Thinking aloud... That is the mental image of what is typical for a commodity economy—the Weberian ideal-type. It is, of course, only an ideal-type. It was never an actual empirical reality. But it was close enough in Adam Smith’s day to guide a great deal of useful thought about economy and economic policy.
Good stuff, as usual. But something in your first graf is a bit confusing.
You state that “But now, many say, our two plague years are packing, in some aspects, what would have been at least a decade of change and development into two years”. You seem to be implying that the last two years were a period of rapid growth that fit into either a Solow style “Commodity economy” model or a “Attention economy” model.
But suppose the switch from majority work-from-office to work-from-home is permanent for certain industries. And suppose we consider this as a massive productivity boost [1]. A growth model would explain this as a two-year period of rapid productivity or “technology” growth.
But that’s not quite right… The technology needed to support much of work from home (Zoom, Skype, Teams, VMs, Remote Desktop, 2FA VPNs, etc.) were already well proven technologies before the pandemic. But that seems to imply that whole industries had double digit productivity growth over a few weeks. Which seems nuts.
If work-from-home continues, then it seems like the economy just had two different equilibrium points. One equilibrium point allowed employers to limit the number of remote workers, since the labor pool of office workers was high. A second equilibrium point prevents employers from imposing work from office rules, since workers now have plenty of more attractive work from home options. Both equilibria seem stable.
But that seems to imply that, if the pandemic didn’t happen, we would still have been majority work-from-office in specific industries even in 2030. Perhaps no amount of “change and development” would have led to these equilibria. We haven’t just experienced a decade of change… we’ve jumped off the tracks and onto another set of rails.
But doesn’t this seem a bit weird? Doesn’t Solow assume differentiable cost and capital functions? I was under the impression that it implied single equilibria and that, if human and technological capital remain unchanged, then everything would converge to a steady state of growth?
Is this an exceptional case, or does this happen all the time? Are we just constantly bouncing between different equilibria all the time, as we flail around dealing with random disasters?
[1] Once could argue that the total time workers devote to work is both time at work and commute time. Decreasing average commute time by 40 min each way would imply a 15% increase in productivity. Surveys seem to indicate that workers would prefer work-from-home jobs than work-from-office jobs that offer 10% more salary.
Good stuff, as usual. But something in your first graf is a bit confusing.
You state that “But now, many say, our two plague years are packing, in some aspects, what would have been at least a decade of change and development into two years”. You seem to be implying that the last two years were a period of rapid growth that fit into either a Solow style “Commodity economy” model or a “Attention economy” model.
But suppose the switch from majority work-from-office to work-from-home is permanent for certain industries. And suppose we consider this as a massive productivity boost [1]. A growth model would explain this as a two-year period of rapid productivity or “technology” growth.
But that’s not quite right… The technology needed to support much of work from home (Zoom, Skype, Teams, VMs, Remote Desktop, 2FA VPNs, etc.) were already well proven technologies before the pandemic. But that seems to imply that whole industries had double digit productivity growth over a few weeks. Which seems nuts.
If work-from-home continues, then it seems like the economy just had two different equilibrium points. One equilibrium point allowed employers to limit the number of remote workers, since the labor pool of office workers was high. A second equilibrium point prevents employers from imposing work from office rules, since workers now have plenty of more attractive work from home options. Both equilibria seem stable.
But that seems to imply that, if the pandemic didn’t happen, we would still have been majority work-from-office in specific industries even in 2030. Perhaps no amount of “change and development” would have led to these equilibria. We haven’t just experienced a decade of change… we’ve jumped off the tracks and onto another set of rails.
But doesn’t this seem a bit weird? Doesn’t Solow assume differentiable cost and capital functions? I was under the impression that it implied single equilibria and that, if human and technological capital remain unchanged, then everything would converge to a steady state of growth?
Is this an exceptional case, or does this happen all the time? Are we just constantly bouncing between different equilibria all the time, as we flail around dealing with random disasters?
[1] Once could argue that the total time workers devote to work is both time at work and commute time. Decreasing average commute time by 40 min each way would imply a 15% increase in productivity. Surveys seem to indicate that workers would prefer work-from-home jobs than work-from-office jobs that offer 10% more salary.