How Covid-19 Transformed the U.S. Economy

“…“If you take the U.S. as a whole,” says Edward Glaeser, chairman of Harvard’s economics department, office attendance is “down about 19%, relative to pre-pandemic levels.”That average masks some startling variations among major cities. While Houston sits squarely on the mean at 19% and Los Angeles is “looking pretty good” at 21%, New York and Boston are both down 32%. “And then you go to San Francisco,” Mr. Glaeser says with an almost unseemly gusto. “San Francisco is still down 52%. The tech hub is the most extreme.” The impact of virtual work was very different “at different parts of the education distribution,” Mr. Glaeser points out—and that may exacerbate economic and social inequality. He cites data from the Bureau of Labor Statistics: The share of people with advanced degrees who were working remotely in May 2020 was 68.9%, compared with only 15% of remote-working high-school graduates and 5.2% of high-school dropouts. “This was a fairly elite phenomenon.”…”

Tunku Varadarajan, "Can America’s Cities Make a Post-Pandemic Comeback?"Wall Street Journal, May 27, 2022, https://www.wsj.com/articles/big-cities-will-suffer-if-workers-stay-home-remote-labor-young-old-finance-college-11653664888

Can America’s Cities Make a Post-Pandemic Comeback?

Before Covid came to America in January 2020, only 5% of the U.S. labor force worked remotely all the time. Within a few months of the pandemic setting in, however, nearly every American who could work from home was doing so. Today remote work is a white-collar norm.

“If you take the U.S. as a whole,” says Edward Glaeser, chairman of Harvard’s economics department, office attendance is “down about 19%, relative to pre-pandemic levels.” That average masks some startling variations among major cities. While Houston sits squarely on the mean at 19% and Los Angeles is “looking pretty good” at 21%, New York and Boston are both down 32%.

“And then you go to San Francisco,” Mr. Glaeser says with an almost unseemly gusto. “San Francisco is still down 52%. The tech hub is the most extreme.”

These figures are based on data drawn from Google Maps, which tracks users’ comings and goings by monitoring the location of their phones. “They’re pretty good, a reliable indicator,” he says. But numbers from Kastle Systems, a Falls Church, Va., property-management company that provides swipe technology for clocking into fancy office buildings, are disconcerting. “Those numbers are down by over 50%” in America’s top 10 cities, Mr. Glaeser says. “They’re telling you that in the highest end of the commercial real-estate market, the picture is more severe.”

Mr. Glaeser has mixed feelings about the long-term effects of all this. The perspective of the economist “tends to be one that favors choice, rather than thinking there’s only one way to live or work,” he says. “For many workers, some form of hybrid will be desirable.” Some, perhaps those in the later stages of their careers, may settle only for going fully remote. He doesn’t think it’s “absolutely necessary” that every employee get back into an office. “But I will say that it’s going to be very difficult for cities if it doesn’t happen.”

Mr. Glaeser, 55, is arguably the foremost economist who studies cities. It’s a growing tribe, he says in a Zoom interview from his office on the Harvard campus, to which, he’s keen to stress, he’s been going in person since August 2021. The “hallmarks” of the urban economic models he studies involve space—“recognizing that people and firms make choices about where to locate.” Zoom and hybrid work may be here to stay, he allows. “But for most of us the most important interactions of our lives will occur in the real world and, consequently, location remains absolutely critical.”

The way Mr. Glaeser tells it, cities are among mankind’s finest creations—engines of entrepreneurship, inventiveness and economic growth. His intellectual inspiration as an urban economist is Alfred Marshall (1842-1924), who formulated the hypothesis that Mr. Glaeser says has been central to his own career. “Great are the advantages,” Marshall observed of cities, “which people following the same skilled trade get from near neighborhood to one another. The mysteries of the trade become no mystery but are, as it were, in the air.”

That explains why young people are drawn to cities—and why, in Mr. Glaeser’s view, in-person work is vital in the early stages of a career. Cities—and face-to-face contact at work—have “this essential learning component that is valuable and crucial for workers who are young,” he says. The acquisition of experience and improvement in productivity, “month by month, year by year,” ensures that individual earnings are higher in cities than elsewhere.

Mr. Glaeser commends a “superb paper,” published in the Review of Economic Studies in 2017, that documents how people learn by working in big cities. The authors show that workers in Madrid earn 55% more than those in rural Spain. “These wage benefits don’t appear magically when workers come to Madrid or Barcelona,” Mr. Glaeser says. “Instead, a new worker in the big city earns only about 10% more than a worker in a mid-sized city.” After 10 years, that earnings gap grows to 35%.

“The sort of young people who don’t want to come back to the office,” he says, “don’t really know what they’ve missed.” They think that the experience of “working from a Starbucks is all there is, and that they’re having just as much career development as they would have if they were surrounded by mentors.” They aren’t. He cites a study that finds remote workers face “a 50% reduction in their probability of being promoted.”

Mr. Glaeser describes the pandemic as a direct and withering assault on cities. “If you take the definition of urbanism,” he says, “a city is the absence of physical space between people. A city is density, proximity, closeness.” Social distancing amounted to “the rapid-fire deurbanization of the world.” Americans went from willingly paying a “hefty premium, whether we were an advertising company on Madison Avenue or an ordinary 22-year-old who just wanted to be in New York, to all of a sudden wanting to have no one around us whatsoever.”

The world did connect virtually, “which essentially changed the rules of the game.” However exhausting we find Zoom and other technologies, we’d have incurred greater economic or health damage without them: “We would have either gone ahead and not social-distanced, in which case we would have had more deaths, or we would have lost more economically—lost more from our productivity.”

The impact of virtual work was very different “at different parts of the education distribution,” Mr. Glaeser points out—and that may exacerbate economic and social inequality. He cites data from the Bureau of Labor Statistics: The share of people with advanced degrees who were working remotely in May 2020 was 68.9%, compared with only 15% of remote-working high-school graduates and 5.2% of high-school dropouts. “This was a fairly elite phenomenon.”

But now that the threat from Covid has abated, will employees go back to work in their city offices? Those who ask the question range beyond employers who yearn to have them back, and include everyone from city mayors to the humblest vendors of coffee and hot dogs who ply their trade on urban sidewalks.

Service workers in the retail, leisure and hospitality sectors accounted for 32 million American workers in 2019—or a fifth of the American labor force. They may be hit particularly hard. “Those workers thrive by providing services to people that come to big offices,” Mr. Glaeser says. He had believed that the pandemic would be “absolutely catastrophic” for them. “As it turns out, any decrease in labor demand was shielded by the trillions of dollars that flowed out in federal largess.” As that money dries up, the effect is likely to be acute.

