Last year, getting started on my book I posted some facts and claims about the 21st economy. The key points (slightly elaborated)
(1) Most economic activity in the 20th century, including ‘primary’ industries like agriculture and mining and services such as wholesale and retail trade, was fairly directly related to the production and distribution of manufactured goods
(2) This is no longer true: around half of all employment is now related to human services, information services and finance, and these are at most indirectly related to goods production.
On the basis of (1), the 20th century economy could properly be described as ‘industrial’. The economy of the early 21st century is harder to classify. Information technology and communications play a central role in the economy and society, and are the main focus of technological progress, but don’t employ all that many people. Service industries employ most people, but it’s critical to distinguish between services that are part of the industrial goods economy and human services like health and education. So, neither ‘service economy’ nor ‘information economy’ captures the whole picture. ‘Post-industrial’ carries too many implicit assumptions, as does the use of the ‘post’ prefix in general.
But that’s just semantics. The key point for the book is how the pandemic changed the different parts of the economy, and to what extent those changes will be sustained. A general observation is that the changes most likely to be permanent are those that reinforce processes that were already underway. So, some thoughts
The goods economy
The pandemic exposed the vulnerability of the global (goods) trading system, a point emphasized by the fact that China was (and remains) the world’s largest producer of surgical masks. In the early days of the pandemic, supply chains for goods of all kinds were disrupted, leading to calls for a greater degree of self-sufficiency. The supply problems are less severe now, but it seems unlikely that we will return fully to the complex global supply chains, characterized by “just in time” delivery that were the most distinctive feature of late C20 globalization. As I argued last year, these complex chains were already under threat as the neoliberal consensus broke down, reflected in Trump’s trade wars, Brexit and more recently China’s largely undeclared trade war with Australia.
The human services economy
The human services sector has been hardest hit by the pandemic, in multiple ways. The burden of dealing with the pandemic has fallen hardest on workers in health, aged care and education. Non-essential services involving human contact, like restaurants, have borne the economic brunt of lockdowns. The process has exposed the disastrous effects of decades of wage stagnation and labor market reform. People holding multiple insecure jobs, without sick leave, have been forced to work even when they are ill, ensuring the spread of the disease. The patchwork nature of much modern employment has created significant difficulties in providing assistance to workers displaced by the pandemic.
The information economy
- The information economy has been the big gainer from the pandemic. Reliance on information technology the expense of both the physical goods economy and service activities centred around human contact.
Again, this is an acceleration of pre-existing trends, but in many instances we’ve seen a qualitative rather than a merely quantitative change. Most strikingly, at the beginning of a year holding a meeting virtually using Zoom or one of its rivals required a fair bit of organization (often, more than flying all the participants to a single location), it’s now become the default*. That’s unlikely to change, and it implies a permanent reduction in demand for business travel and accommodation (at least relative to the pre-existing trend). By necessity, the regulatory obstacles to things like telemedicine have been removed, and are unlikely to be restored.
The information economy is different in crucial respects, which will be spelt out in more detail below. First, information is inherently a public good: it can be shared without being diminished [econ jargon- nonrival], and it is hard, though not impossible to lock up [econ jargon- nonexcludable]. That makes any kind of pricing problematic. Second, information technology is characterized by rapid capital-saving innovation. A modern smartphone has more computing power than a 1990s supercomputer and (thanks to the information encoded in software) does a vast range of things that a supercomputer could not. Even allowing for the R&D embodied in the smartphone, the capital requirements of the information economy are much smaller than those of the physical goods economy. That means much reduced investment demand, which in turn pushes interest rates down.
More to come on all this, but for now I’d very much appreciate comments and criticism
- Just as the Internet went from being a tool for nerds in the 1990s to a (near) universal communications platform in the 2000s]
{ 29 comments }
Alan White 12.21.20 at 5:33 am
I’m an admitted dolt about all this, but it appears to me that the US and perhaps world investment markets are heavily information-driven, which means that many so-called “big” information sources–which vary from Agent-Orange tweets to leaks about C19 vaccine-treatments to news about large-scale hacks of companies and countries to extreme media outlets like Newsmax–sources that have relatively little investment as just “put out there” either as legitimate or fake news in order to increase their own bottom lines short-term–have a hugely disproportionate influence on the global economy. Can this kind of cheap influence on the world economy be held to account or controlled in its disproportionate influence? Or is this the new what I’d call “abnormal”? Again, I hope this isn’t stupid to ask.
nobody 12.21.20 at 8:21 am
A key feature of the information economy is that it creates new forms of natural monopolies and externalities that no society is equipped to deal with.
