• The internet has the potential to spark a productivity boom, just as electricity did in the 1920s.
• Productivity growth has slowed to a crawl since the mid-2000s, and technology is needed to help boost us out of this.
• Electricity took a long time to start lifting productivity by measurable amounts, as factories had to reorganize their systems of production around the new technology.
• Computers allowed production to reorganize itself, with the rise of outsourcing.
• Service industries have been contributing less to productivity growth than manufacturing, but the internet could help change this.
• Remote work could allow companies to distribute their workforces to low-cost locations, and could nudge them to reevaluate the necessity of many meetings and routine office tasks.
• Working from home could save on commute time and costs, and dual-use living space and office space with home offices.
• Remote work has the potential to increase productivity by reducing costs associated with commuting, housing, and outsourcing.
• Location arbitrage allows people to move to cheaper places to live and work, and international task outsourcing allows companies to hire people from cheaper countries.
• Improved outsourcing management makes it easier to monitor contractors and blur the line between within-firm and between-firm cooperation.
• Efficient time management allows remote workers to manage their own time and do something else once their tasks are completed.
• Telehealth and distance education can reduce commuting time and office space, and offer economies of scale.
• Productivity gains come with social disruptions, such as reduced ridership for transit systems and downward pressure on wages for some workers.
Published January 15, 2023. Visit Noahpinion to read Noah Smith’s post: Distributed service-sector productivity