There’s an irony in all this. “There tends to be a very strong correlation with political beliefs,” he says. “The difference in mobility—people moving around—was very clear early on between red and blue. There was much more Covid fear in blue states, where there were also more knowledge workers.” Although liberals also profess concern about economic inequality, the effects of remote work are “probably more problematic for upward mobility in blue states than red states,” he says. “The well-heeled in San Francisco not going to the office is bad for demand for urban services, which are provided by less-well-educated San Franciscans.”

How would Mr. Glaeser make the case for a nationwide return to the workplace? “If I were making it to Mayor Adams of New York or Mayor Wu of Boston, it would be pretty easy.” The job would be one of civic and moral “suasion,” as well as talking up the vital importance of cities. “The city depends upon being a thriving place, where people buy and sell to each other, and interact with each other. It’s terrible for a city that many of its key urban office markets feel like wastelands during the daytime.”

Cities, Mr. Glaeser says, must recognize their “traditional function of providing economic opportunity, even more so helping poor people become middle-income people.” He’d recommend making it as easy as possible for businesses to reopen and offering “permit holidays” for new businesses in currently dormant downtown areas. Most of all, he’d like America’s urban mayors to tackle crime, which increased alarmingly during the pandemic. Homicides in 2021, he points out, were up 44% “in major American cities” compared with 2019.

He would be “more circumspect” in making the case to a business owner. “I would say, ‘I understand that a lot of your employees don’t like coming in, so let’s look at some data.’” He points to an article in Nature that examines the impact on more than 61,000 Microsoft employees of working remotely over the first six months of 2020. “Firm-wide remote work,” the study found, “caused the collaboration network of workers to become more static and siloed, with fewer bridges between disparate parts.” Employees found it much harder to acquire and share information. Mr. Glaeser would counsel employers to ask themselves whether they were “causing long-term problems for the company by not bringing people together into the office.”

Which raises another question: “Can they get their workers to come back? Certainly. They can use their wage power to get anyone to come back.” There’s a price at which “almost all of us will come into the office—the question is, just how much?” But there has, he says, been a great “clarifying” that has led us to think about “the nature of work, and the nature of offices.” And he thinks the pace and incidence of return will differ by the task an employee performs.

He cites the example of his own workplace. “I consider it incredibly important to have a community of scholars in this building,” he says, “one that is there and available for our graduate students, that runs into each other in the halls and is a living, breathing community.” By contrast, he doesn’t think the support staff “who work on our financials” need to be in the building. “They need a little bit of time to onboard, and then it’s really OK for them to go home.”

Remote connection has been calamitous for education, Mr. Glaeser says: “The unmitigated disaster that remote learning has been for American children—and children throughout the world—has been confirmed in study after study, and particularly for the most disadvantaged kids.” College instruction has suffered too. Delivering a lecture to 100 students on Zoom, he says, is “just a bad movie, a really bad movie. None of the magic that comes from live lecturing and live interaction with students is there when you’re doing it via Zoom.”

As for individual employees, Mr. Glaeser would tell them that his own return to his Harvard office nine months ago was “just fantastic for my mental health”: “I have been a much happier person for being around young people again, for being around my colleagues. And that has been not only productive but also joyful.”

Nor will further urbanization ride to the rescue here. Officially, China has only a 64.7% urbanization rate, compared to over 80% in the U.S. You might think, therefore, that China has plenty of room to move people from farms to cities. But in fact, this is purely an artifact of how China defines urban population. In China, only people who live in cities with populations of larger than 100,000 are considered “urban”. In the U.S., that number is just 2500. So lots of China’s “rural” population isn’t even close to what Americans would consider “rural”. In fact, when economists try to estimate China’s “Lewis Turning Point” — the point where a country no longer has surplus agricultural population to shift into urban manufacturing industries — they agree that China either reached it a while ago, or is reaching it right about now.China’s productivity slowed down at a much lower income level than other East Asian countriesNow, as the experience of Taiwan, Korea, and Singapore show, it’s possible to dip and then recover, at least somewhat. But China’s productivity growth slowed so much earlier than that of its regional peers that even a modest re-acceleration would leave it significantly behind. In other words, just because China has “room” to catch up with the rich countries doesn’t mean it will.

Noah Smith, "Does China have hidden reservoirs of growth potential?,"Noahpinion, May 5, 2022, https://noahpinion.substack.com/p/does-china-have-hidden-reservoirs

Does China have hidden reservoirs of growth potential?

Within the last year, I’ve noticed a distinct souring on the topic of China’s growth prospects among the commentariat. This makes sense, of course. Between seemingly never-ending Covid lockdowns, a protracted crash in the vast real estate sector, Xi’s weird crackdown on internet companies, and the fear of Russia-like sanctions in the event of a conflict, there are now a lot more reasons to worry that China’s amazing catch-up growth story is drawing to an end. In fact, these new stumbles come on the heels of longer-term trends that have relentlessly pushed down China’s growth prospects — slowing productivity growth, reduced opportunities for copying Western technology, and rapidly aging demographics.

This is obviously an important question for multinational companies who are thinking about curbing or even abandoning their investments in China:

China witnessed $17.5 billion worth of portfolio outflows last month, an all-time high, according to most recent data from the Institute of International Finance (IIF). The US-based trade association called this capital flight by overseas investors "unprecedented," especially as there were no similar outflows from other emerging markets during this period. The outflows included $11.2 billion in bonds, while the rest were equities.

With so many reasons to leave, why stay? The answer is: Sheer market size. The most important reason to be invested in China switched long ago from cheap labor costs to market access. Even if the Chinese government takes various steps to limit foreign companies’ market access and support home-grown competitors, even a tiny sliver of a billion consumers equals vast riches. So obviously, the question of whether the Chinese market will continue to grow is an important factor for investors.

Despite the darkening outlook on the China growth question, pockets of optimism remain. Some of these come from the people I call “obligate longs” — people whose job it is, in essence, to reassure Western businesspeople that investing in China is safe and attractive. But some optimism comes from less directly interested parties — for example, from my fellow Substack blogger Adam Tooze, and from Bert Hofman of the National University of Singapore.