Because of the sheer complexity of interoperability between competing software products and the importance of network effects, markets for both software products and online services will ultimately converge to support only one monopoly player in each market niche.
In the office software market, that monopoly player is MS Office. There are no equal-footing competitors to Office, especially in the business sector, because completely friction-free interoperability with Office is virtually impossible. Anyone who wants to interoperate with suppliers/customers who use Office must, themselves, use Office.
In the online services arena, Facebook is a defacto monopoly for person-to-person communication. The value of Facebook as a communications platform is entirely based on the fact that it is full of people to communicate with. There is no point in joining a communications platform that does not already have people you know as members, so any attempt by a Facebook competitor to enter the communications platform market with a userbase of zero will ultimately fail in much the same way Google+ did.
Contemporary, neoliberal, regulatory frameworks are not equipped to manage these forms of natural monopolies in a way that is fair to society.
Similarly, the modern information economy creates new forms of externalities that create modest profits at an enormous social cost. The social tools do not exist to manage the social pollution created by Facebook and Youtube in their propagation of right wing politics. Left unmanaged, the externalities of the information economy could well pose an existential threat to not only democracy but also to the values of the enlightenment.
nastywoman 12.21.20 at 8:22 am
”The human services sector has been hardest hit by the pandemic, in multiple ways”.
Yes!
That’s why economies – where ”around half of all employment is now related to human services” are in the HUUUGEST trouble – and economies which are
”related to the production and distribution of manufactured goods” will weather this crisis –
AGAIN!! –
in a way –
where a book about the economical consequences about the pandemic HAS to start with such a simplistic…
fact?
Even if for the Anglo-American economies ”The Casino” -(Finance) – still – will be HUUUUGER…
(to… mumble it in ”trumpterms”)
Or n other words:
The economy of the future 21st century is even easier to classify. If ”the split between the so called ”Predominant Producing Countries” and ”Predominantly Consuming Countries” get’s… wider and… wilder?
And why are Anglo-Saxon economists – tend to view the economical consequences of the pandemic with a perspective – hardly ever ”directly related to the production and distribution of manufactured goods”?
Because compared to ”gambling” (Finance) – the production and distribution of manufactured goods”?plays such a ”tiny role”?
It actually doesn’t – as where I reside currently nearly EVERY job is related directly or indirectly to ”the production and distribution of manufactured goods”?
(even the job of my hairdresser)
And we are talking about Europes HUUUGEST economy.
Hidari 12.21.20 at 9:02 am
‘ more recently China’s largely undeclared trade war with Australia.’
I feel a more even handed (and accurate) way of describing this would be ‘the recent largely undeclared trade war between Australia and China’.
Hidari 12.21.20 at 9:19 am
One other thing that occurs to me (and I’m well aware that some on CT will not like this being pointed out, for reasons which are ‘morally good’ but irrelevant) is that the globalisation and the movement towards ‘free and open borders’ is simply over, at least for the next 10 or 20 years or so.
As everyone has pointed out, the movement towards globalisation ‘peaked’ early in the 21st century and has really not been going anywhere since then. Without rehashing past debates the Trump Presidency and Brexit were clearly animated by (amongst many other things) hostility towards ‘free trade’: one of Trump’s few genuine breaks from previous administration’s economic policies was the alacrity with which he used tariffs as an instrument of economic policy. This will likely be ‘toned down’ by Biden, but it is unlikely that there will be a complete 180 degree shift.
Brexiteers’ rhetoric was also, of course, strongly motivated by ‘take back control’ (i.e. of ‘our’ borders) rhetoric.
The Coronavirus has added another ‘push’. It took a long time, but now, the initial response to new strains of Covid is simple: seal the borders. The borders between England and Scotland are now sealed, and the UK is now more or less cut off from Europe. Even assuming that the new vaccine works (it might not), this response and issue is not going to go away. As Mike Davies has tirelessly argued, SARS, Covid and other illnesses like them are inherent to 21st century globalised capitalism. It is simply a matter of time till the next covid like disease (which may well be far more lethal). In any case, fear of Covid will last for a long time. And, even these issues notwithstanding, the fact that global warming is now spiralling out of control (1/5th of the Amazon is now emitting more CO2 than it is ‘sucking in’, which is a sign that ‘feedback loops’ are now kicking in which will lead to global temperatures zooming way past 2 degrees, or even 3 or 4). This has obvious implications for population movements. It has equally obvious implications for political movements who wish to stop population movements.
