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Remote-first work is taking over the rich world

A growing body of research hints at why

In february 2020 Americans on average spent 5% of their working hours at home. 

By May, as lockdowns spread, the share had soared to 60%—a trend that was mirrored in other countries. 

Many people, perhaps believing that working from home really meant shirking from home, assumed that office life would soon return to something like its pre-pandemic norm. 

To say it has not turned out that way would be a huge understatement.

Most office workers remain steadfastly “remote-first”, spending most of their paid time out of the office. 

Even though a large share of people have little choice but to physically go to work, 40% of all American working hours are still now spent at home. 

In mid-October American offices were just over a third full, suggest data from Kastle Systems, a security firm. 

From Turin to Tokyo, commercial areas of cities remain substantially quieter, compared with pre-covid norms, than residential ones. 

Economists are trying to work out what all this means for productivity.

Perceptions about the future of office work are changing. 

Last year British government ministers exhorted workers to get back to the office; now they are quieter. 

Wall Street banks, often the most enthusiastic advocates for in-office work, are toning down the rhetoric. 

According to a monthly survey by Jose Maria Barrero, Nick Bloom and Steven Davis, three economists, bosses expect that in a post-pandemic world an average of 1.3 days a week will be worked from home—a quarter more than they expected when asked the same question in January. 

Even that could in time prove to be an underestimate. 

Workers hope they will spend closer to half their working hours at the kitchen table.

A few factors explain why remote-first work remains dominant. 

Many people remain scared of contracting covid-19, and thus wish to avoid public spaces. 

Another possibility is that workers have more bargaining power. 

In a world of labour shortages, it takes a brave boss to make people take a sweaty commute five days a week (workers view being forced to be in the office full-time as equivalent to a 5% pay cut). 

There is a more intriguing possibility, however. 

Work that is largely done remotely may be more efficient compared with an office-first model.

The past year has seen an explosion of research on the economics of working from home. 

Not all the papers find a positive impact on productivity. 

A recent paper by Michael Gibbs of the University of Chicago and colleagues studies an Asian it-services company. 

When the firm shifted to remote work last year average hours rose but output fell slightly. 

The authors ascribe part of the decline in productivity to “higher communication and co-ordination costs”. 

For instance, managers who had once popped their head round someone’s door may have found it harder to convey precisely what they needed when everyone was working remotely.

Most studies, however, find more positive results. 

Mr Barrero and his colleagues’ surveys cover a large number of firms, rather than just one. 

Only 15% of home-workers believe they are less efficient working in this way than they were on business premises before the pandemic, according to a paper published by the team in April. 

A study released that month by Statistics Canada finds that more than half of “new” remote workers (ie, those who normally worked outside the home before the pandemic) reported completing about the same amount of work per hour as before, while one-third said they got more done.

Economists have less insight into why remote workers might be more productive. 

One possibility is that they can more easily focus on tasks than in an office, where the temptation to gossip with a co-worker looms large. 

Commuting, moreover, is tiring. Another factor relates to technology. 

Remote workers, by necessity, rely more on tools such as Slack and Microsoft Teams. 

This may allow bosses to co-ordinate teams more effectively, if the alternative in the office was word-of-mouth instructions that could easily be forgotten or misinterpreted. 

Patent applications for work-from-home technologies are soaring, while American private-sector investment in it is growing by 14% year-on-year.

Yet the popularity of remote-first work presents a puzzle. 

If it is so wonderful, then why is there little evidence of a shift towards “fully remote” work, where firms shut down their offices altogether? 

Companies that have chosen to do this are in a tiny minority. 

The number of people moving to cities such as Tulsa, in Oklahoma, which is positioning itself as the global capital of remote work, remains small.

Perhaps it is only a matter of time before everyone who can goes fully remote. 

A new study in Nature Human Behaviour, however,suggests that firms have good reason to hold on to their office buildings, even if they are used less frequently. 

The paper studies the communications (including instant messages and video calls) of 60,000 Microsoft employees in 2019-20. 

Remote work makes people’s collaboration practices more “static and siloed”, it finds. 

People interact more with their closest contacts, but less with the more marginal members of their networks who can offer them new perspectives and ideas. 

That probably hurts innovation. 

The upshot is that fully remote teams might do quite well in the short term, but will ultimately suffer as innovation dries up.

What a way to make a living

How best to collaborate, then, in a remote-first world? 

Many firms assume it is enough for everyone to come into the office a few days a week, since this will lead to people bumping into each other and talking about ideas. 

