It’s a Zoom World After All

It’s a Zoom World After All

It’s a Zoom World After All

The pandemic has pushed all of us into Zoom World: that is, a world where many more of our interpersonal connections, both work and personal, happen online.

This de-emphasis on direct interpersonal connections and greater emphasis on long-distance online connections has some inevitable tradeoffs.

For example, there is a tradeoff that geographically close relationships have been to some extent devalued relative to long-distance ones. There is a tradeoff that the more formal and pre-planned interactions have increased in importance, while informal and unplanned interactions and conversations have been reduced. There is a tradeoff that those with a strong network of pre-existing long-distance relationships find it easier to continue in those relationships, while those without such a pre-existing network will find it harder to break into such relationships. There is “superstar” effect that many of us now have greater access to high-profile people than we did before, but the tradeoff is that this access is via an online channel that often lacks interactivity, and in the meantime we may be neglecting the mid-profile and lower-profile people around us with whom we could have a higher level of interactivity.

Here, I’ll point out some thoughts on how these tradeoffs and Zoom World in general are playing out in several contexts: academic seminars, family balance, and urban workplaces. The comments are all drawn from a recent e-book book by Luis Garicano: Capitalism After COVID: Conversations with 21 Economists (June 2021, CEPR Press) However, I should emphasize that Garicano’s book is not focused on this narrow topic, and indeed is very broad in scope. I’ll provide a full list of interviewees at the bottom of this post.

Here’s Jesús Fernández-Villaverde commenting in his interview with Garicano on the tradeoffs of on-line academic seminars, in an interview titled ” Economists and the pandemic:”

You and I waste an enormous amount of time in airports, and now we’re doing everything by Zoom. It’s very hard to figure out how much is being lost in terms of output. That’s true. Let me give you the positive and the negative. In my view, the positive is that this is opening up, for instance, seminars to people that are ‘out of the circuit’. The top people in the profession are hard to attract to your seminar series if you are a relatively small university – often because they don’t have the money. Over the last few weeks, however, I have given my paper on Covid in a lot of South American universities. The average South American university may not have the budget to bring someone from the US and put them in a hotel. And I will not have the time. So suddenly it’s easier for them to do a conference. On the other hand, Zoom is not a great substitute for person-to-person. So, if the host is the London School of Economics, the department of economics there is getting less now from its seminars than it did on a personal basis. There are winners and there are losers.

And the second thing that is important is the difference between maintaining existing relations and creating new relations. We can spend a year on Zoom because we already know each other. We have some dynamics, we can interact. But what is going to happen with the new assistant professors and the new graduate students trying to get into the circuit through zoom? It is going to be much harder. Zoom gives a premium to eloquence that maybe in a person-to-person relationship is not so strong.

You worked at Chicago with Sherwin Rosen. Rosen wrote the famous paper on the economics of superstars (Rosen, 1981) and his example was, of course, music. Why are you going to go and listen to a good opera singer when, thanks to a DVD, you can listen to an amazingly extraordinary opera singer? This may happen with economics. Why are you going to go to a seminar by a good professor of economics when you can listen to the seminar by Ivan Werning?

Here’s Fernández-Villaverde on the tradeoffs of Zoom World from in the balance between family and work life:

One thing that I find disappointing for societies is that either you work eight hours a day or you work zero. Some societies, especially in the north of Europe, have made progress in terms of solutions, but it’s something we should push very hard. For instance, let’s think about fertility. One of the reasons why fertility is so low these days is because having a kid and trying to keep a full-time job is very difficult. That usually has a gender component because women usually assume most of the cost of it, and that generates many tensions and unhappiness in society that I fully understand. So, imagine we are in a society where we have more flexible forms of work. Thanks to Zoom, I can go from being expected to work eight hours a day, to being expected to work six hours and half hours, to say a random number. Then, it’s much easier to reconcile work with family. In the old world where you had a factory, that’s difficult to accomplish.

Governments here should have a leading role. A lot of what we do is about coordination. I want to be in the office at 9:00 because someone else is going to be at there at that time. You just need to have a focal point, and governments can help to coordinate us in good focal points. I can imagine many people who are aged 65 or 66 and are reluctant to work eight hours a day, but at the same time they are not very happy working zero hours a day. If we could get to a society where you can flexibly work four or five hours a day, maybe we could extend the working life of many people, contributing to GDP and helping us a lot to transition. It will also have positive health benefits. We have actually quite a bit of evidence that when people suddenly retire, they start an exponential decay, and especially if they are men they tend to drink and gain weight. So, I think that these solutions will help society a lot. Thanks to telecommuting and Zoom, we may be able to do that much better than in the past.

Finally, here are some comments from Esteban Rossi-Hansberg about the question of how Zoom world and online interactions will ultimately affect the density of urban areas.

This is highly speculative, of course, but I think the evidence from urban economics and from all the studies of cities is that systems of cities tend to be very resilient to shocks. Cities tend to come back after shocks, and the distribution of cities doesn’t tend to change that much. For example, if you look at the evolution over time of the size distribution of cities in the United States, or in many countries in Europe (certainly in France), it looks very similar today to what it did 50 years ago. The overall size of the cities has changed, but the distribution itself – how much bigger the biggest city is than the second and so on – is very similar.

