Governments across the rich world have spent anywhere between 4 and 21 per cent of their countries' gross domestic product to stimulate their coronavirus-ravaged economies. A substantial portion of these stimulus packages has been aimed at boosting the purchasing power of individuals and small businesses. But there is evidence to suggest that they are not having the desired effect on consumer spending, thereby pushing governments to consider announcing more such packages in the near future.
Researchers in the US and Europe point out that people have tended to use the money they received from stimulus funds to pay for necessities, including food and rent, more than they have on luxuries, such as electronics, furniture and cars. The outcome – as concluded by researchers from the Kellogg School of Management at the US-based Northwestern University – is that the "stimulus checks didn't stimulate the hard-hit areas of the economy like manufacturing or retail".
This means that governments need to rethink their stimulus packages before they run out of money. But what can they do?
James Duesenberry, a former Harvard University economist, once wrote: "Economics is all about how people make choices, but sociology is all about how they don't have any choices to make." I would add to this notion by saying that the way people spend their money today is largely determined by their access to enabling technology.
Lawyer Timon Karamanos works from home following the Covid-19 outbreak in Athens, Greece. Unfortunately, not everyone around the world is able to do so. Reuters
For example, it was only after the invention of the Diners Club Card in 1949 that consumers could access financial resources that were previously not immediately available to them. Just consider how limited a person’s choice would be at a restaurant or a shop that only accepts cash as a form of payment.
Electronic payments generally require access to a bank account and to electronic banking. But there are countries in the emerging markets where a majority of people do not have access to an account, let alone net banking. Only 3 per cent of India’s population have access to a credit card, according to data sourced from Reserve Bank of India, compared to around 68 per cent in Japan and the US.
Governments have come to take for granted the availability of many established technologies, such as the internet and the various modes of transportation. Yet these ubiquitous technologies are not as available to everybody as one might assume. The rate of car ownership, for instance, is as high as 838/1,000 adults in the US, according to the Federal Highway Administration, a the US government agency. But it is only 22/1,000 in India and under 10/1,000 in many African countries. The same can be said about air and train travel in emerging markets.
In today’s world, goods and services are increasingly bundled with technology. The app store is bundled with the smart phone, just as the mall is bundled with the car. And yet technology does not seem to feature a great deal in governments' study of consumer choice, as is evidenced in the lack of effectiveness of some of the stimulus packages.
In July, the EU approved a €750 billion economic stimulus plan. Bloomberg
Governments would be wise to consider the effect of technology scarcity on the effectiveness of these packages.
Access to broadband, transportation, smart wearables and intelligent home and office technologies could hold the key to an effective stimulus. In this respect, governments could earmark some of their funds to enable small firms and households to adopt or upgrade the necessary technology to participate in the economy, both as consumers and producers. They could subsidise the cost of high-speed internet connection, software, smart home appliances and personal wearables.
It is evident that working from home and remote learning have only been made possible in countries and communities where broadband access is available and reasonably priced, as well as in places where ownership of video-enabled phones, laptops and tablets is high.
It is therefore important for governments to recognise that technology is a “necessity resource” that helps to unlock other resources. Furthermore, they should identify technology scarcity as a separate subject of economic policy.
Lionel Robbins, a former professor at the London School of Economics, once defined the subject matter of economics as "the study of the allocation of resources, under conditions of scarcity". However, allocation itself is often influenced by technology. In fact, technology has become a condition for participation in various aspects of economic life, whether they relate to production or consumption. This is especially observable in regions and communities where access to technology is beyond reach.
Without adequate and affordable access to technology, human agency will continue to fall short. On a macroeconomic level, it will almost certainly render obsolete any government's economic recovery policies despite its best intentions.
Sami Mahroum is a professor at the Free University of Brussels
Islamophobia definition
A widely accepted definition was made by the All Party Parliamentary Group on British Muslims in 2019: “Islamophobia is rooted in racism and is a type of racism that targets expressions of Muslimness or perceived Muslimness.” It further defines it as “inciting hatred or violence against Muslims”.
What can victims do?
Always use only regulated platforms
Stop all transactions and communication on suspicion
Save all evidence (screenshots, chat logs, transaction IDs)
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Power: 300hp at 6,000rpm
Torque: 520Nm at 1,500-3,000rpm
Transmission: 8-speed auto
Fuel consumption: 8.0L/100km
Price: from Dh199,900
On sale: now
Why it pays to compare
A comparison of sending Dh20,000 from the UAE using two different routes at the same time - the first direct from a UAE bank to a bank in Germany, and the second from the same UAE bank via an online platform to Germany - found key differences in cost and speed. The transfers were both initiated on January 30.
Route 1: bank transfer
The UAE bank charged Dh152.25 for the Dh20,000 transfer. On top of that, their exchange rate margin added a difference of around Dh415, compared with the mid-market rate.
Total cost: Dh567.25 - around 2.9 per cent of the total amount
Total received: €4,670.30
Route 2: online platform
The UAE bank’s charge for sending Dh20,000 to a UK dirham-denominated account was Dh2.10. The exchange rate margin cost was Dh60, plus a Dh12 fee.
Total cost: Dh74.10, around 0.4 per cent of the transaction
Total received: €4,756
The UAE bank transfer was far quicker – around two to three working days, while the online platform took around four to five days, but was considerably cheaper. In the online platform transfer, the funds were also exposed to currency risk during the period it took for them to arrive.
Pearls on a Branch: Oral Tales
Najlaa Khoury, Archipelago Books
Mobile phone packages comparison
Conflict, drought, famine
Estimates of the number of deaths caused by the famine range from 400,000 to 1 million, according to a document prepared for the UK House of Lords in 2024. It has been claimed that the policies of the Ethiopian government, which took control after deposing Emperor Haile Selassie in a military-led revolution in 1974, contributed to the scale of the famine. Dr Miriam Bradley, senior lecturer in humanitarian studies at the University of Manchester, has argued that, by the early 1980s, “several government policies combined to cause, rather than prevent, a famine which lasted from 1983 to 1985. Mengistu’s government imposed Stalinist-model agricultural policies involving forced collectivisation and villagisation [relocation of communities into planned villages]. The West became aware of the catastrophe through a series of BBC News reports by journalist Michael Buerk in October 1984 describing a “biblical famine” and containing graphic images of thousands of people, including children, facing starvation.
Band Aid
Bob Geldof, singer with the Irish rock group The Boomtown Rats, formed Band Aid in response to the horrific images shown in the news broadcasts. With Midge Ure of the band Ultravox, he wrote the hit charity single Do They Know it’s Christmas in December 1984, featuring a string of high-profile musicians. Following the single’s success, the idea to stage a rock concert evolved. Live Aid was a series of simultaneous concerts that took place at Wembley Stadium in London, John F Kennedy Stadium in Philadelphia, the US, and at various other venues across the world. The combined event was broadcast to an estimated worldwide audience of 1.5 billion.
RESULT
Manchester City 5 Swansea City 0
Man City: D Silva (12'), Sterling (16'), De Bruyne (54' ), B Silva (64' minutes), Jesus (88')
Name: Peter Dicce
Title: Assistant dean of students and director of athletics
Favourite sport: soccer
Favourite team: Bayern Munich
Favourite player: Franz Beckenbauer
Favourite activity in Abu Dhabi: scuba diving in the Northern Emirates
Five famous companies founded by teens
There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
