Productivity, The Internet, And Staring Out The Window

Media274I heard recently that the latest thing in Silicon Valley when friends go to dinner is that all cell phones are placed in the middle of the table. The first one to reach for his or her phone has to pay for the meal.

I think this is a brilliant idea. I know, I know – everyone whines about being tethered to their office via the little glass-and-aluminum rectangle in their pocket. But don’t we need them? Isn’t the ability to communicate immediately with anyone you’ve ever exchanged numbers with a wonderful boon? Doesn’t the fact that we are instantly aware of every business development anywhere on Earth make us more productive?

Maybe not. There were two interesting articles in the August 17 issue of The Economist regarding productivity in the developed world.

The first article cited a study by Robert Gordon of Northwestern University in which he suggests that the internet has not had much of an impact on economic productivity, at least not when compared to the enormous improvements that resulted from electrification, improved sanitation, indoor plumbing, etc. a hundred years ago. Economic production per man-hour jumped dramatically during the industrial revolution. By contrast, hourly productivity in the U.S. has increased by a measly 0.3% per year recently, and at a similar crawl in the euro zone. Part of this problem could be simple burnout; it’s hard to maintain high levels of productivity when you’re always on call.

Which brings me to the second article. Americans work an average of 8 ½ hours more per week today than we did in 1979. The CDC (Centers for Disease Control and Prevention) reports that almost a third of working adults in the U.S. get an average of less than six hours of sleep per night. Four out of five people continue to work after they leave the office (I’m typing this blog on a Sunday evening). People compulsively check their emails every five or ten minutes.

No wonder productivity is poor. When people cannot concentrate on a piece of work without being distracted every few minutes by something chiming into their inbox, they aren’t going to get much done. This is doubly so when the distracting email is far more likely to be spam or trivial than it is to be important.

If people never stop working, they never really recharge, either. When you’re in a constant state of partial attention to your phone, it’s far more difficult to achieve a state of total focus on anything, be it work or play.

So what to do? I’ve read about offices declaring “no email” hours. Some time management gurus recommend setting two or three specific times each day for checking emails, and ignoring your inbox the rest of the time. Rules like these will help, but I think the productivity problem runs deeper.

I’ve written before that humans are inclined to preferentially believe information which confirms what they already think, and I’m no exception. These data on productivity dovetail well with my theory that the global economy has gone past the optimal level of interconnectedness and is now drifting further and further from the magic “zone of efficiency.”

“Zone of efficiency?” Let me explain. The global economy is best understood as a complex system in which individual agents make decisions about what they’re going to do based at least in part on what they see other agents doing. This captures the iterative nature of economies; if I halve my prices and you are my competitor, you will most likely react in one way or another. You might lower your own prices, you might try to market your products as being of superior quality, you might even get into a different product line altogether – but you will almost certainly react. It’s an iterative system.

Systems such as these can be characterized in many ways, but one useful metric is the interconnectedness of the system. This refers to the number of other agents any one agent looks at when deciding what to do – i.e., the number of other agents to which our agent is connected. All other things being equal, if the interconnectedness of a system (or an economy) is very low, the system is stagnant. Nothing ever changes. If suddenly somebody does change their prices, the reaction is minimal or nil. Consider a state-run economy; people aren’t allowed to change their prices in response to a change in the market. So nothing changes, there is no growth, the economy never evolves – it is very inefficient. Poland in 1965 looked pretty much like it did in 1955.

At the other extreme, a system in which every agent is connected to a very large number of other agents quickly descends into chaos. With every agent reacting to every minor move that any other agent makes, the system never settles into equilibrium. This, too, is highly inefficient.

In between, there is a zone of efficiency. Systems in this band react and evolve appropriately to changes. If one agent does something, the information ripples outward as the system adapts and modifies its patterns. The system – the economy – is efficient. This is where a well-run free market economy sits.

But global interconnectedness has been skyrocketing. There is no reason to believe that it will magically stop in the zone of efficiency. It seems quite plausible that the global economy has moved beyond that optimal zone and is drifting into the chaotic side of things. Think about how quickly the world reacts to any event – and then re-reacts to that reaction. The herd mentality replaces the wisdom of crowds. Efficiency – and productivity – decrease.

So again – what do we do? We can start by disconnecting, at least occasionally. The Economist article points out that Jack Welch reserved an hour a day for “staring out the window,” and that Bill Gates would isolate himself in a cabin somewhere for two weeks every year, just to think.

That sounds great to me. But that might be because people tend to preferentially believe information which confirms what they already believe.

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