So cities have proven very resilient to shocks. The question is: is this time different? I do think there’s a potential for it to be different, in particular because of telecommuting technologies. These are not new, and we’ve seen them improve over time. Telecommuting was already growing before the pandemic, but it was at very low levels (around 5%). But it’s rising, as you would expect from the technology getting better over time, or a lot better over time. That’s the standard evolution and it is perhaps not going to change cities in a dramatic way, at least in the nearby future. With Covid of course, a lot of us were sent or chose to go home. In a world in which there’s multiple equilibria, can this change the equilibrium?

Let me be a little bit more explicit. How much we get out of going to the office depends on how many of our colleagues go to the office. If we all go to the office and we all interact in the office, we get more out of the office. We learn from our co-workers and there’s externalities, knowledge spillovers. That’s why there’s offices. Of course, these spillovers also operate across firms. And that’s why it costs so much money to rent an office in the middle of Palo Alto or in the middle of Manhattan. It pays to be there. This creates a coordination problem. Going to the office works if everyone else goes to the office too. But if no one goes to the office, it’s not so good because you have to pay all of the commuting costs and there will be no one there. Now, suppose the vaccine comes and the whole pandemic goes away. Are we going to go back to the office? Well, if we’re coordinating in the equilibrium of not going to the office, we’re going to stay there. Why? Because no one wants to be the first mover and go to the office.

Can we solve that coordination problem and make everyone go to the office? It’s not going to be that easy. There are individual advantages of staying at home. Most people are saving an hour on average a day not having to go to work and back, and that hour is valuable. Unless firms and governments are proactive in moving us back to an equilibrium where we all go to the office, we’re going to stay home. Now is this new equilibrium bad? Maybe it is a great advantage of the modern world. Maybe it is great to telecommute. But all the evidence that we have is that the interactions we would be missing are valuable. Hence, if the economy doesn’t get all those interactions and to the extent that telecommuting doesn’t exploit and encourage those interactions, the economy is going to suffer because productivity is going to suffer in the long run. Furthermore, cities are going de-agglomerate as a result of this. So, some of these externalities are external, not just to the worker, but even to the firms – externalities that firms aren’t capturing. The firm is saving itself some money by not paying the rent. But the city and the productivity of the whole economy could suffer. …

We were in a good equilibrium in which we were paying a lot of commuting cost. But at that cost we were getting a big benefit, which was all these productivity enhancements from all of us being there. It’s a quantitative question to what extent the benefits from not commuting and all the potentially large environmental benefits of having fewer people driving and so on are going to compensate for the productivity losses that we’re going to see from people not going to the office. Now, if we’re in the equilibrium where we don’t go to the office, that may also encourage biased technological change to improve those interactions online. It is a possibility. But it is something that we still don’t know. We don’t know how good these technologies can be.

Finally, here’s the full list of Garicano’s interviewees, and the broad subject areas of the interviews, taken from the Table of Contents of the book:

Debt Sustainability

Markus Brunnermeier: Let’s compare the central bank to a race car 11
John Cochrane: Throwing money down ratholes 17
Jesús Fernández-Villaverde: Economists and the pandemic 23
Agnès Bénassy-Quéré: How to design a recovery plan 29

Tackling Inequality

Oriana Bandiera: Overcoming poverty barriers 39
Stefanie Stantcheva: Taxes and social economics 45
Esteban Rossi-Hansberg: Will working from home kill cities? 53
Atif Mian: The savings glut of the rich 59

A More Balanced Globalisation

Dani Rodrik: Globalisation after the Washington Consensus 69
Pol Antràs: Is globalisation slowing down? 75
Michael Pettis: Trade wars are class wars 83

Containing the New Leviathan

Daron Acemog˘lu: The Great Divergence 93
Wendy Carlin: The Third Pole 99
Lucrezia Reichlin: Democratising economic policy 107
Carol Propper: Targets and terror 111
Raffaella Sadun: Management for the recovery 117

Promoting Innovation and Curbing the Power of Digital Giants

Philippe Aghion: Is ‘cutthroat’ capitalism more innovative? 127
John Van Reenen: The Lost Einsteins 133
Fiona Scott Morton: What should we do about big tech? 141

Combatting Global Warming

Nicholas Stern: Zero-emissions growth 149
Michael Greenstone: The real enemy here is carbon 157

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Timothy Taylor

Global Economy Expert

Timothy Taylor is an American economist. He is managing editor of the Journal of Economic Perspectives, a quarterly academic journal produced at Macalester College and published by the American Economic Association. Taylor received his Bachelor of Arts degree from Haverford College and a master's degree in economics from Stanford University. At Stanford, he was winner of the award for excellent teaching in a large class (more than 30 students) given by the Associated Students of Stanford University. At Minnesota, he was named a Distinguished Lecturer by the Department of Economics and voted Teacher of the Year by the master's degree students at the Hubert H. Humphrey Institute of Public Affairs. Taylor has been a guest speaker for groups of teachers of high school economics, visiting diplomats from eastern Europe, talk-radio shows, and community groups. From 1989 to 1997, Professor Taylor wrote an economics opinion column for the San Jose Mercury-News. He has published multiple lectures on economics through The Teaching Company. With Rudolph Penner and Isabel Sawhill, he is co-author of Updating America's Social Contract (2000), whose first chapter provided an early radical centrist perspective, "An Agenda for the Radical Middle". Taylor is also the author of The Instant Economist: Everything You Need to Know About How the Economy Works, published by the Penguin Group in 2012. The fourth edition of Taylor's Principles of Economics textbook was published by Textbook Media in 2017.

   

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