Demographics

One of their main arguments is that China’s demographic crisis is not nearly as severe as people think. For example, here is a slide from Hofman’s talk showing that if China were to simply raise its retirement age to 65, its labor woes would essentially vanish:

Color me very skeptical. Here are the UN’s projections for China’s population age 15-64:

But having seen firsthand the effects of forced early retirement in Japan (where the retirement age was 60 for many workers for a long time), I’m skeptical that a lot of these 61-year-olds are actually retired. Many of them probably go to work at much more low-paying jobs after being forced to quit their career job. They’re still in the labor force, they’re just not earning nearly as much. So the labor force bump from Hofman’s projection might be illusory.

It still might be true, of course, that keeping those folks in their career jobs for a few years longer will raise national productivity by a substantial amount. Old workers certainly have a big accumulated stock of knowledge about the companies and industries where they’ve worked for decades. But as Adam Ozimek suggested in a recent presentation, it’s also possible that doing this will cause Chinese companies to ossify — top-heavy with older management, these companies might fail to embrace new technologies and new business models. Ozimek’s own research shows a negative correlation between population aging and productivity:

In other words, productivity probably peaks at some point in a worker’s life. So keeping elderly managers in the top spots in China’s companies might not be the best idea for growth, whatever the official labor force numbers say.

Conversely, there’s the question of how many young workers China has. And we see that this number has already fallen by quite a lot:

So to sum up, China’s demographics probably are just as much of a headwind as everyone thinks they are.

Nor will further urbanization ride to the rescue here. Officially, China has only a 64.7% urbanization rate, compared to over 80% in the U.S. You might think, therefore, that China has plenty of room to move people from farms to cities. But in fact, this is purely an artifact of how China defines urban population. In China, only people who live in cities with populations of larger than 100,000 are considered “urban”. In the U.S., that number is just 2500. So lots of China’s “rural” population isn’t even close to what Americans would consider “rural”.

In fact, when economists try to estimate China’s “Lewis Turning Point” — the point where a country no longer has surplus agricultural population to shift into urban manufacturing industries — they agree that China either reached it a while ago, or is reaching it right about now.

Productivity

Tooze and Hofman emphasize the fact that China still has only a little over 1/4 the per capita GDP of the U.S., and so still seems to have plenty of “room to grow”. But there are a great many countries in the world that fail to grow fast despite having plenty of room. In the past, China has fulfilled its potential; in the future, this may change.

The key here is productivity. You can build a lot of physical capital, but once you’ve built a certain amount, how rich you are relative to top countries like the U.S. depends entirely on how efficiently you use your resources of labor and capital.

And here, China has not been looking so amazing in the last 15 years or so. The Lowy Institute has a long and highly informative article with a great section on productivity (which Tooze links to). Here’s one of their graphs:

Now, as the experience of Taiwan, Korea, and Singapore show, it’s possible to dip and then recover, at least somewhat. But China’s productivity growth slowed so much earlier than that of its regional peers that even a modest re-acceleration would leave it significantly behind.

So what’s the positive case for a productivity acceleration here? Tooze and Hofman tout the country’s rising tertiary (college) education levels:

Finally, Tooze touts Xi Jinping’s industrial policy, covered in depth in a recent Economist article. Basically, the idea here is that Xi is going to force China’s economy to divert resources away from industries like real estate, internet, and finance, and toward industries like semiconductors, artificial intelligence, robotics, electric vehicles, and the internet of things, and that this will result in big productivity gains.

In fact, I think it’s no exaggeration to say that this is the main hope for continued Chinese growth. But I also think that what Xi Jinping is trying to do is qualitatively different from the (occasionally successful) industrial policy drives that other countries have undertaken. He’s not just promoting the industries he likes; he’s trying to supercharge their growth by smashing the industries he doesn’t like. The idea seems to be that the economy’s industrial structure is like a tube of toothpaste, and if you squeeze one end, capital and labor and human ingenuity will spurt out the other end. Industrial policy is usually about picking winners; Xi wants to pick losers too.

I am skeptical that this will work. Sure, Xi can probably get a little mileage from pumping up the industries of the future (though even there it will depend on competence in execution, which is generally the exception rather than the norm). But I don’t think most of the untold millions of Chinese people who are forced to quit building and financing apartment buildings are going to start successful, innovative companies in AI and robotics. They just don’t know how to do that.

And I think Xi already sort of realizes that. Already, in the face of slowing growth, the government is trying to partially back away from its crackdown on internet companies. But at this point the damage has probably been done, not just to that industry but to entrepreneurship everywhere. It’s going to be harder, going forward, to get innovative entrepreneurship in any sector other than the ones Xi explicitly supports.

So while it’s conceivable that Xi will be able to pull off some totally novel industrial policy magic, the chances don’t look great — unless you’re one of those people who think that the Chinese government is just operating on another level from every other government that has ever existed, which is a thing that some people do think.

Anyway, to sum up, the continued bull case for Chinese growth rests to a large degree on optimistic assumptions about two things:

1. China’s ability to counteract extremely unfavorable demographics by having old people stay in their jobs longer, and
2. Xi Jinping’s ability to invent whole new and wildly successful forms of industrial policy.

I don’t think I quite buy this case just yet.

Christopher Mims, "How the Pandemic Broke Silicon Valley’s Stranglehold on Tech Jobs,"Wall Street Journal, March 12, 2022, https://www.wsj.com/articles/how-the-pandemic-broke-silicon-valleys-stranglehold-on-tech-jobs-11647061211

How the Pandemic Broke Silicon Valley’s Stranglehold on Tech Jobs

Silicon Valley, make way for Silicon U.S.A.

In a feedback loop that could transform the economic geography of the U.S., millions of Americans are moving, and companies are following them—tech companies in particular. In turn, this migration of companies and investment is attracting more workers to places that in the past usually lost talent wars. This is a reversal of a decadelong trend in the opposite direction. It could have big implications for which parts of the U.S. will prosper and for income inequality, and so possibly also for politics, innovation and America’s overall ability to compete.

For decades, the success of America’s so-called “superstar cities” was driven by the tendency of the nation’s most productive workers and firms to cluster in a handful of places such as Silicon Valley. Now, in the economic equivalent of the blink of an eye—the two-year span of the pandemic—that has begun changing.

Until very recently, evidence for this shift has been mostly anecdotal and preliminary. But a cornucopia of Research has yielded eyebrow-raising statistics documenting the scale and speed of this change in how people with jobs that can be done remotely work and live:

Nearly 5 million Americans say they have moved since 2020—and 18.9 million more are planning to do so—on account of remote work, according to a survey released this past week by Upwork, a platform connecting employers and freelance workers.