Others, backed by stronger evidence, say that managers must be more intentional, and bring people together with the express purpose of discussing new ideas. 

Firms will have to experiment as they get used to a new way of working, and the precise arrangement may vary depending on the type of work. 

What seems clear, though, is that offices will still have a role after the pandemic—even if they are mostly empty.

Why Jay Powell has been a ‘dangerous man’ at the Fed

Central bank chair’s support for deregulation has weakened the financial system

Dennis Kelleher 

Jay Powell’s actions have moved the US closer to future financial crises and bailouts funded by taxpayers © Financial Times

In a recent hearing, Senator Elizabeth Warren told US Federal Reserve chairman Jay Powell that he is “a dangerous man” and that she would not support his renomination to head the central bank.

Warren said deregulation supported by Powell over the past four years has undermined the financial stability of the banking system. 

I believe that is an accurate description. 

Powell’s actions have moved the US closer to future financial crises and bailouts funded by taxpayers, as happened in 2008.

The actions were aimed at the most important reforms after 2008 across five key areas: capital requirements, supervision, proprietary trading, living wills to allow stricken banks to be safely unwound and the amount of assets banks must hold that are “liquid” and easy to sell.

Each of those financial protection rules were significantly weakened by the Fed under Powell, leaving the overall structure of the regulatory framework impaired and materially reducing the resilience of banks. 

The deregulation also made it harder for regulators and the public to know the actual condition of the banks, making crisis planning and mitigation more difficult.

Diluting the regulatory stress tests that lenders must go through weakened the capital requirements that enable banks to absorb their own losses without failing and needing taxpayer bailouts. 

These include scrapping the assumption that the banks would continue to lend during stressful periods and expand their balance sheets. 

Under the old test, banks in such a plight would have been required to increase their capital.

The test also previously assumed banks would continue to pay dividends over the following two years, thereby depleting their capital. 

Removing that assumption eliminates the requirement for the banks to have sufficient capital to cover those payouts.

In a dissenting opinion issued on the stress tests changes, Fed governor Lael Brainard said the rule changes gave a green light for large banks to reduce their capital buffers materially. 

She argued that the rule change would result in a $60bn, or 5 per cent, reduction in the current capital requirements for the highest quality capital across the largest banks and that the actual amount of capital held (which includes management applied buffers) could reduce by twice as much.

The effect on banks with assets in the $250bn and $700bn range would be even greater because the additional capital charge for being the largest, systemically important banks does not apply to them, despite some still being large enough to cause systemic issues and contagion. 

We now have much less confidence that any large bank can withstand a crisis.

Requirements for banks to hold adequate amounts of liquid, high-quality assets to fund outflows were lowered, particularly for those in the $250bn to $700bn asset range. 

This action has needlessly jeopardised big bank liquidity positions, leaving them more vulnerable to insolvency under stress.

Under Powell, the Fed eliminated its own ability to restrict bank dividends and share buybacks in response to especially poor supervisory assessments. 

When used, this restriction enabled the Fed to get the attention of shareholders and provide motivation for banks to fix their own problems.

On top of that, the Fed made it easier for banks to deplete their capital via share buybacks and dividends, even in times of extreme stress.

In addition, full and complete living wills now must only be submitted to the Fed every four to six years instead of effectively every two years. 

Considering how much a bank can change in that time, the living wills might be irrelevant, undermining the very purpose of the exercise. 

For example, a 2004 living will for Lehman Brothers would be likely to have been largely useless when it crashed in 2008.

Finally, the restrictions put in place by the Volcker rule’s ban on proprietary trading were eroded by a set of exclusions and definition changes. 

Allowing banks to trade on their own accounts encourages risk-taking and even gambling-like behaviour.

Not only did Powell’s Fed allow banks to engage directly in more of these types of activities, but they were also enabled to do more of it indirectly through investments in venture capital and loan funds, some of which have been shown to be unstable and unsafe.

The dissents from Brainard and FDIC Director Martin Gruenberg also point to the many dangers of the Fed’s actions under Powell. 

These deregulations have weakened the financial reform legislation meant to protect Main Street families’ jobs, homes, savings and so much more.

The writer is president of financial reform advocacy group Better Markets  

The JFK Cover-Up Strikes Again

By blocking the release of all documents concerning the Kennedy assassination, US President Joe Biden has continued what is now something of a White House tradition. It is no wonder that most Americans believe that Lee Harvey Oswald did not act alone.