Moreover, as the internet and virtual reality technologies increase in ‘ability’ there is less and less reason to travel. Nor will there be the ability: until some CO2 free method of transportation (especially air transport) is developed and becomes ubiquitous all methods of moving goods and people make the climate crisis worse, and everyone knows it. So there will be increasing emphasis from both right and left to ‘stay where you are’. Don’t travel abroad for work, don’t take a gap year, don’t see the world, don’t holiday in Thailand (or whatever), don’t take a job abroad (or if you do, stay where you are, and do it ‘virtually’).
Zamfir 12.21.20 at 10:10 am
OK, some comments that might or might not be useful:
An important driver behind the growth of complex global supply chains, was exactly the improvement in information and communication technologies that you mention later. If communication technology makes it easier to work from home, that same technology also make it easier to work with supply chain partners across the globe. In that light, the pandemic may well end up encouraging such supply chains.
I already have some anecdata on that. For example: contracts where I had both local and more remote bidders. Due to corona restrictions, the local bidders lost some of their edge. They couldn’t do in-person visits either, while the virtual visits worked better than they used to.
You mention political factors that make globalized supply chains harder in the future, but I don’t think those factors will be unique to manufacturing. Political actors are also about their dependencies on foreign software systems, or foreign banking (Swift!), or foreign tourism.
Another, unrelated, point on the human services economy: it strikes me that a lot of this sector substitutes for unpaid household work, typically women’s work. Nursing, childcare, cleaning, cooking, shopping runs. I suppose that some of the “growth” of this sector, is about work getting more visible in the official statistics when it’s a paid job.
Tim Worstall 12.21.20 at 11:50 am
If this is true:
“The information economy is different in crucial respects, which will be spelt out in more detail below. First, information is inherently a public good: it can be shared without being diminished [econ jargon- nonrival], and it is hard, though not impossible to lock up [econ jargon- nonexcludable]. That makes any kind of pricing problematic.”
Then it’s very difficult for this to be true:
” The process has exposed the disastrous effects of decades of wage stagnation”
If we’re all gaining some vast amount of those public goods then it’s difficult to say that our real incomes have stagnated. Real income being defined in the real sense, our consumption possibilities.
One example would be WhatsApp. No fee to use it, doesn’t carry advertising – currently at least. Other than the costs of the couple of hundred engineers that run it – were at least, when I asked Facebook – it doesn’t appear in GDP at all. Yet some 1 billion people gain some to all their telecoms from it.
Yes, sure, there have always been non- or not entirely- monetised, thus in GDP, consumption possibilities. But it’s at least possible to argue that this is vastly larger these days. The standard thought on the consumer surplus is that it’s about equal to GDP. But if Bjornlofson etc are right, that search engines and email are worth $18,000 a year (and Facebook $800 etc) then this is a very much larger multiple of the mere advertising revenue per capita that is in our GDP numbers.
That is, this information part of the new economy means that GDP, plus any estimates of real income derived from money income, are increasingly diverging from real incomes.
Which means that it is difficult to believe both things. That real incomes aren’t rising while we’re also gaining much more from unpriced public goods.
Greg Koos 12.21.20 at 12:20 pm
I work(ed) in the cultural sector, for a museum. The pandemic forced us to place most of our activity on-line. Since our funding is based upon philanthropy and not gate, such a move was feasible without reduction in force. As a result we have added a new dimension in service. My rule of thumb is that robust digital drives higher attendance. I think that will occur. However, we may see a decline in philanthropy due to a growing attitude that culture is a transactional affair, not a civic affair. Our large local insurance industry will be more of a tell. The workforce will end up with a year’s worth of remote work. I see no reason why the companies need to rehouse their workers. They own the space, but they must ask, do we need it? As a result, these workers will end up with considerable leeway in choosing their residences. They will be able to weigh price vs. sq. footage. This may well push resettlement into rural areas, which have not decimated their educational and health sectors.
