Work From Home, Technology, and the Singularity

    In response to the pandemic, businesses and consumers were forced to adopt technology at unprecedented speeds. In an article by Enda Curran, he emphasized that the adoption of technology paired with work from home will lead to increases in labor productivity and economic growth. The normalization of WFH has reduced time lossed from commuting while increasing the time for more productive tasks. While employees shifted to working from home, businesses  automated routine tasks through increased investments in robotics and other technologies, allowing workers to focus on less repetitive tasks and work on higher value output. A company that comes to mind that is a reflection of the automation trend is UiPath. The company's products are an example of Robotic Process Automation, which detects what's on screen to perform routine computer tasks across desktop applications. The positive outlook of these trends, however, are not widespread. Robert Gordan, a professor at North western university said, “it’s going to take a long time for the economy to adjust in the areas that are being severely damaged by working from home, like public transit and the downtown office buildings.” Research from a survey of more than 30,000 Americans indicates that 20 percent of full work days will continue at home after the pandemic ends, compared to just 5 percent before the pandemic (Berrero et al.). Additional results from the survey are captured in figures 1, 2, 3, and 4.

Figure 1-4: Source (Berrero et al.)

According to Blanchard, “it is useful to think of technological progress as increasing the amount of effective labor available in the economy.” Effective labor is labor multiplied by the state of technology (AN). Similar to Chapter 11, capital per effective worker and output per effective worker converge to constant values representing the steady-state. Part of the growth story discussed by Cullen could represent an improvement in effective labor (AN), captured in part by an increase in A, the state of technology. Another aspect of the pandemic is a sharp increase in the savings rate seen in figure 5. We can see significantly higher levels of saving and a near recovery of real gross domestic product per capita. Noticeably, an increase in the savings rate would have a negative effect on output in the short run as consumption decreases. However, an increase in the savings rate would over time increase the steady-state levels of output, raising output per effective worker and capital per effective worker. Figures 6 and 7 capture the effects of an increase in the savings rate. Will the higher savings rate persist post-pandemic remains to be seen, but if it remains on average higher than before there could be long-term increases in the steady state leading to more growth.

Figure 5: Personal Savings Rate (Right), Real GDP p capita (Left)

Figure 6: An increase in the savings rate (Blanchard)

Figure 7: The higher savings rate increases to a new level, but growth remains the same. (Blanchard)

                            

        

      

    Blanchard discusses the “age-old worry that research will become less and less fertile” where most discoveries have been made and technological progress slows down. This has yet to become the case, the improvement of technology over time, particularly in computing power and artificial technology has led some to think about the Singularity theory. The cost per computation per second has fallen dramatically captured in figure 8. When computer intelligence matches and surpasses human intelligence. Experts often are quick to predict what computers cannot do only to be proved wrong later. The rollout of machine intelligence can be seen in three stages: calculation, control, and innovation. Nordhaus in a journal article sought to investigate the effects of the Singularity on the economy and developed tests to indicate whether it has occurred. Of the six tests two returned a positive signal, but the trend shows that the singularity is greater than 100 years away. 

Figure 8: Decline in cost per computation per second

Works Cited

Berrero, Jose Maria, et al. “Why Working from Home Will Stick.” Working Paper No. 2020-174, Apr. 2021. Becker Friedman Institute.

Blanchard, Oliver. “Technological Progress and Growth.” Macroeconomics, Boston, Pearson, 2017, pp. 241–258.

Curran, Enda. “Productivity Is Finally Looking Up, and the Gains Could Lift Growth.” Bloomberg.com, 4 May 2021, www.bloomberg.com/news/articles/2021-05-04/productivity-surge-during-covid-could-mean-gdp-growth-around-the-world. Accessed 10 May 2021.

Mischke, Jan, et al. “Will Productivity and Growth Return after the COVID-19 Crisis? | McKinsey.” Www.mckinsey.com, 30 Apr. 2021, www.mckinsey.com/industries/public-and-social-sector/our-insights/will-productivity-and-growth-return-after-the-covid-19-crisis.

Nordhaus, William D. “Are We Approaching an Economic Singularity? Information Technology and the Future of Economic Growth.” American Economic Journal: Macroeconomics, vol. 13, no. 1, 1 Jan. 2021, pp. 299–332, 10.1257/mac.20170105. Accessed 10 Jan. 2021.

UiPath Inc. “What Is Robotic Process Automation? - RPA Software | UiPath®.” Uipath.com, 2017, www.uipath.com/rpa/robotic-process-automation.