Not Just Another Weblog at Harvard. Thoughts on technology, business, payments, policy and the economy.
Can we deliver a high-performing post-COVID19 economy remotely?
For those fortunate enough to be able to work from home – what happens to our economic productivity when we go into lock-down? Do we have the systems, security and skillset – technical and otherwise – to handle it? The answer is not entirely, and as a result we are facing serious productivity hiccups with severe economic consequences across the globe. For the U.S. alone, Goldman Sachs and Morgan Stanley estimate a staggering 24% and 30% decline in gross domestic product respectively.
Governments across the world have either locked down, or put in place various shelter in decrees, in the process disrupting economic operations as we know them and it is not clear when this lock-down will lift. Non-essential businesses and government services are scrambling to continue operations remotely. Meetings are virtual. The challenge is: are we as creative and productive at home?
A few examples can illustrate the problem. Our airports are not designed to process travelers in ways that minimize physical contact. On the New York Stock Exchange, traders have to physically crowd the floor to trade. A friend at a prestigious university conceded that after cancelling in-person classes, no-one in the Department had a clue how to teach the same class remotely with just a camera and a microphone.
Our lives have been configured around congregating in pursuit of socio-economic activities: studying, worshiping, manufacturing, you name them. Yet to contain the pandemic facing us today, we need to minimize in-person interactions. The new normal is self-isolation and social distancing.
Countries that are worst affected may need to reinforce isolation and social distancing for several months. Yet, firms,as well as local and national governments, are social constructs designed to deliver goods and services. Our ability to come together and be productive sparked the industrial revolution and fuels the global economy; our representatives debate in chambers; and our industries are regulated in office complexes.This means we need to adapt and redesign all of our production processes, and better secure weak IT systems whose vulnerabilities may expand exponentially when working at home.
Futurists, academics, and some pragmatists have over time proposed ways to work remotely. “Telecommuting” and the “gig economy” have evolved over the years. Despite some successes, such as freelancing, it is largely aspirational. Discussions about the future work have long been in vogue, but COVID19 has fast forwarded us to that future and we are facing it now.
Disaster recovery and business continuity plans, for short sharp shocks such as fires and cyber attacks, have become standard practice. But how many organizations test these plans for longer term disruptions? For example, stock traders could enhance crisis preparedness through carrying out regular month long drills to develop the right infrastructure needed to function as well at home as on the trading floor. Although some professors regularly run classes online, entire universities should make not only their classes but also their wider learning experiences – speaker events, mentoring and careers services – virtual too.
Our global economic infrastructure and systems are vulnerable to pandemics such as COVID19. We are forced to adapt. Rapidly transitioning to remote forms of production requires retooling including quickly making the relevant adjustments to not only our technology but also the support to develop our skills.
The likelihood is that most of us will not reach the same levels of productivity virtually as we do face to face. Based on history, we can predict that pandemics or climate related crises will happen again and again. We need to boost our capacity to more seamlessly switch back and forth between the in person and virtual environments at minimal costs to our economic systems. Preventing the likely economic fallout of crises like COVID19, from happening again is the greatest global economic challenge of the twenty-first century.