In the U.S., nearly a quarter of all full work days will happen at home after the pandemic ends, as opposed to 5% before the pandemic, according to survey data published in December that was gathered by economists at Stanford University, University of Chicago and the Instituto Tecnológico Autónomo de México.

A paper from researchers at Oxford Universify, the OECD Economics Department and Indeed, the job-postings site, found that as of December 2021, the proportion of job listings in 20 countries that mentioned the possibility of remote work had more than tripled from before the pandemic, to 8.5% from 2.5%. The same researchers also tracked how such postings changed as pandemic restrictions ebbed and flowed, and found evidence these figures are unlikely to budge after pandemic restrictions end.

Yet another paper published this past week, from economists at Stanford, MIT Sloan, Princeton University and other institutions, makes the case that the U.S. government has undercounted the share of Americans working remotely by 33 percentage points, and about half of all U.S. workers currently perform their jobs remotely at least some of the time.

Finally, research out this past week from the Brookings Institution provides fresh evidence that the rise of work-from-anywhere as both a technological and cultural phenomenon is driving a mass migration of capital, companies and workers. They are heading to a diverse array of cities that for decades saw their best and brightest drained away to places like the San Francisco Bay Area, New York City and Seattle. These new “rising star” cities include Atlanta, Dallas, Denver, Kansas City and St. Louis, according to Brookings.

“We knew remote work was feasible, and we knew job seekers wanted it, but it was the pandemic that made it an actual day-to-day experience, and once it happened it stuck,” she adds.

The surge in pandemic-induced remote work happened to coincide with another phenomenon, years in the making, according to data from Brookings: a decade or more of increased investment in tech firms clustered in cities outside regions that typically consume the lion’s share of investment and talent.

The result of the convergence of these two reinforcing trends is that, in 2021, six of nine rising-star cities all saw growth in the number of postings for tech jobs, a proxy for future employment in those cities. During the same period, postings in Boston, the Bay Area, New York and Los Angeles declined, according to data from Brookings.

Commentators and local boosters have been proposing for decades, perhaps wishfully, that this sort of thing might happen. From the “Silicon Prairie” to “Philicon Valley,” it’s been a slow build to the present inflection point, and some regional tech hubs are growing more quickly than others.

The movement of capital, talent and companies has typically been a relatively slow process, and can take decades, says Margaret O’Mara, a professor of history at the University of Washington and author of “The Code,” a history of Silicon Valley. The development of America’s existing superstar tech hubs are the clearest example of that—after all, the term “Silicon Valley” was coined a half-century ago.

“One of the secrets of Silicon Valley is time,” says Dr. O’Mara. “No mayor or county executive wants to hear that answer, which is why I don’t have a multimillion-dollar economic-development consulting career.”

The ascension of these new tech hubs is hardly an apocalypse for America’s superstar cities or the tech companies and tech workers in them, says Mark Muro, who conducted the research for Brookings. But it does seem to be the first full-year data in a shift that is just getting under way. Data in 2022 and beyond should show an even more profound shift in employment away from what have in the past been dominant cities for tech, he adds, especially as a number of tech companies, such as Oracle and Tesla, transfer workers as a result of moving their headquarters out of the Bay Area.

After the rise of remote work and the growth of more tech hubs, a third underlying trend could also be driving this geographic shift: the maturation of some of the technologies that for decades have underpinned Silicon Valley and other hubs, in particular the microchip and the internet itself.

The “silicon” in Silicon Valley is, after all, a reference to what microchips are made of. The first commercially available integrated circuit was produced in 1961 by Fairchild Semiconductor, in Santa Clara, Calif. The PC revolution and later the internet created the tech giants of today, mostly in and around the Bay Area and Seattle.

But the outsourcing of electronics manufacturing and the rise of cloud services have made it much easier to build a tech startup anywhere. The dispersal of the knowledge required to build companies, and the precipitous drop in the cost to launch a startup in the tech industry, are both hallmarks of what historians call a “mature” set of technologies. This doesn’t mean these technologies are done evolving, just that the rate of breakthroughs has slowed enough that companies built far from where they were first invented can now participate in their development.

Some historians and economists have declared our current age the “fourth industrial revolution.” If that’s so, then in some ways it might be following the path of past industrial revolutions, says Dr. O’Mara. From England’s 18th-century Industrial Revolution—which quickly became America’s, after the requisite expertise and technologies were transplanted across the Atlantic—to the rise of Detroit, history is full of new technologies that started in one place, made those who lived there enormously wealthy, and eventually became global phenomena, leading to specialized hubs of knowledge and production all across the world.

While it’s impossible to precisely copy the formula that worked for the Bay Area and build the “next Silicon Valley,” regional tech hubs can prosper by finding their own niches, she adds.

Atlanta is a good example of these trends. While it was largely left out of the early decades of the rise of the PC and the internet, the presence of corporate headquarters and the Georgia Institute of Technology meant it had both demand for the products of enterprise tech startups and the talent to build them.

America’s ninth-largest metro area has quietly become an assembly line for tech unicorns, with five of its startups topping $1 billion valuations in 2021 alone, including Calendly, which streamlines the process of scheduling meetings, and Stord, which helps businesses with fulfillment and logistics. The result of successive waves of startup exits, followed by mentorship and reinvestment from startup founders, plus the proximity of potential customers in the headquarters of Fortune 500 companies like Home Depot and United Parcel Service, means that the city has built up all the elements necessary to churn out tech startups.

Combined with the relatively low cost of living and the availability of housing—both in sharp contrast to superstar cities—Atlanta has attracted workers in a way that gives it a talent pool ready-made for new startups, says Adam Steinberg, a serial entrepreneur in the Atlanta area and CEO of Fetch, a startup that allows individuals and small businesses to rent trucks and utility vans by the hour.

Mr. Steinberg went through the storied startup-accelerator program Y Combinator, where he was advised he would have better access to funding and talent if he moved his company to the Bay Area. But other variables, such as his existing professional network in Atlanta, being close to family and friends, and the fact that he could sustain his company longer on the same amount of investment because of Atlanta’s lower costs, kept him in that city.

The pandemic has made finding talent easier, he adds, because with the rise of the remote-first work culture across the tech industry, he can hire workers anywhere in the world.

Also, he felt that for a truck-rental company it was important to start in a city typical, in its layout and demographics, of most of America: “We figured if we could make it in Atlanta, we could make it anywhere.”

