As November begins, many Georgetown students are fixating on their futures. Whether they are looking for summer internships, research positions or full-time employment, there is no shortage of eager Hoyas on the cusp of answering the perennial question of what they want to be when they grow up.
While many students have specific career goals that they wish to achieve in the next five to 10 years, there are just as many people who only have a vague sense of what they hope the next chapter of their lives will entail.
Historically, Georgetown students tend to follow career trajectories that are considered standard for today’s college graduates. In other words, statistically, most Hoyas will begin their careers working in the public sector, financial services or consulting.
Recently, two other options have also become fairly common, with a growing number of highly motivated college students starting their professional lives in the start-up or technology spaces.
If given the opportunity, I am not sure any college-aged job seeker would be able to turn down the chance to work for high-tech firms like Google, Facebook or LinkedIn. Every year, these companies attract top talent at universities. For recent graduates, working for such firms has become increasingly more prestigious as well as more lucrative.
As the reputation of these technology-focused companies grows, economists are seeking to understand how these firms are impacting the composition of the United States economy.
Astonishingly, though, as Larry Downes, a McDonough School of Business Senior Industry and Innovation fellow, wrote in a recent op-ed for The Washington Post, in purely economic terms, companies like Google and Facebook officially add no value to the American economy. With these two companies alone worth about $850 million according to CNN Money, this statement is enough to leave many people scratching their heads.
Currently, gross domestic product is the primary tool by which economists measure the economic activity of a country. GDP represents the monetary value of all goods and services that are produced within a given country over a specific period of time. While this metric intuitively makes sense, it does not account for the rise of companies founded on providing users with predominately free services. As a result, traditional measures of economic activity such as GDP fail to attribute value to companies that offer consumers free services.
In other words, while these tech companies may be valued at hundreds of billions of dollars and carry thousands of employees, the contribution of a company like Google to the United States’ GDP is incalculable, because providing search engine services does not have a tangible price. The same is true for other major players in the digital field such as Facebook, YouTube and Snapchat.
Thus, while monolithic, these companies are essentially GDP-invisible.
But why does it matter if governments are able to properly account for the economic value of these companies so long as consumers value their services?
It matters because this is an oversight of monumental proportions.
Ultimately, it is the government that dictates the regulatory framework in which all companies must abide in order to operate legally within the United States Since government policy relies on information provided by traditional economic measures such as GDP, current policy is essentially ignoring the needs of all of the top technology companies, simply because they do not charge users for their services.
As the world becomes increasingly more digitally focused, it is time for these traditional economic tools to be re-evaluated in order to better reflect and assess the composition of our modern economy. If these now-antiquated economic assumptions do not adapt the contemporary lay of the land, then it will be almost impossible for governments to make effective policies for future development. And if governments continue to ignore the companies that are some of the foundation blocks of the digital economy, their nations are not leveraging their full potential in the global market economy.
Here at Georgetown, though, as we wait for the government to catch up with the times, we rush off to the next interview with a GDP-invisible firm.
Bianca DiSanto is a senior in the McDonough School of Business. Think Tech appears every Friday.