfies and nannycams to Netflix downloads and “Battlestar Galactica” episodes.

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There is just one tiny problem: the economy is, at best, in the doldrums and has stayed there during the latest surge in Web traffic. The rate of productivity growth, whose steady rise from the 1970s well into the 2000s has been credited to earlier phases in the computer and Internet revolutions, has actually fallen. The overall economic trends are complex, but an argument could be made that the slowdown began around 2005 — just when Big Data began to make its appearance.

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Robert J. Gordon, a professor of economics at Northwestern University, said comparing Big Data to oil was promotional nonsense. “Gasoline made from oil made possible a transportation revolution as cars replaced horses and as commercial air transportation replaced railroads,” he said. “If anybody thinks that personal data are comparable to real oil and real vehicles, they don’t appreciate the realities of the last century.”

Other economists believe that Big Data’s economic punch is just a few years away, as engineers trained in data manipulation make their way through college and as data-driven start-ups begin hiring. And of course the recession could be masking the impact of the data revolution in ways economists don’t yet grasp. Still, some suspect that in the end our current framework for understanding Big Data and “the cloud” could be a mirage.

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Perhaps surprisingly, the parallel most tightly embraced by digital futurists — the rise of the electricity grid — is largely dismissed by those who have studied the history of the subject. The idea is that a ubiquitous Internet will make data and “cloud” computing available anywhere, like electricity through a socket.  Full Article

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