Nearly 5 million Americans say they have moved since 2020—and 18.9 million more are planning to do so—on account of remote work, according to a survey released this past week by Upwork….In the U.S., nearly a quarter of all full work days will happen at home after the pandemic ends, as opposed to 5% before the pandemic, according to survey data published in December that was gathered by economists at Stanford University, University of Chicago and the Instituto Tecnológico Autónomo de México....The surge in pandemic-induced remote work happened to coincide with another phenomenon, years in the making, according to data from Brookings: a decade or more of increased investment in tech firms clustered in cities outside regions that typically consume the lion’s share of investment and talent. The result of the convergence of these two reinforcing trends is that, in 2021, six of nine rising-star cities all saw growth in the number of postings for tech jobs, a proxy for future employment in those cities. During the same period, postings in Boston, the Bay Area, New York and Los Angeles declined, according to data from Brookings.

“…the 10 fastest growing counties last year accounted for nearly 80 percent of the national total, a testament not so much to the rapid pace of change in these places, but to the lack of significant growth in the rest of the nation. The bureau had previously called 2021 the slowest population growth year on record, with the nation growing by just 0.1 percent.....New York, Los Angeles, Chicago and San Francisco lost a total of over 700,000 people from July 2020 to July 2021, according to the Census Bureau. Meanwhile, Phoenix, Houston, Dallas, Austin and Atlanta gained more than a total of 300,000 residents....Despite the latest figures, many major cities are optimistic about growth. New York City lost more than 300,000 residents through June 2021, the census shows, which city planning officials said was consistent with their own analysis. But, they said, the city’s sharp population decline through mid-2021 resulted largely from temporary patterns earlier in the pandemic, including an uptick in residents fleeing to the suburbs and exurbs, fewer immigrants, deaths from Covid and lower birthrates. They said these patterns had most likely lessened or reversed during the second half of 2021, which is not captured in the data. “The city is on its way back,” said Arun Peter Lobo, the city’s chief demographer. “The initial indicators, at least for us, are in the right direction.”

Robert Gebeloff, Dana Goldstein and Winnie Hu, "Cities Lost Population in 2021, Leading to the Slowest Year of Growth in U.S. History,"New York Times, March 24, 2022, https://www.nytimes.com/2022/03/24/us/census-2021-population-growth.html

Cities Lost Population in 2021, Leading to the Slowest Year of Growth in U.S. History

Substantial population loss in some of the nation’s largest and most vibrant cities was the primary reason 2021 was the slowest year of population growth in U.S. history, new Census data shows.

Although some of the fastest growing regions in the country continued to boom, the gains were nearly erased by stark losses last year in counties that encompass the New York, Los Angeles and San Francisco metropolitan areas.

The pandemic played a role, as the number of people dying rose substantially and many Americans left cities for smaller places. But experts say that skyrocketing housing costs were also to blame, and that some of the changes are a continuation of fundamental shifts in American demographics that began before the pandemic, such as the steadily falling birthrate and steep drop in immigration.

New York, Los Angeles, Chicago and San Francisco lost a total of over 700,000 people from July 2020 to July 2021, according to the Census Bureau. Meanwhile, Phoenix, Houston, Dallas, Austin and Atlanta gained more than a total of 300,000 residents. And there was also substantial growth in some rural areas and smaller cities like Boise, Idaho, and Myrtle Beach, S.C.

Population loss, particularly of working-age adults and their children, can separate extended families and lead to funding cuts and labor shortages in schools, health care facilities and other services that are essential to the residents who remain.

The pattern is a notable contrast from a decade ago, when large cities were growing, bolstered by a decades-long boom in immigration and the rising popularity of urban living. At that time, most of the counties losing population were rural or experiencing economic decline.

In the years immediately preceding the pandemic, those factors began to shift. Immigration slowed, urban housing costs rose, and suburban and exurban growth began picking up steam, trends that continued through the pandemic.

The virus wrought other changes. Because Covid-19 caused so many deaths, only 828 counties had more births than deaths in 2021, the figures show, down from more than 1,900 a decade ago.

And the rise of remote work made it less of a requirement for many workers to live in expensive cities to take advantage of high-paying jobs.

The decline in fertility started a decade ago during the Great Recession, and reflects the ways in which women and men of the Millennial generation are prioritizing education and work, delaying marriage and parenthood, and struggling to gain their economic footing as they deal with student debt, slow wage growth and steep housing costs.

Alison Grady and Ernest Brown, both 31, moved to Atlanta from Oakland, Calif., in March 2021 after nearly five years of living with roommates to save money on rent. Most recently, they had paid $1,500 a month for one room in a three-bedroom, 1,200-square-foot apartment that they shared with two friends.

The couple, who plan to marry and start a family, had wanted to buy a home in Oakland, but they found that houses in move-in condition started at $700,000, which was more than they could comfortably afford.

As they worked from home during the pandemic, and the virus and wildfires curtailed their social life, they spent more time in their cramped apartment and questioned whether it was worth it. They eventually decided to return to Atlanta, where they had met in 2014. They were able to buy a 1,000-square-foot, two-bedroom apartment for $315,000. And they no longer have roommates.

“The price of living in the Bay Area was so out of sync with the quality of life we were getting,” said Ms. Grady, a public health strategist.

Cities like New York and Los Angeles remain alluring, as evidenced by bidding wars for homes and big companies investing in office space. But many residents have been pushed away by a lack of affordable housing, as well as by pandemic-related changes to how they order their priorities.

Across the nation, counties with more modest housing costs gained in population, the data showed.

Five years ago, counties ranking above the 90th percentile for housing stress — a measure of housing costs as a share of income — accounted for a third of the nation’s population growth, suggesting that the high prices represented high demand.

But in 2021, those counties were net population losers, suggesting that costs have gotten out of hand.

In the Los Angeles area, for example, nearly half a million renters do not have access to an affordable unit, according to a 2021 report from the California Housing Partnership. For this group — including essential workers such as home health aides, janitors, child care professionals and medical assistants — homeownership can be all but impossible.

Regions where state and local governments do not make it easier to build affordable housing will face a troubled future, according to Dowell Myers, a demography and urban planning expert at the University of Southern California. There will be too few working-age adults to support a growing population of aging baby boomers. Jobs in nursing, utilities and other fields will go unfilled.

This demographic risk “is just deadly,” Professor Myers said. “We’re not building enough housing to keep our own kids.”