James K. Galbraith

AUSTIN – Brood with me on the latest delay of the full release of the records pertaining to the murder of President John F. Kennedy in Dallas on November 22, 1963. 

That was 58 years ago. 

More time has passed since October 26, 1992, when Congress mandated the full and immediate release of almost all the JFK assassination records, than had elapsed between the killing and the passage of that law.

The late Senator John Glenn of Ohio – an astronaut-hero of the Kennedy era – wrote the 1992 law. 

It stipulates that “all Government records concerning the assassination ... should carry a presumption of immediate disclosure, and all records should be eventually disclosed.” 

The law states that “only in the rarest cases is there any legitimate need for continued protection of such records.”

Congress was precise in specifying where such a need might exist. 

Protecting the identity of an intelligence agent who “currently requires protection” was one case. 

Likewise, any intelligence source or method “currently utilized” deserved protection. 

In some cases, privacy concerns might be paramount. 

Finally, there was language exempting any other matter relating to “defense, intelligence operations, or the conduct of foreign relations, the disclosure of which would demonstrably impair the national security of the United States.”

After 25 years, those provisions lapsed, whereupon the law requires the President to certify that “continued postponement remains necessary to protect against an identifiable harm to the military defense, intelligence operations, law enforcement, or the conduct of foreign relations that is of such gravity that it outweighs the public interest in disclosure.” 

On October 22, President Joe Biden made this certification, supposedly on a temporary basis, tasking the relevant federal agencies to review all remaining records and report by October 1, 2022, on any cases where the risk of such identifiable harm remains.

What “identifiable harm” could there possibly be? 

In reporting this story, The New York Times reminds us that an exhaustive, “yearlong inquiry into the murder led by Chief Justice Earl Warren concluded that Lee Harvey Oswald acted alone.” 

Oswald, like Kennedy, has been dead for 58 years. 

If he acted alone, and if an exhaustive inquiry established this fact 57 years ago, what secret could be left? 

If he acted alone, there were no other guilty parties. 

Not then, not 29 years later, and not today.

The Times distinguishes between “researchers and conspiracy theorists.” 

One may infer that researchers are those who trust the Warren Commission, whereas conspiracy theorists are those who do not. 

But apart from those few who have made careers out of defending the Commission against its many critics, why would anyone who didn’t distrust the official story be interested in this case? 

In fact, as the Times admits, people are interested, with surveys finding that “most Americans believe others were involved.”

In other words, most Americans accept a conspiracy theory. 

They can see that the “lone gunman” story cannot be reconciled with the claim that national defense, intelligence operations, or foreign relations in 2021 would be compromised by releasing all documents, with no redactions, as required by law, nearly 58 years after Kennedy’s assassination by that lone gunman.

I am not accusing Biden, or the agencies whose advice he accepted on these matters, of breaking the law. 

On the contrary, I take them at their word: that in their view, a full disclosure of all documents would compromise military, intelligence, and foreign relations.

It is not difficult to imagine how. 

Suppose, for the sake of argument, that there was a conspiracy. 

Suppose that the remaining documents, together with those already released, were to establish – or permit private citizens to establish – what most Americans already believe. 

In that case, it would be obvious that the cover-up involved senior US government officials – including the leaders of the very agencies currently being tasked with reviewing the records. 

And, as a point of logic, it follows that in every succeeding cohort, under every president, the cover-up has continued. 

Isn’t that the only plausible way the current interests of those agencies might be damaged?

The irony is that by withholding the records, the government has already admitted, without saying so, that the Warren Commission lied and that there are vile secrets which it is determined to protect. 

It concedes, without saying so, that there was a conspiracy and that there is an ongoing cover-up. 

If there were not, all the records would have been released long ago. 

You don’t have to be a “conspiracy theorist” to see this.

Mark my words: Biden’s 2022 deadline will come and go. 

The song and dance will continue. 

No one who remembers 1963 will live to see the US government admit the full truth about Kennedy’s murder. 

And the American people’s faith in democracy will continue to fade. 

There is only one way to prevent this, and that is to release every record, withholding nothing – and to do it now.

James K. Galbraith, a trustee of Economists for Peace and Security, holds the Lloyd M. Bentsen, Jr. Chair in Government/Business Relations at the LBJ School of Public Affairs at the University of Texas at Austin. From 1993-97, he served as chief technical adviser for macroeconomic reform to China’s State Planning Commission. He is the author of Inequality: What Everyone Needs to Know and Welcome to the Poisoned Chalice: The Destruction of Greece and the Future of Europe.