Randolph Preston McAfee is an American economist, currently serving as a distinguished scientist at Google. His research has concentrated on microeconomics and industrial organization, on topics including auctions, bundling, price discrimination, antitrust, contracting, and mechanism design. More recently, he has been publishing research at the interface between microeconomics and computer science.
|New salary transparency laws will cause companies to increase bonus pay and other nonreportable perks as a share of total compensation. Neither agree nor disagree||“Many tech companies already minimize salary for highly paid workers, with bonuses and equity accounting for a substantial portion of overall compensation. Banks often focus on salary for mortgage evaluation, limiting how far companies can go in substituting for salary without harming the employee. Making the salaries more standardized doesn't require more average bonuses but greater differences across employees in bonuses.”|
|Artificial intelligence is reducing wasteful holiday giving (i.e., deadweight loss) by helping online retailers to better match people to presents. Disagree||“I think AI could help with the matching of people and presents, but I’m not seeing it in action at this time, nor is the kind of data needed — recipient characteristics — available to use.”|
|Charging for user verification will lead to increased user engagement and trust on Twitter. Neither agree nor disagree||“First, actually verifying users will increase trust, and increased trust will likely increase engagement to some extent, though misinformation lamentably often seems to promote engagement even more. Second, charging for verification isn’t at all the same thing as verifying, and current plans seem to focus on charging, not verifying, and indeed may promote fake accounts by letting unverified users pay to be listed as verified. Twitter introduced and withdrew a verification check mark within 24 hours, so commenting on Twitter’s verification system is clearly a moving target. The churn in plans and the uncertainty it induces is likely a much bigger disincentive to engagement than the specific verification plans.”|
|Corporate investments in diversity, equity, and inclusion should be expected to generate a monetary return on investment. Strongly agree||“DEI affects the bottom line by increasing employee morale, by increasing the available talent, and by increasing customer goodwill. These are challenging to measure in the first place, and assessing causality is even more daunting, but the returns are real nonetheless.”|
|The era of dominance for Tesla in the EV market is coming to an end. Neither agree nor disagree||
“Tesla has a substantial lead in supercharger availability, and its cars have a reputation for excellent quality. Offerings from BMW, Mercedes, and Audi are challenging Tesla’s higher end, and Ford and the Volkswagen ID.4 will challenge the Model 3, but Tesla remains formidable. Absent a major misstep, Tesla will remain the strongest EV competitor, though no longer unchallenged as they have been.
Now if someone would just make a convertible EV...”
|Online education and specialized degrees will supplant the traditional two-year full-time MBA. Strongly disagree||“While there is a large role for specialized degrees ranging from chemical engineering to computer science, there is also a demand for general skills, especially in management, that an MBA provides and specialized degrees rarely touch on. Moreover, the MBA has proved to be a useful way to restart a stalled career, making it desirable for those with more specialized degrees whose careers have foundered. Demand for MBAs will likely remain strong for decades to come.”|
|Starbucks’s plans to increase wages for nonunionized workers is a shortsighted strategy. Disagree||“With the current inflation and the shortage of workers, a wage increase is going to be necessary soon anyway, so increasing wages has negligible downside and may slow unionization. Indeed, a commitment to pay nonunion workers at least as much as unionized workers have negotiated would deter unionization even more. It was a mistake to engage in reported dirty tricks to stop unionization, as it created an adversarial relationship with the workforce that will likely harm Starbucks for years to come; the one downside of this action is that it seems like a continuation of an anti-worker hardball tactic.”|
|Sanctions against Russia will cause multinational companies to consider human rights protections in supply chains more broadly. Agree||“The fragility of long supply chains is having a moment, primarily due to COVID, but the Russian invasion of Ukraine reinforced the concerns.”|
|Blockchain is more likely to be a sustaining innovation than a disruptive innovation in the financial sector. Agree||“Blockchain allows decentralized ledgers and so-called smart contracts, which have self-executing features, automated escrow, and contingent trading. Thus, blockchain reduces the level of trust needed and replaces some agreements operated by trusted third parties or escrow agents. Such developments seem more evolutionary than revolutionary. But there is the possibility that some disruptive innovation that no one has envisioned yet will be enabled. One candidate example is the corporation with no human owners — an AI-based company that trades and owns assets but has no human ownership. This isn’t a bad model for a nonprofit and is potentially disruptive.”|
|Socially responsible mutual funds are more of a marketing tool than a solution to environmental and social problems. Disagree||“Socially responsible mutual funds give people an opportunity to express their values while still achieving the risk reduction and efficiency of a mutual fund. While the sellers of such funds might be creating them as a marketing gimmick, there may be real consequences if enough people choose to buy them. Socially responsible mutual funds do no harm and might do good, if companies change their behavior to qualify for inclusion.”|
|When hackers take data hostage, companies should pay the ransom. Neither agree nor disagree||
“Kind of a silly question because sometimes it is profitable to pay a ransom and sometimes not. Society might like companies to pay less often for the deterrence effect of not paying. Individuals might prefer the ransom be paid to protect their data. Many companies should probably invest more in protection (both stored offsite backups and data encryption) than they do so that they have a better alternative if they refuse to pay the ransom.