In Houston, like other growing Southern metro areas, the influx of relatively high earners has contributed to a real estate crunch that could erode the city’s reputation for affordability.

Kayli Thompson, 34, and her daughter, Analiese, 13, arrived in Houston last year from Ithaca, N.Y., where Ms. Thompson’s hours as a librarian were cut in half during the pandemic.

She was drawn to Houston by its stronger job market and warm climate. Still, relocating was a struggle. The rent money she set aside from savings, stimulus payments and a tax credit did not stretch as far as she had hoped. Her two-bedroom apartment costs $1,500 per month, nearly double her rent in Ithaca. She did not find a job right away, and received an eviction notice; in February, her church paid her rent.

Last month, she began working for a community newspaper, and she now feels the risk she took has paid off. She is delighted to be living downtown in a much more walkable neighborhood. When Ms. Thompson’s car broke down, it wasn’t as much the crisis it would have been in Ithaca.

“We’re happy,” Ms. Thompson said.

Gina Vargas, a 38-year-old consultant, joined the exodus from New York City in the spring of 2020. After 18 years in a city she thought she would never leave, she relocated to the Houston area, where she grew up, drawn mostly by the need to assist her aging parents.

The Houston she returned to was far different from the conservative place she remembered from her childhood, Ms. Vargas said. When her parents, an interracial couple, first moved decades ago to the working-class city of Pasadena, southeast of Houston, there had been a Ku Klux Klan meeting place near their home. Now, as a mixed-race Mexican American, she has felt welcomed into a cosmopolitan community, she said — though she noted there were more Trump flags.

And her New York salary has stretched a long way. Ms. Vargas was renting a one-bedroom apartment in Sunnyside, Queens, but she was able to purchase a three-bedroom house in a planned community in Cypress, 30 miles north of downtown Houston. She also bought a house for her parents, moving them to a more upscale neighborhood.

“The city is on its way back,” said Arun Peter Lobo, the city’s chief demographer. “The initial indicators, at least for us, are in the right direction.”The population estimates are the primary way the Census Bureau updates the population counts from the regular decennial census, which attempts to count every person living in every household and institutional setting. These estimates are largely based on administrative records, such as birth and death certificates and tax returns.

David Price from the FRBR interview Ed Glaeser who remains bearish on "place based policies""... I do think that the persistence of prime-age male joblessness is worrisome. If you look at the relationship in the Public Use Microdata Areas between joblessness in 2010 and joblessness in 1980, the correlation is over 80 percent.We have an enduring level of local economic dysfunction. I don't think that this makes the case for large-scale redistribution in these areas. I think there are many good reasons for being wary of that, but at the same time, I think it's necessary to think about policies that are more place-specific.....Likewise, if you're going to have a large-scale employment subsidy, it makes more sense to put that subsidy into places where it will actually encourage the most employment. That's much more likely in places that start with high levels of nonemployment, like the eastern heartland. Now, my own preference is that you make it feel relatively budget neutral and figure out other things to deliver more of to other areas. But I think we have to realize that the eastern heartland, particularly, has very specific circumstances that need distinct policies. So, when we're discussing a $15 national minimum wage, that's fine in Seattle; we've had a whole bunch of papers on this over the past five or six years that show it won't hurt employment much. If you have a $15 minimum wage in West Virginia, you're risking much more of an increased joblessness problem there because you're starting at a very different place...."

David Price, "Edward Glaeser," Federal Reserve Bank Of Richmond, December 2021, https://www.richmondfed.org/publications/research/econ_focus/2021/q4_interview

Edward Glaeser

Harvard University's Edward Glaeser, considered by many to be the foremost economist of cities and of the forces influencing their development, is known for defending the role of cities as places where businesses and residents can exploit the benefits of social and economic interactions.

As a teenager, he lived on the Upper East Side of New York during the Bonfire of the Vanities era. His eventual specialization in urban economics was influenced, he says, by his growing up in the city during its times of crisis and recovery. "My childhood was shaped by the arc of New York City during the '70s and '80s, first as a period of startling decline as crime rates exploded and the city teetered on the brink of bankruptcy, and then its remarkable comeback," he remembers. "And it was hard as a child not to wonder at this amazing variety of things that were happening in the city."

Glaeser was promoted to chair of Harvard's economics department in July. He has authored scores of journal articles and book chapters and is a member of the editorial board of five journals of urban or regional economics. He is the author or editor of 12 books, many of them on the economics of cities or on housing policy. His most recent, Survival of the City: Living and Thriving in an Age of Isolation, written with Harvard colleague David Cutler, was published in September.

David A. Price interviewed Glaeser by phone in September 2021.

________________________________

EF: In your new book, Survival of the City, you argue that technological changes in the postwar period were mostly "centrifugal," leading people and companies to move away from urban cores, while technological changes in the 21st century have been "centripetal," leading to more concentration in urban cores. Please explain.

Glaeser: I see urban growth as almost uniformly a dance between technologies that pull us together and ones that push us apart.

Technologies of the 19th century, like the skyscraper — which is really the combination of a steel frame and an elevator — the streetcar, the steam engine, all of these things enabled the growth of 19th century cities. They brought people together. This was a centripetal age.

In the mid-20th century, we had technologies that were major jumps forward in transportation cost. In transportation technology, like the car, and in technology for transporting ideas and entertainment — television and radio — these were centrifugal forces that basically flattened the Earth and made it easier to live in far-flung suburbs or even rural areas.

Those centrifugal technologies were the backdrop for New York's decline during the 1970s. They were the backdrop for the exodus of people from dense cities that had been built around streetcars and subways and to suburbs that were built around the car.

But then in the late 20th century and early 21st century, the tides turned again. And it was somewhat surprising. With this shift came a vision in which the rise in these forms of information technology would lead the knowledge workers that still existed in cities to follow the path of industrial workers and essentially deurbanize. Knowledge workers would work remotely from electronic cottages.

But for most of the last 40 years, that hasn't been correct at all. That hasn't been happening in cities. We've started to see the electronic cottages become a force during the pandemic, and suburbanization has continued, but downtowns are vastly stronger than they were in the 1980s. And I think the primary reason is that globalization and new technologies have radically increased the returns to being smart, and we are a social species that gets smart by being around other smart people. That's why people are willing to pay so much to be in the heart of Silicon Valley and why they're willing to pay so much for downtown real estate in Chicago or New York or London.

EF: What does the future of small towns look like after the pandemic?