DavidtheK 12.21.20 at 12:55 pm
I think you are missing a point here about the role of monetization, or perhaps return on investment, and really consumerism as a whole which has come to define so much of current capitalism. Masks were (are) all made in China because they were considered a low-tech product, and largely disposable, which could never fetch a high price in the marketplace, therefore it only made sense to have them manufactured in places with the lowest labor and manufacturing costs. Had humanity been confronted with a crisis which would have created a demand for anything else of similar “value” – say rubber garden hoses, battery operated flashlights, or common kitchen can-openers – it would have been the same story.
RichardM 12.21.20 at 2:13 pm
The division of labour into agriculture and manufacturing makes reasonable sense; the two sets of things each have s coherent set of characteristics that distinguish them from non-manufacturing and non-agriculture.
‘human services, information services and finance’ as a category doesn’t have that property. Much of it, like finance, fucntionally is the design, manufacturing and retail of of non-physical goods. You should be very careful in drawing conclusions based on fluctuations in such arbitrary categories.
A smartphone is not a part of some entirely different economy; it is just a small, high-value manufactured good. And while foftware is in some ways economically different from hardware, that doesn’t make it coherent to group it with haircuts. It is more like the perfect and central example of the concept of ‘manufactured good’ that physical goods are imperfect shadows of.
Kiwanda 12.21.20 at 2:55 pm
Still, the scope here is confusing: it doesn’t sound global. There are about two billion smallholder farmers worldwide (or were a few years ago); are they, together with others not in financial, human, or information services, really less than half of the employed, worldwide?
Kenny Easwaran 12.21.20 at 5:25 pm
I think it’s notable that both information services and human services have been trending upwards in recent years, but they were affected in opposite directions by the pandemic. Retail locations have been replacing small goods shops with things like restaurants, bars, yoga studios, escape rooms, nail salons, and other businesses that require the physical presence of the client for an extended period of time, and can’t be done online. But that has drastically paused during the pandemic. I assume it will pick up again, but it’s possible there will be a change in the subset of these businesses that will be growing, and how they will structure themselves for purposes of ventilation, or just possibly weathering another change in how in-person business is conducted.
steven t johnson 12.21.20 at 8:37 pm
A lot of human services seem to be productive consumption that reproduces the labor force that is now counted in the formal economy as household functions become commodities. For many this is because of economic pressure: The dad who takes the kids to McDonald’s because mom is working an evening shift and dad can’t cook. Or the mom who invests in an XBox because they can’t afford a neighborhood safe enough for the kids to play outdoors.
If you consider the economy as social arrangements to satisfy human needs and organize other consumption and production of the means to continue life (social life, but in truth there is no other, as unwelcome a thought that may be,) the issue of the “information economy” outweighing the supposedly old fashioned industrial economy seems quite peculiar. I would suggest going back to basics, like rethinking whether there is a distinction between productive and unproductive labor, but no doubt that would lead in unacceptable directions, like looking for a theory of profit.
It seems to me that on a world scale, there is nothing post at all about the industrial economy. It may be that industrial economy is simultaneously producing such an abundance of goods that it is absurd to price them out of so many people’s reach. It may also be that industrial economy is doing so by depleting natural resources, the world biosphere, counting only the costs of past production, while ignoring the utility of a future.
Tim Dymond 12.22.20 at 2:47 am
I’m wondering whether the ‘human services’ sector needs a more precise description: the ‘human contact’ sector. A lot of services are either automated or becoming so, but there’s still work that needs direct human to human interaction, both physical and virtual. It could include both health workers and some form of retail as well. It seems like it warrants a distinct label for the 21st century economy though.
