Thoughts in Between
TiB 214: Remote work and innovation; underwater cables and geopolitics; TikTok and identity; and more...
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Remote work: the best is yet to come?
We've talked a lot about remote work here (see, e.g., TiB 116, 117 , 171, 182 and 183). I've said before that I believe that the net effect will be strongly positive, above all because it will allow firms to tap into much larger talent pools outside major cities and developed countries. The counter-argument, though, is that remote work might be particularly bad for innovation. If working on new ideas benefits from serendipitous encounters or face-to-face collaboration, then a more distributed workforce might be a less innovative one.
Chinchih Chen, Carl Frey and Giorgio Presidente examine this in a new study (full paper here) on remote collaboration in science. They look at teams of researchers who publish work first as co-located and then as distributed teams and ask what happens to the "disruptiveness" of their work. They find that overall it drops significantly: subsequent work is about 20% less likely to be disruptive. But the study covers a 60 year period and finds that the impact of co-location varies over time. After 2015, indeed, there is a small positive effect: work with distributed authors is more likely to be disruptive.
Why might this be? One answer is the "J-curve" of productivity-improving technologies: new technologies usually require complementary investments in intangibles like training, new processes and organisational design to achieve their full potential. See this paper by Brynjolffson et al for more. This means that in the short run, new technologies can appear to have a minimal or even negative impact on productivity ("You can see the computer age everywhere but in the productivity statistics"), until the complementary investments kick in. Chen, Frey and Presidente's paper suggests that we may be through the pit of the J-curve of remote work. If that's right - and the pandemic undoubtedly accelerated the complementary investments - the real remote boon is still ahead of us.
What submarine cables teach us about geopolitics
I've said several times (TiB 50, 62, 121, 204, 207) that I think "weaponised interdependence" (WI) is one of the most important ideas for understanding contemporary geopolitics. The core idea is that states can exploit their control over the chokepoints of global economic networks to achieve their strategic goals. Good examples include the US's use of SWIFT and of the dollar's role as the global reserve currency in their actions against Russia (and previously Iran). But WI has its limitations. Lars Gjesvik has a great new article that looks at how private ownership of global infrastructure can limit the ability of even very powerful states to weaponise it.
He explores this through the lens of transatlantic submarine cables - a strategically important infrastructure that has evolved rapidly over the last two decades. Gjesvik explains that modern cables were largely built in two waves - one in the late 1990s, primarily by telcos and with the US and UK as the two main hubs; the other since 2015, primarily by the big internet companies, and more geographically distributed. He argues that before the second wave, the US and the UK were successful in "weaponising" their control of this infrastructure (above all for signals intelligence - e.g., via PRISM), but since then their ability to do so has been more limited. Why? Gjesvik identifies four factors that he argues mediate states' ability to achieve their goals through WI.
First, power asymmetries: Google, Facebook et al are much more powerful than the telcos. Second, alignment of values: the telcos were often national champions or even partially state owned, which made collaboration easier. Third, materiality of the network (or what we might call here the "stubborn persistence of the physical"): because cables are today less geographically concentrated, the chokepoints are less powerful. And fourth, legitimacy: claims to regulate things physically located in your country tend to be more compelling than extra-territorial claims (Snowdon probably didn't help either). I believe both WI and clashes between states and corporations are going to be increasingly important, so I expect this will a useful framework to keep in mind.
Tiktok, identity, Elon Musk and more
My guest on the podcast this week is Kyla Scanlon. Kyla is in my view the most interesting of a new generation of financial and economic commentators: she's built a huge following for her Tiktok videos explaining everything from the Archageos hedge fund blow up to what the Federal reserve does. She also has an excellent newsletter, which I highly recommend. Not only is her analysis sharp and interesting, but it's completely different from anything you'd see on traditional channels. If you want to understand how the internet is eating media, Kyla is the living embodiment.
We open the conversation by discussing how people craft an "online" and "offline self" on social media today. Kyla linked to this paper on the "Algorithmised self" in one of her newsletters, which looks at behaviour on TikTok and argues that users "engage with versions of themselves, as mediated through the algorithm" (see TiB 136 for more on the TikTok algorithm). I think this is a really fascinating idea and it proves a great jumping off point for the rest of the conversation.
We also discuss:
- Elon Musk, Twitter and free speech (see TiB 211)
- Memes as an investment strategy (see TiB 209)
- The future of the dollar as a global reserve currency (Also TiB 209)
- ... and much more
- It’s been emotional. Fascinating charts on what the onset of the pandemic in 2020 did to global happiness
- Concentrate hard. Excellent thread on oligopoly in popular culture, with some great charts.
- Green crypto. The ESG case for Bitcoin.
- Aid and escalation. Good thread on whether US aid to Ukraine increases the risk of nuclear war. Pair with this superb essay on Lend-Lease by Adam Tooze (Thanks Mike for the link)
- Checkmate. Good, brief thoughts on what developments in chess teach us about AI
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