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Comment by procgen | Hacker News Reader

Is remote work hammering the economy? What effect does it actually have on productivity?

It's keeping a lot of people at home who otherwise would be in downtowns or suburban office districts buying lunch, having clothes drycleaned, stopping in stores, buying gas, etc.

Because what the economy needs right now is… more demand?

This still happens regardless of remote work. People still live in the cities. The city isn't 100% full of remote tech workers. I think there is some assumption that remote work represents the majority, which its not even close.

This is a "broken window" fallacy.

I think it's not the broken windows fallacy when it increases many remote workers' savings rate. That's different from the parable of paying a glazier for the window instead of a tailor for a suit, but rather having less money circulating in the economy when 20 days a month, I don't burn $5 of gasoline, eat a $2 lunch instead of a $15 lunch, and wear sweat pants instead of office clothes.

That could be $3000 of spending reduction for me that isn't replaced with $3000 of other consumption, but rather a significant portion of it goes into savings/investments.

Yes, but the economy is not suffering from a lack of demand right now. Quite the opposite, in fact.

> it increases many remote workers' savings rate

I think that was true during lock-outs, for obvious reasons, but now? On the contrary, people have more money to spend and the opportunity to spend it.

The personal savings rate is well below pre-pandemic levels now.

https://fred.stlouisfed.org/series/PSAVERT

If you've had people fixing broken windows for 100 years then windows stop getting broken, it may be more efficient in the long term - but in the short term, you've got lots of glaziers going bankrupt.

Which is bad for them but good for the overall economy. They will find other jobs and since the net benefit of fixing broken windows is 0 anything they do will grow the economy.

Dry cleaning being the exception, I believe I spend more in my local neighborhood than ever before. If anything I’m giving more to the local stores rather than some far downtown area or sprawling office complex area.

I certainly was out a lot less during most of the 2019-2021 times, but that was mostly because COVID.

Funny enough I probably go out more now than I did before, something about WFH is a lot less draining and I don’t feel the urge to take a unexpected nap at 6pm.

Or at they at home thinking about revamping their kitchens, bathrooms, gardens and upsizing the place they spend 23 hours a day?

What's the broken window fallacy?

IDK the economy isn't built on dry cleaning and lunch

In theory what you are describing is a more efficient economy which would actually boost the economy, except for those unnecessary producers. Everyone cuts out unnecessary items and has more money to spend on necessary items. This is kind of true as the supply of nearly everything can’t meet the demand at the moment. Less people cutting hair and washing clothes means more people can work on producing other things people want… however since things that people want are mostly produced in China we can’t properly reallocate the labor force to increase production to meet demand, in particular in cities. US is way behind on manufacturing and is completely missing the tools to ramp up production. We are missing entire business to business categories that make production impossible because no one knows where or how to obtain raw materials or supplies, let alone the machinery to produce goods.

will the stop spending altogether? They ll spend on other things

Food and gas prices are already inflated now. It's not clear how people paying even more for these would help the economy.

Unemployment in city centers and businesses reliant upon the city commuter and office crowd are not doing well. The unemployment rate of Manhattan is still pretty high for instance. A lot of remote workers have priced out local service workers in some small towns, so some restaurants and businesses are now more or less permanently closed due to short staffing. They can't afford to live where they work so they moved. You could blame AirBnB as well for this development where short term rentals outnumber actual rentals available. Under those conditions I'd expect a detriment to the local economy.

hasnt the pandemic been a much bigger shock than remote work ?

I'd imagine the determining the relative impacts should be best left to policy experts and wonks. I don't think one can determine the impact of the pandemic without also contextualizating the rise of remote work. They cascade and coalesce together.

it has significantly shifted spending; downtown landlords are kind of screwed

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