Glaeser: I think that's going to be a tale of two towns. If you are a small town like a college town, a place with high levels of amenities and beautiful scenery where rich people want to go, I think that the combination of the ability to do work remotely and perhaps some enduring pandemic fears means that you are as strong as you've ever been, if not more so. These places are poised to benefit.

Take your Silicon Valley startup with 15 smart, hungry young people. Do we truly think in five years these people are just going to be Zooming it in from their suburban bedrooms? That sounds totally implausible to me. That sounds like a totally different work model that will lack all the energy and high quality in-person connections you get from being in the same room as one another.

But on the other hand, are these 15 people going to decide, "Well we all love skiing, we're tired of paying Silicon Valley prices, should we relocate to Vail?" Or say, "We don't want to pay taxes, let's relocate to Austin." Or, "We want better surfing, let's relocate to Honolulu." That feels entirely plausible to me. The technology supports the mobility en masse of these groups to some different area. Places they're most likely to relocate to are high-amenity places that will appeal to them along one of these dimensions.

These would be probably the best index right now of whether or not a place is likely to benefit: Among small towns, is it a skilled place already? Prior to COVID-19, did it do a good job of attracting large numbers of college graduates or people who had advanced degrees?

On the other hand, if you're talking about small towns in relatively low-amenity places, places that are low density, farmland, low levels of education, these places have been declining for decades, and I see little reason why the decline would be reversed anytime soon.

EF: Place-based policies — that is, policies aimed at improving specific areas — are often criticized by economists. You've argued that they may be justified for some areas of the American heartland where men have low labor force participation. Why is that?

Glaeser: I still maintain my traditional aversion to place-based policies. I have not completely gone away from it.

But I do think that the persistence of prime-age male joblessness is worrisome. If you look at the relationship in the Public Use Microdata Areas between joblessness in 2010 and joblessness in 1980, the correlation is over 80 percent. We have an enduring level of local economic dysfunction. I don't think that this makes the case for large-scale redistribution in these areas. I think there are many good reasons for being wary of that, but at the same time, I think it's necessary to think about policies that are more place-specific.

Take housing. You really don't need to subsidize the production of low-income housing in most of Texas, because they have an unfettered market that does a great job of providing lots of low-cost housing to middle-income residents. If you have Detroit, you don't want to produce more low-cost housing, because they've got an abundance of low-cost housing there. But on the other hand, there's probably a good case for doing something about low-cost housing in San Francisco or New York or Boston.

That suggests to me, at least, that you want policies like the low-income housing tax credit that subsidizes new housing construction. You want that to be spatially limited. You want it to go in areas where there's a genuine dearth of low-income housing. At the same time, you could have more housing vouchers in the areas where housing supply is elastic. You can have the right policy for the right place, which is something that America has traditionally found very difficult to do. But it's just basic economics.

Likewise, if you're going to have a large-scale employment subsidy, it makes more sense to put that subsidy into places where it will actually encourage the most employment. That's much more likely in places that start with high levels of nonemployment, like the eastern heartland.

Now, my own preference is that you make it feel relatively budget neutral and figure out other things to deliver more of to other areas. But I think we have to realize that the eastern heartland, particularly, has very specific circumstances that need distinct policies. So, when we're discussing a $15 national minimum wage, that's fine in Seattle; we've had a whole bunch of papers on this over the past five or six years that show it won't hurt employment much. If you have a $15 minimum wage in West Virginia, you're risking much more of an increased joblessness problem there because you're starting at a very different place.

EF: What is your view of opportunity zones as a policy in this regard?

Glaeser: We have a paper on this that does try and compare them with truly comparable areas. We're focused mainly on the effect on housing prices, which we thought would be one measure of whether things are getting better in the area. We find almost no effect from these zones on prices.

I think in general that the needs of these places are really about human capital problems rather than a lack of entrepreneurship. But the opportunity zone structures are very oriented toward more investment in physical capital, including housing and apartments and such, which does not particularly seem like the right thing to do for these disadvantaged areas. When I think about what I would like to see in a zone, it's much more focused on the human capital than the physical side.

EF: Why have major investing institutions recently started buying single-family homes in large numbers?

Glaeser: Traditionally, single-family homes were overwhelmingly owner-occupied in the U.S. More than 85 percent, I think, of homes were owner-occupied. The usual view of the housing economics community was that the agency problems involved in renting them out were huge. There are estimates that suggest that renting out for a year involves a 1 percent decline in the value of the house, or something like that, because the renter just doesn't treat it properly.

By contrast, traditionally more than 85 percent of multi-family housing was rented, at least once you get to over five stories. It's much easier to manage a multi-unit building when you have one owner. One roof, one owner, because otherwise you've got the problems of coordination of the condo association or the co-op board, which can be more fractious.

So those were the things, I think, that were responsible for tying ownership type and structure type so closely together. We are starting to see that break down, which is quite interesting. I don't know if these buyers have fully internalized their difficulties with the maintenance that goes into rental houses as a long-run issue. Or if technology has changed in such a way that they think that they can actually solve that agency problem and that they can figure out ways to deal with the maintenance costs in some efficient fashion.

I'm happy to see an emergence of a healthy rental market in single-family detached housing, but I'm keenly aware of the limitations and difficulties of doing that. So, we'll have to see how this plays out. I can't help thinking some part of it just has to be that investors are simply searching for new investment products.

EF: In Survival of the City, you write about development restrictions as favoring insiders, by which you mean homeowners. Homeowners might say, "Don't we want local government to be responsive to local interests?" Is this a good thing as well as a bad thing?

Glaeser: I certainly don't want local government to be nonresponsive to local interests. The problem is that local majorities are not necessarily going to take into account everyone. They won't necessarily take into account minorities, and they certainly won't take into account people who are not in the locality right now.

As always in the case of democracy, we want something that empowers the majority, but also slightly restrains it in different ways. We want the Bill of Rights as well as the grants of power in the Constitution. And in the case of localities, I think that the idea of placing some restriction on what localities can do is quite reasonable to me.

For example, in the area of housing, you have Massachusetts Chapter 40B, which basically enables developers to work around local zoning if the locality has almost no affordable housing and if the developer is providing some low-cost units to buyers. They're able to take advantage of the state process rather than the local process for getting approval. So, you're not getting rid of all local power over zoning. But if your local power means that you produce nothing that's affordable, we're going to maintain a way for the builders of affordable housing to basically bypass you. That sort of hybrid model seems like a good one to me.

