One of the most fascinating features Google plans to roll out is a price index, similar to the Consumer Price Index, that can track inflation based on what people are buying online every day.
It will be based on Google's vast database of web shopping data. Now that's not perfect. The Google price index is only tracking what people are buying or searching for online. Which means certain items, like coffee or toilet paper, will not show up. That means the numbers could be skewed. On the other hand, it could be a lot more accurate than CPI figures which are lagging indicators. The CPI is calculated monthly, lagging the real economy by weeks. At the same time, billions of dollars are flying around the world every millisecond. The lag is a problem.
Financial Times columnist Christopher Caldwell points out that could actually see Google challenging the role of governments. "It has recently been asserted – and not just by Google's engineers – that the company's search queries can predict flu epidemics as accurately as the federal Centers for Disease Control and Prevention, and can get an earlier, more accurate reading of unemployment trends than the Bureau of Labor Statistics. Eventually Google will iron out the wrinkles in its inflation measure. What resources will the government then be able to tap that would ever allow it to compete with Google? Should Google's principals be allowed to trade on this information? If Google is better at predicting inflation, unemployment and influenza, it will probably be better at predicting crime, terrorism and political unrest. What government that claims to be vigilant against terrorism would fail to use Google's data? The line between Google and government is destined to blur. You can say that such lines have been blurring, through privatisation, for a long time. But there is a difference between the privatisation of tasks that started in the 1980s and the privatisation of analysis that Google portends. Google is going to have a special role in shaping the ends of government. Google strengthens a key argument in favour of privatisation: why should a sclerotic and bureaucratic government deny itself the tools so plentifully available in the private sector? But Google weakens a key argument in favour of freedom: that a modern economy is too complex for a single entity to make sense of. Privatisation used to mean decentralisation. It no longer necessarily does. History would lead us to expect one of two resolutions over the long term. Either Washington will turn Google into a utility (railroads are the model) or Google will take up a privileged position as a private company with public prerogatives (for example, the old Bank of England or the Dutch and English overseas trading companies)."
This is unsettling. To think that a private business corporation with vested interests can take a privileged position over a body elected by the people is truly frightening.
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