John Quiggin 12.22.20 at 5:43 am
Thanks everyone for useful comments. Working backwards
Tim @14 agree
Steven @13 OTOH, Facebook depends entirely on the contributions of the household sector. This is complex. I concluded long ago that C19 attempts to distinguish productive and unproductive labor were a waste of time
Kenny @12 agree
Kiwanda @11 Yes, there are still lots of people in the agricultural economy (and a handful in the hunter-gatherer economy that preceded it). I should note this
Richard M,@10 You’ve lumped together two categories (contact services and information) that I’ve tried to distinguish. Unsurprisingly, the result is a mess
John Quiggin 12.22.20 at 5:58 am
Continuing responses
David @9 Good points
Greg @8 Useful to think about the cultural sector, where in-person and digital compete. My guess is that the big winners will be medium cities large enough to provide urban amenities, but with cheaper housing and easy access to the countryside
Tim W @7 I’ll expand on the point made in the OP. It’s now possible (in fact, common) to own a supercomputer with capacities unimaginable a few decades ago (that is, a smartphone) while regularly going hungry. The goods economy and the information economy have diverged so radically that any economic index number is highly problematic
Zamfir @6 Useful. Note that information economy tends to go the other way, monetising activity in the household sector
Hidari @5 I talked about this a while ago. https://crookedtimber.org/2019/06/12/can-globalization-be-reversed-part-ii-migration/ Even with stringent border restrictions, past migration isn’t being reversed to any significant extent
Hidari @4 The Australian side has been aggressive on other fronts, including investment, not so much on trade. You can see this from the list of Chinese grievances I published recently https://johnquiggin.com/2020/12/18/chinas-grievances-for-anyone-to-read/
Nastywoman @3 Everything is related to everything else, directly or indirectly. But the links between hairdressing (which dates back to Neolithic times) and manufacturing is pretty tenuous
Nobody @2 Agree entirely https://crookedtimber.org/2020/08/11/intangibles-monopoly/
Alan @1 Not stupid to ask, but hard to answer
nastywoman 12.22.20 at 6:27 am
@16
”But the links between hairdressing (which dates back to Neolithic times) and manufacturing is pretty tenuous”
That’s true – but it made my favourite American hairdresser move from Detroit to California – and telling each one of his customers – that with the death of manufacturing – hairdressing always is ”dead” too.
nastywoman 12.22.20 at 6:53 am
AND I wonder if you guys are aware – that everywhere in the World –
right now this…
this…? let’s not call it a ”game”? –
Let’s call it: ”Guessing how the economy really will look like A.V. (after the Virus)
And there are my Italian friends and family who believe that the Via Mazzini (and it’s hairdressers) will ”flourish” again -(BUT it will take a loooong time)
And then there are these New Yorkers who believe that one of the utmost exciting restaurant scene of the World is finished for… bad – and then there are these Californians who believe that ”the eviction crisis” will become the utmost devastating consequence for the US economy – and as ”the eviction crisis” – (and the death of Manhattans Restaurant Paradise) – somehow is related that you can’t fire a German workers as easy as an American workers in such a crisis – and it ALL seems to depend on how well a government takes care of it’s people in a pandemic – I just hope that the 600$ check I will receive this time is NOT signed –
AGAIN –
by ”Donald Trump” and comes
AGAIN! –
accompanied with a letter from him…
nastywoman 12.22.20 at 7:06 am
AND just don’t forget:
https://youtu.be/vuq-VAiW9kw
and after doing her hair Lizzo gave her mom an ”Audi” for Christmas!
Peter T 12.22.20 at 12:30 pm
From a longer perspective, the economic picture painted looks very like a pre-industrial economy: a few large private monopolies, a dispersed middle of dependent semi-professionals and a large lumpen class surviving on whatever they can cobble together day to day. Politics beholden to the rich and coercive to the poor.
Simon 12.22.20 at 2:33 pm
I’d like to see some more attention to the agricultural sector. The production, processing, and distribution of food was another stress point exposed by the pandemic, particularly in meat production. As long as eating is the custom, ag will remain important, so what does Covid tell us about the ag economy of the future?
steven t johnson 12.22.20 at 4:14 pm
Sorry to go OT, except for a very tangential reference to C19, but…there was a sale at my nearest bookstore, six for five dollars, so I picked up Literary Remains, by William Hazlitt.
One of the essays, The Main Chance, seemed to be of interest to someone who wrote Economics in Two Lessons.
Tm 12.22.20 at 6:59 pm
„The information economy has been the big gainer from the pandemic. Reliance on information technology the expense of both the physical goods economy and service activities centred around human contact.“
The analysis is not convincing. The only example given is the substitution of physical business travel with online meeting tools. This may well be significant but let’s keep in mind that business travel is not an end in itself. As far as we are concerned as consumers, we don’t care how the workers who produce the goods and services we care about do their work, as long as in the end we get those goods and services. We also don’t really care whether they use computers or paper files to keep track of inventory and whether they communicate by snail mail or email or whatever. In large part, the „Information economy“ is just the way bureaucracy is organized these days. bureaucracy is indispensable for the running of the economy and has been for a long time but it’s not an end in itself. At the end of the day, it is still overwhelmingly the physical stuff that we care about, food, clothes, housing, appliances, electronic devices, vehicles and transport infrastructure, and so on. (Haircuts btw are not „stuff“ in the strict sense but nevertheless they are physical. Perhaps one day we won’t need haircuts any more because all our interactions will be virtual and our virtual presence will only need virtual haircuts…)
In that context, one often hears wisdom like „in the new economy, data is the most important resource“. It’s total bullshit. Companies like Google and Facebook that have found ways to profit from extensive collections of consumer data are merely parasites scrounging off the real economy. Advertising is not in itself a productive endeavor, just like financial services and bureaucracy, it may be necessary up to a point but it’s never done for it’s own sake.