The new California law, SB 9, on speedy permitting of two-unit buildings will also be a state restriction on local power. This was the first time in many years we've had a victory for the "Yes In My Back Yard" movement — the YIMBYs. It may be a small victory, but you know, when I started thinking about this stuff in 2001, there was nothing. There was no popular movement of any form to reduce the local straitjacket on building.

EF: The famous 1961 book by Jane Jacobs, The Death and Life of Great American Cities, has been influential over the years in people's thinking about urban development. What was she right about, and what was she wrong about?

Glaeser: It's a wonderful, wonderful book. It's so wise in its understanding of urban neighborhoods and the street life and the ability of neighborhoods to just work and the dangers of trying to engage in planning. All of that stuff is fantastic.

Where she kind of screws up is when she gets into a discussion of how cities need old buildings. It's not that she's totally wrong, not at all. It's great for cities to have some form of inexpensive space. And in most cities, that inexpensive space comes from older buildings that have not yet been upgraded. The way that affordability is supposed to work is that you build new buildings, which are usually not that cheap, and that reduces the pressure to gentrify old buildings. So that's where affordability comes from.

But that led her to the policy view that you actually want to prevent tearing down old buildings and replacing them with new buildings. Now, if the two buildings are exactly the same size, I agree that replacing the old building with the new building will not promote affordability.

But that's not typically what developers want to do. Typically, they want to take a short building and replace it with a tall building. And if you stop that process, as she was so instrumental in doing in the Greenwich Village historic preservation district — which was part of a great popular wave of opposition to rebuilding New York — you aren't promoting affordability, you are freezing a neighborhood in amber. In the case of Greenwich Village, you have created a situation in which townhouses start, at least before the pandemic, at over $7 million. That's no recipe for affordable urban space that scrappy startups and young families can buy, which is how she was thinking about it.

That was, I think, the thing that she got most wrong. She was right in many of her ground-level observations, but economics is really helpful for thinking through the long-run implications of a policy intervention.

EF: You wrote in your book that the 1970s were a catastrophic decade for much of urban America. Why were the 1970s catastrophic for cities?

Glaeser: It's that combination of the centrifugal technologies — the fact that container ships and highways made it easy for factories to relocate to places where land and labor were cheaper, and highways made it possible for wealthier urbanites to leave for suburbs.

That process collided with the dreams of progressive mayors, like New York's John Lindsay or Detroit's Jerome Cavanagh, who were trying to fix the very visible woes of cities. What that meant was that just at the time cities were asking businesses to pay more, asking the rich to pay more, it was becoming easier for the rich and for businesses to get out. And that's exactly what happened.

On top of that, of course, there was an inability to deal with the crime problem. That's something that I worry about today. There is a totally understandable desire to try and deal with the terrible inequities of urban life. There's a totally understandable desire to want to do something about policing and the experience that many people have with the police. But if the changes that occur either end up targeting the taxpaying members of the urban community or end up leading to a significant deterioration in the quality of life — for example, with an increase in crime rates — that risks replaying the 1970s.

One of the reasons why I wrote the book was to emphasize that we had paths to try to reduce those inequities and could make those cities not just more functional but more humane. But at the same time, cities have to do that in a way that respects the need to continue to attract the taxpayers who ultimately fund things.

EF: You wrote that court-ordered school busing and the reaction to it played a role. In what way?

Glaeser: The way that busing got implemented was the court requirement getting rid of segregation in cities. But there was also a court ruling saying that you could not force desegregation across city boundaries.

For example, the Supreme Court decision in Milliken v. Bradley in 1974 said essentially that federal courts could not require desegregation across school districts. What that meant was that if you wanted to avoid busing, either for racist reasons or for some other reasons, you could get that only by leaving the school districts — by leaving the city. And so, for thousands and thousands of parents, that's when they moved, sometimes just outside the city's school district.

If you had metropolitan-area-level desegregation efforts, that would not have created the same incentive. Or if you had something that was more like a charter school system or like a voucher school system. Anything that breaks the link between where you live and where you go to school would've been less harmful for cities. But as it was, this was yet another huge incentive for parents to get out. And a harmful one.

And ex post, if you look at the Opportunity Atlas data created by my colleague Raj Chetty and his co-authors, there was a clear and discernable break in upward mobility at the border of central city school districts across America. Opportunity jumps up if you're just outside the central city school districts as opposed to just inside it. This is a cohort that was born between 1978 and 1983, and you can see it in their adult earnings. They are also significantly less likely to be incarcerated as an adult.

EF: Winston Churchill said in 1943, "We shape our buildings and afterwards our buildings shape us." Was he right? And if he was, what are the trade-offs in regulating architecture?

Glaeser: Yes, he was right. It's one of the greatest of all lines about architecture, absolutely.

The regulation of architecture is probably the most straightforward element of this in some sense. I have a paper with Nikhil Naik, who is a computer scientist, where we look at the connection between the appearance of your neighbor's home and your housing value. We find significant effects, and the effects are much stronger if you are on the same street as opposed to being, say, half a block away outside of the sightline. People value having nicer homes to look at, and that creates at least some scope for benefits from regulating architecture.

On the other hand, I believe people are willing to pay for architecture. Moreover, as the son of an architectural historian, I continue to be skeptical about the abilities of states to regulate architecture well.

There are special cases. The vista of a city or the elegance or the magic of, for example, some streets of Barcelona or the Place des Vosges in Paris — these are magical urban spaces. And certainly, I am OK with protecting those pieces of architecture that are widely accepted to be part of the patrimony of the city.

But when it comes to building new buildings, we have to be aware that very rarely does great architecture happen by committee. And very rarely will a zoning board be the best judge of what design is going to create joy in people for decades to come. It doesn't take much to convince me that there's a market failure in many cases, that cities are chock full of externalities, but saying that the government is actually going to make it better is a much heavier lift. I'm not sure it's here in this case.

In terms of how buildings shape us, I certainly believe that the structure of our offices shapes who we interact with and end up shaping our lives. There is evidence to show that people who are physically proximate to each other end up influencing each other. I think about, say, Bruce Sacerdote's work at Dartmouth on randomized roommates. There's an older MIT study that suggests that if you are randomly put closer to each other, you are more likely to form friendships. Plenty of evidence suggests that human proximity shapes interactions. None of this is surprising, but it is powerful and reminds us that physical proximity continues to be highly important.

For those younger economists who are reading this, I think that would be a great place to think about using, say, randomized controlled trials or something else to figure out to what extent Churchill is correct when it comes to day-to-day office life and street life and how our buildings are shaping us.