The globalists vs the localists:
The bimodal distribution of the domestic vs global labor force, and how the 2020 Election will be a fight between these two forces
Source: Globalism vs Localism. Is There a New Political Coordinate System in the 21st Century?
Remote work has risen because of COVID-19, giving employers the flexibility to hire, not only at a local marketplace, but to attract talent from a pool of a highly-skilled global labor market.
Which means, if you’re a highly-skilled white-collar worker, you are no longer competing with your country’s labor market, but rather an entire global talent pool.
Especially as many employers will explore paying talent with cost of living adjustments, I believe these economic trends will create political rifts that merit further discussion.
If employers can choose from a highly-skilled global remote workforce, three major questions emerge:
What is the role of the nation-state in serving its people, if much of the workforce doesn’t live in the country?
How do we tax workers who don’t live in the country, if they don’t use local public services such as schools, healthcare, public safety, or infrastructure?
What level of immigration policies, if any, are needed to provide a buffer zone to protect or re-skill the local labor market to compete in the global marketplace?
Let’s break these questions, one by one:
What is the role of the nation-state in serving its people, if much of the remote workforce doesn’t live in the country?
The 20th Century foundation of a nation-state is based on a series of shared cultural, economic, and political values that are physically bound by geography. Physical geography serves as the fertile ground to cultivate these value systems, from youth to old age.
However, with remote work & the rise of the digital economy, physical geography is no longer the vehicle to cultivate these cultural or economic values, that were previously only available via the nation state.
In layman’s terms, if you are a direct to consumer clothing brands e-commerce site, one future looks like this:
Your physical, immersive retail pop up store is in a city like London, Nairobi, Shanghai, Dubai, etc.
Your fashion designers live in Bangkok, Mexico City, Kyoto, Milan, Johannesburg,
Your marketing, business development, or sales staff lives in Austin, Texas or Berlin, Germany;
Your manufacturing takes place in Ho Chi Minh City, Dhaka, or Jakarta.
If you’re a blue collar worker, you will interpret this as the country selling out its people for profits. However, if you’re a white-collar C-Level corporate executive, you’re just doing what’s “good for business”.
This is the major dilemma that many countries haven’t resolved yet.
Even if COVID-19 has convinced many Trump voters to go Biden due to Trump’s treatment of coronavirus, many Trump supporters I know feel very strongly about having strong government policies that protecting the local labor force - and will continue to vote Trump for the sake of jobs.
The big question really is, how much can government due if they can hire global talent without the need to obtain H1B visas, since the remote workforce doesn’t even need to step foot in the country?
This leads me to my next point.
How do we tax workers who don’t live in the same region as the company HQ, if they don’t use local public services such as schools, healthcare, public safety, or infrastructure?
A nation-state supports its people via public services such as schools, healthcare, public safety, or infrastructure. To support these services means paying taxes via property, sales and income tax.
But wait, if that remote workforce doesn’t:
Live in the city/region where your headquarters are located
Shop at the local restaurants or retailers where your headquarters are located
This means that cities, states, or countries will have to be very creative on how it finances these public services.
The net positive benefit of remote work is that the re-distribution of the workforce will allow for second or third-tier cities to emerge as places to live, work, or play.
However, we don’t have enough granular data to see what the financial benefits are for city and state governments, as a result of remote work. It’s too early to say.
But, the question still remains valid. People will only pay taxes if they see massive increases in quality of life (“the price of doing business”).
Quality of life, however, is more dictated by physical geography, so if they don’t live in the city/state where the headquarters is located - is it worth paying income or property tax there?
This is where remote work can become problematic, in terms of financing critical public services.
We simply don’t have a clear vocabulary on how to resolve this emerging economic and cultural trend. I am very against political soundbites, because they don’t recognize the complexity of how remote work will shape municipal, state, or federal taxes.
This leads me to my final point.
What level of immigration policies, if any, are needed to provide a buffer zone to protect or re-skill the local labor force to compete in the global marketplace?
If we’ve learned anything from the United States 2016 Election, voters will vote for their immediate needs over long-term goals.
For some people, it’s the fear of immigrant labor pool taking away jobs from the domestic labor force. For others, it’s the rise of artificial intelligence, and the offshoring of jobs to the global marketplace.
In terms of domestic work-force, it’s clear that some buffer is needed. By protecting the local labor force from global labor market, you give time for the local labor market to reskill, generate new industry, build new infrastructure, or start new businesses to catch up.
But there are competing narratives that make it difficult to execute on this.
My big concern is Trump’s populism - via a US-Mexico border wall, and his white supremacist followers - are extreme reactions that don’t address a very complex economic shift in the global workforce.
Especially as the 2020 Election emerges, I now recognize that this civil unrest is now inevitable. It is a result of not addressing these structural economic and cultural factors that have built up these last 50 years, that are finally imploding in 2020.
While we’re going to see a rise of remote work, I support deliberate government policies that help protect, cultivate, and restructure the domestic labor force so that they can compete in the global labor force.
Regardless of what the role of the nation state is, if much of your main industry’s work-force is remote.
By not doing so will cause social and civil unrest that has massive global implications.
I want to end this post, by stating that while the US treatment of COVID-19 is now a major factor in who voters will pick for public office, the reality is that for many voters, jobs is still more important.
We’re entering a new reality where the top 20% of global talent will take 80% of the rewards, and we don’t really have policies that really address this economic shift.
This is why the political debate between the globalist versus localist workforces will continue to be relevant past 2020.
This bimodal distribution of the global labor market is inevitable. If not addressed properly, it will lead to social chaos, and reduce our political dialogue via primal ethno-nationalism. Ethno-nationalism usually turns out very bad, because it appeals to the most base of human nature.
Thus, the globalist vs localist labor market is a political debate that deserves merit and discussion, and we need an expanded vocabulary to resolve these complexities, especially as the workforce is changing right before our eyes.