I further would stress the point made by others, that a lot of the “services economy†is nothing but care work that used to be done without pay in the private household, mostly by women, and now happens increasingly in the paid, but poorly paid, economy , mostly by women.
mutant_dog 12.22.20 at 7:15 pm
The glories of the Internet are hard to measure. Economics is at a loss. When things or effects are not priced in currency it takes a specific effort to measure their costs or benefits. That’s the whole “externality” problem in a nutshell. My experience would have me guessing I derive value from the Internet – but I’d find it hard to quantify, even just for myself. Bottom line, here, the Internet is a challenge for public-policy economists, and econometrics. [I’m freshly reminded I’ve not caught up with Hal Varian, writer and economist at Google.]
Kiwanda 12.22.20 at 7:23 pm
Thanks for the response, but my comment was not so much about people in the agricultural economy as such, but that saying for example “around half of all employment is now related to human services, information services and finance,” implies that you might only be discussing developed economies, not the global economy. I take it that you are discussing the global economy, but I’m still not sure.
dbk 12.22.20 at 9:01 pm
A few thoughts:
(1) I think it would be useful to consider the future of some sectors which have been very hard hit by the pandemic, including aviation (which belongs to both the production and services sector – a crossover, if you will), hospitality (tourism/ hotels/ cruise industry). Will they rebound? Personally, I don’t believe so – business travel, which generated most of the profits for the airline industry, will definitely not return to its pre-COVID level.
(2) As a corollary to (1), as more and more knowledge-information workers work remotely, what will happen with the commercial real estate markets in the world’s great financial cities (e.g. London, NYC)? And (related): What will happen to their hotel stock?
(3) I think it’s correct to surmise that mid-sized cities with high-level services (health, entertainment, culture, environment) will prove more attractive as high-tech workers work increasingly remotely.
(4) Related to (3), it might be worth devoting a chapter/chapter section to predictions concerning climate-change induced “internal” migration – to domestic climate refugees, in other words. Most of the southern (South, Southeast, Southwest) U.S. will be nearly uninhabitable by 2070, and it’s estimated that as many as 100 million American residents (not immigrants per se) will move several hundred miles inland/ northward. This will bring about major demographic changes to the U.S., as states which are nearly uninhabited or sparsely inhabited absorb millions of internal climate refugees.
(5) Offshoring – re-shoring: I think that this will occur, at least for essential goods and possibly, food production. The pandemic has indeed demonstrated the fragility of “just in time” supply chains.
(6) Will retail return, or will it be permanently replaced by online purchasing? If it doesn’t, what will happen to commercial RE (shops/malls) in cities/towns? How will “main streets” be re-configured?
John Quiggin 12.22.20 at 11:37 pm
Kiwanda @25 That number is for the US, and would be applicable to developed countries in general. But both agricultural and manufacturing employment shares have peaked in most of the world.
Michael Newsham 12.23.20 at 11:48 am
In reply to Tim Worstall, take a worker who makes $30, 000 in 1990 at the start of this while the CEO makes $300,000. At this point both the boss and the worker have gained $18,000+ from new technology, GDP has gone way up, and the worker makes $40,000 while the boss makes $3,000,000. The income of the top !% has increased 157%, the bottom, 22%- but they both have Facebook. What wage stagnation?
Kenny Easwaran 12.23.20 at 3:57 pm
Re DBK at 26:
It’s definitely interesting to think about the future possibilities for office and hotel real estate in global cities. These cities tend to be suffering from an undersupply of residential real estate, particularly in the central districts (as evidenced by quickly rising rents over the past few decades). Converting hotels to residences should be relatively easy (as Airbnb showed in the opposite direction), but converting offices to residences is likely harder.
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