By the way, moving to the public cloud reduces such hacking because the public cloud companies have better tech to identify and stop hackers before data is encrypted or copied.”
|Relaxing the rules around physical presence in the office will improve employee productivity and firm performance. Neither agree nor disagree||“There is a cost/benefit — it is good to have employees interact, and it is good for them to be healthy and safe. Balancing these benefits depends on a lot of factors, like pandemic virulence, effectiveness and prevalence of vaccines, and the effectiveness of video conferencing.”|
|The COVID-19 pandemic has permanently changed how companies should think about business strategy. Strongly agree||“While a lot of attention has been justifiably focused on work-from-home policies, the evident fragility of long supply chains demands a reevaluation of cost versus risk. We learned that much business travel is unnecessary. The “digital divide” is evaporating, so a digital marketing and customer engagement strategy becomes universally effective.”|
|The COVID-19 pandemic will lead companies to relocate infrastructure and employees away from dense urban locations. Disagree||“Cities are more productive and efficient, and the great urbanization of the past 50 years is unlikely to reverse. Moreover, Asian countries show that cities can manage infectious diseases. Companies will be more alert to the resilience of their supply chains, at least temporarily. Business travel is unlikely to recover to its 2019 peak.”|
|The California Consumer Privacy Act will undermine the targeted advertising market by giving consumers the right to opt out of allowing companies to sell personal data to third parties. Disagree||“The California law won’t stop Facebook significantly, and the targeted ad market has a glut of inventory. Reducing the supply may help the market by increasing prices. The law will tend to favor big sites that can force opt-in: Facebook, Gmail, YouTube, TikTok, Amazon, and disfavor many others, an unfortunate unintended consequence. Free sites like Facebook may need to start charging to compel opt-in.”|
|In the wake of recent climate-related disasters and related events, such as the bankruptcy of PG&E, corporations are now planning for the increased operational risks and potential liabilities caused by climate change. Strongly agree||“Most corporations were examining the effects of climate change on their operations and future five years ago. Any that weren‘t would have started by now.”|
|Antitrust policy should intervene more decisively to limit the scope of large technology platforms. Agree||“Antitrust enforcement in the 1960s was probably excessive (e.g., Von’s, 1966), but we’ve swung the other way and have let hundreds of ‘potential competition’ cases through without adequate scrutiny. WhatsApp/Facebook and Amazon/Zappos are particularly egregious, but so are the technology acquisition mergers that solidified the leaders' AI technologies. Broadband and smartphone tech are problematic.”|
|U.S. regulations have been rolled back in a number of areas, including emissions standards and clean water. Companies will decide to voluntarily adhere to rules that closely resemble the original standards. Disagree||“A few high-profit firms will decide to meet or even exceed historical standards. Others will not change their processes right away. But over time, most firms will not expend additional resources to meet standards they are not required to meet, and [they will] blame their rivals. After all, we have seen firms, in fact, cheat and not meet standards, to save money.”|
The Business Roundtable’s new Statement on the Purpose of a Corporation indicates a shift away from shareholder value maximization as the sole purpose of the corporation and toward a broader view of value creation.
This shift will have material impact on the well-being of U.S. workers. Agree
|“The tension is between long-run and short-run goals. Often, maximizing long-run value involves activities that benefit workers and the public. The new focus gives management greater leeway to pursue long-run value maximization. Overall, it will probably make little difference.”|
|In the next decade, we will see the first sustainably profitable private commercial activities in space. Strongly agree||“SpaceX’s Starlink is probably already close to profitability. The first profitable private space activities will likely involve Earth communications rather than, say, mining.”|