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Remote work is our once-in-a-generation chance for rebalancing the economy

Last week, Deutsche bank came up with an a very absurd suggestion of having a 5% privilege tax for remote workers. This is a very narrow view of the impact of remote work at scale and completely ignores a large-scale economy problem that can be fixed with remote working.

The Problem: Regional inequality = Overcrowded & expensive metro cities

  • Technological & economical forces fuelled the rise of cities and led to overcrowding over time. This study of Europe from 1900 date shows that 1980 was a point of inflection after which the migration to big cities & the gap of regional inequality has only increased.
  • Financial incentives from government or lower taxes to attract big employers hasn't really worked in spreading the population across smaller cities.

The Solution: Large-scale migration from big cities to tier-2 cities & towns, thanks to remote work

  • The sudden remoteness due to Covid19 has had a lasting impact on our way of working. This will over time lead to people dispersing from overcrowded, expensive cities to tier-2 cities & towns while keeping their good jobs.
  • The shift would also be a more organic one compared to governments getting employers & individuals to move away from cities.

Next steps for governments & local bodies:

Governments just need to act as catalysts and make more the move easier & more lucrative. This can be by:

  1. Ensuring availability of fast broadband internet
  2. Setting up & repairing basic public services, thus creating a good place to live & raise a family.
  3. Setting up co-working spaces & mobile offices.
  4. One-time incentive or bonus if people make the move from cities to towns.
  5. Rubbishing claims of any kind of tax or pay cuts for working remotely (no-brainer, but just calling it out).

Take for example, Tulsa Remote. This is a great example of the success that the local governments have seen by implementing good remote work programs.

Regional inequality poses huge problems and we have got this one chance in many decades to actually fix it. Do tell me what you think of this in the comments.

I write regularly about remote work, tech & startups on Twitter. You can follow my updates there.

Top comments (6)

mattother profile image

This article seems very short-sited and simplistic. In general, as other people have pointed out, this usually results in large portions of the population moving to more affordable areas and what you're really describing is gentrification on huge scale. And we know how well gentrification has worked out so far.

Personally I find the idea that this is a "our once-in-a-generation chance for rebalancing the economy" very incorrect. It's a perfect way of rebalancing the economy for people who have the means to easily relocate, but at the expense of everybody else in community.

Also I don't believe this will fix, education, etc. issues regarding lack of access to technology, etc. in smaller communities. You would need equal distribution within these communities for that to work and I see no evidence that that will be the case. Personally, I think it's more likely that certain more affordable but still desirable areas will just be overrun.

I agree there does tend to be a siloing within big cities, but I think this problem is much more complicated than a simplistic jump to remote solution. Personally I'm not even certain if this is a world-wide issues (I would need to see much more data regarding this). It's definitely an issue in American, but there's a lot of reasons for America's current state of affairs and assuming remote work is some how going to fix it is just silly.

In general the bulk of the article isn't related to Deutsche bank tax either so I really don't see what the point in bringing up was, except yet another short-sighted jab at the idea.

I'll point out that I'm not necessarily against the idea of accessible relocation, but your view lacks any depth. And to somehow believe this is what will rebalance the economy is just absurd.

yellow1912 profile image

I think technology is making it easier day by day. However, it will have the exact same issue with globalization: people from developed market will have to compete with people from undeveloped market. And taxing and labor laws as well. I can assure you that once this gets big enough we may even see protests against it.

crtaylor243 profile image
Ryan Taylor

As someone who grew up in a rural area in the Midwest, I do think a tremendous amount of value has been left on the table, both in raw economic potential and untapped human potential, from under-investment. Rebalancing urban and rural populations is certainly something that can catalyze change, and I like that you detailed some things that local governments can do to attract economic migrants.

I want to raise a few more points that I think are worth considering - especially for those who have only lived in urban/suburban areas and are considering a change.

  1. Building business-tier broadband, coworking spaces, and other infrastructure will be important for drawing in businesses that increase the local tax base - but these improvements take time and involve a significant amount of bureaucracy. Therefore, it will take a number of years before the impact will be felt at a foundational level for the whole community. Unfortunately, I think this will create a more stark income inequality in these communities in the near-term (especially as real estate value increases and consumer prices lift).

Therefore, I think it's critical that businesses relocating to lower-cost areas take a long-term view of their new surroundings. Individuals and businesses should not wait for a starting signal from local governments to engage with their new communities.

One area where this is critical is early childhood education and access to resources. As a rural kid, I was about a decade behind some of my classmates in terms of home infrastructure. I was printing out Wikipedia articles at school so I could read them in the evenings. Despite our incredible access to information where most of the population lives (cities/metro areas/medium cities/towns), those of us living in more frontier-like areas have a much steeper hill to climb. Imagine the amount of human capital that would be available if every household had sufficient access to tech infrastructure...

Substance abuse, homelessness, and income security are significant issues that affect all of America (and most of the rest of the world, but I'm only qualified to speak about the US), and local governments have comparatively fewer resources to tackle these issues. While these issues may not seem related to a remote worker who is connecting back to the home base in [insert city here], they are intrinsically linked. Paying attention to local issues is an easy first step - engage with local media, journalism, community organizations, ecological restoration groups, etc. There are many ways to help, and most of these organizations could really use the help of professionals with access to wide networks of wealth.

  1. Frankly, rural areas and rural citizens are stereotyped in popular culture and in professional circles. There is a wide culture gap between urban and rural areas, and within both groups is a kaleidoscope of cultures, viewpoints, lifestyles, and perspectives. Considering the sudden effects that can happen from migrations (in this case, urban to less-urban), it's really critical that care is taken to understand the viewpoints of longtime residents so that communities can be built with a foundation of respect and mutual aid. You must be willing to suspend and reconsider pre-conceived political and cultural notions - just like I had to do when moving from farmland to the cityscape.

  2. Take the opportunity to join the local community and appreciate their contribution to our society. It's easy to forget where food and manufactured goods come from, or how a family trade adds resiliency to the wider economy. I recently heard a statistic: only 4% of American businesses bring more than $1MM in annual revenue - implying that the vast majority of businesses are small and medium sized. There is a tremendous amount of business acumen and intelligence that is simply not visible from the shiny, bustling cities. Use these services and engage with these entrepreneurs to help weave a tighter fabric.

v6 profile image
🦄N B🛡

As someone who grew up in a rural area in the Midwest, I do think a tremendous amount of value has been left on the table, both in raw economic potential and untapped human potential, from under-investment.

I grew up in the Midwest myself. It's a damn shame, and Middle America, and the good ideas, productivity, work ethic, honest people, and discipline that come with it are being starved in many ways.

My family and I got to watch as the manufacturing industry withered away.

codeandclay profile image
Oliver • Edited

I don't know about other countries but the home working boom has screwed the property market where I live -- a small English town that I moved to ten years ago because it was 'affordable'. Property prices had climbed before lockdown but since then, they've rocketed. There's nowhere to rent within five miles of the town centre and you're looking at more than double the national average if you want to buy even the smallest of boxes. Rental isn't cheap either. Fine if you're paid a big city weighting. The UK government is partly to blame as it cut stamp duty -- I've never seen so many SOLD signs up -- without considering the consequences. People are flooding to rural towns despite limited housing. This last few months, my town's Facebook group has been inundated with posts from local families looking for homes.

jamesdengel profile image
James dengel

Unfortunately when the stamp duty cut is removed in late march/april (i forget when)
Then prices will go back as the houses will cost more.

The price rise is almost artificial as prices in my area have risen very quickly by effectively as much as what was saved from stamp duty.