The Dean of the NYU Stern School of Business, Thomas Cooley, on how technology innovations will fuel the new economy.
Topic: Thomas Cooley Explains the Role of Technology in Creating New Markets
Thomas Cooley: I’m Thomas Cooley. I’m the Dean of the Stern School of Business at New York University. I’m also a professor of economics.
Question: What role will technology play in the new economy?Thomas Cooley: Certainly access to information. A lot of the issues, a lot of the market failures in economics occur because of information asymmetries. I know something that you don’t; and in a trade, I can take advantage of that.
So, I think, what the real impact of technology in economics and on markets has been in the development of more sources of information, faster information, easier access to information.
And also, it’s improved our ability to make markets work, to create markets where they didn’t exist. So if you think about, online markets for goods or online markets for anything, we can trade risk, we can trade energy, we can trade advertising time, we can trade all kinds of things in markets that couldn’t have existed without the technology for buyers and sellers in desperate locations to come together in these virtual marketplaces and trade things.
That gives us the ability to realize what the prices of things ought to be, how the market values things. So, I think, markets have become lot more efficient because of that. And there are more markets.
Question: Do you expect rapid innovation in the finance sector?Thomas Cooley: That’ll ebb a bit for sure. Some of the products that were created, some of the innovation was very destructive. So I think we’ll see a change in the way markets are organized.
We won’t see credit default swaps being created and traded bilaterally, but it’ll be done more through clearing houses so that there’s a higher degree of transparency about what’s going on.
And then, I think, we won’t see some of the silly financial instruments that we’ve seen recently. I think there’ll be a coming down of the crazy securitization process. I think securitization still has an important role to play but it kind of ran amuck in recent years.
Question: What technology platforms will most facilitate growth?Thomas Cooley: I think global collaboration is going to be incredibly important in lots of dimension in technology and in improving the transmission of technology and the development of new ideas. So I think the possibilities of global collaboration that technology has created are just enormous. I think we’ve only seen the beginning of what that can accomplish. So I think it’s enormously important.
And you’ll see, I believe, increasing news of technology and education in transmitting the very best ideas globally. And I think that’s certainly a part of the future of education in this world.
Question: How important is social media to the future of commerce?Thomas Cooley: I don’t blog, partly because I don’t have the time to do that and be a columnist and run a major educational institution and do research. So blogging on top of that will be more than I can handle.
But I do understand the importance of it and social media, so I pay a lot of attention to whether my columns get picked up by aggregator sites. Because I know then that many more people will read them. And it’s a fascinating phenomenon, I have to say. It’s such a hot medium and such a fast cycle. It’s really quite remarkable.
Question: Will teleconferencing replace face-to-face interaction?Thomas Cooley: I think there’s still enormous value in face-to-face communication. And I don’t think that that’s just because I’m of a certain age that I have those feelings. I think people value that.
What I do think is changing is the sort of the use of media and other forms of communication to add to that experience. So in advance of a lecture, students can learn a lot about the person who’s giving the lecture, get material delivered online so they can do their preparation when it’s convenient for them in various ways. They can get information from their handheld devices or from their laptop in various places. And then, they can have the interpersonal experience.
And then, they can go back. And if there’s something they weren’t clear on and view yesterday’s lecture online via streaming video. Or if they had to miss it, they can have the experience of seeing it.
So I think the media is actually added to the experience of the lecture, made the interpersonal part of education more valuable. But that part will always be there.