Issue Briefs

Metropolis Doomed

Metropolis Doomed

Martin Hutchinson

June 15, 2022

We are constantly subjected to propaganda from media journalists living in tiny apartments in crime-ridden major cities about how wonderful those cities are. That is partly a matter of taste, of course. However, the technological and organizational changes brought by the COVID-19 pandemic may finally end city life for those for whom that pathological taste is not politically and psychologically ingrained. For those without the mania, it will be a joyous release.

Exodus from big cities

As is well known, COVID-19 caused many high-powered professionals to experience for the first time the joys of working from home, with fewer useless meetings and no commuting time. For many middle-aged drones it was a revelation. As a consequence, the population of the world’s largest cities has fallen by substantial percentages in the last two years, as people took the opportunity to reorganize their lives in a more civilized manner.

Back to the office?

Now, the inevitable reaction has occurred. Elon Musk of Tesla has publicly demanded that his employees work at the office, and not just any office, but the one to which their jobs are related – the Fremont HR department must actually clock in at the plant in Fremont, CA., an absurd and grotesquely overpriced place to locate a manufacturing facility, if ever there was one. Musk is trying to lose 10% of his employees, so does not mind if a certain percentage resign in a huff; it saves paying them redundancy money. Other employers whose staff may be in demand and not entirely interchangeable (which does not include the Federal government and other employers of tens of thousands of interchangeable drones) are trying to figure out ways of achieving the effect Musk desires, without losing too many of their staff.

What will happen to workers

When the dust settles, it will become clear that the economics of large aggregations of people has changed drastically in the last decade or so. Cellphones and videoconference software have made face-to-face interaction no longer necessary for most purposes. Equally, we are not about to move to a world in which everybody works from home, for two reasons:

First, younger, and less established staff members will become excessively isolated if they do not have personal interactions and will not learn the intangible “how we do things around here” mores that are essential to corporate success – in any case many younger and more junior staffers will not have living arrangements that lend themselves to working from home. The isolation point may also apply to more senior workers. But hybrid arrangements, in which they come into the office physically on one or two days a week, would generally get round isolation in most of those cases.

Second, universal and perpetual working from home will lead to “goofing off” – the employer’s interests will be given second priority when the employer is not physically present and productivity will therefore decline (that is not true for all staff, but for many of them, enough that workforce discipline would be impossible to maintain). Even if employees do not goof off, employers will not be confident that they are working diligently and will therefore make various unpleasant Orwellian attempts to check up on them, leading to a breakdown of mutual trust.

Disadvantages of commuting

Despite the disadvantages for both employees and employers of working from home, the last two years have shown there to be at least equal drawbacks to the traditional lengthy commute to a metropolitan office. Transportation in many cities is increasingly unreliable, as the decline in usage through the pandemic has caused transit systems to run huge deficits, and therefore neglect necessary maintenance, policing, and cleaning.

I gather this is particularly the case in Washington DC, where I lived for its first decade; the WMATA transit system, adequate when I first moved to Washington in 2000 because it was still at that stage fairly new, suffered a steady decline in quality over the decade 2000-10, and simple linear extrapolation from its 2010 state, together with anecdotal evidence, tells me that it is now thoroughly unreliable and indeed quite dangerous. If the capital of the United States, with potentially infinite funding available, cannot maintain a decent subway service in today’s conditions, then lengthy commutes must become an increasing deterrent to those undertaking them.

Cities are no longer very attractive

The other alternative, for staff to live within the giant metropolis concerned, has become increasingly unattractive even nightmarish for all but the wealthiest and most bigotedly liberal employees. Large metropolises are universally governed by incompetent left-wing city governments, who allow crime and homelessness to proliferate, while imposing draconian restrictions on their middle-class inhabitants. This is not just a U.S. phenomenon; you have only to look at the automobile charges and restrictions introduced by the loathsome Mayor Sadiq Khan in London, and his attempts to make the Metropolitan Police ever more woke, middle-class-hostile and ineffectual, to appreciate how much the quality of life there has nosedived in the last 30 years.

Add to the universal unpleasantness of metropolitan life the inordinate cost of metropolitan real estate, and you have an environment to which no sensible person would wish to subject himself, still less to bring up a family (the hyper-woke schools, with academic standards headed firmly for the abattoir, are another dystopian feature of these places). Even the Metropolitan Opera, the one barely adequate reason why one might wish to live in New York, is now wrecked by the audience being forced to be vaccinated and permanently masked, and the glorious singer Anna Netrebko having been fired for the crime of being Russian. Thus, employers located in big cities are finding their costs spiraling and the satisfaction level of their employees cratering, not a winning combination.

Move offices to smaller cities

There are several decent responses to this. One is to move the company’s entire operations to a medium-sized city such as Indianapolis (to pick one at random; I am not here attempting to act as a relocation consultant). This allows the firm’s senior staff and headquarters personnel to remain based in one location. It also greatly reduces costs, both for the company and for its employees. It may make life more difficult for the international “road warriors” because the airport connections will be less complete than in say Chicago. However, with Zoom available those people should be traveling less anyway (and if the company has a complex and extensive international sourcing network it needs to reduce it – it is not 2005 anymore and the world is very definitely not flat, in Thomas Friedman’s term). Only the wokest and most senior staff (hopefully not the same people) will have any objections to moving out of the metropolis, but they should be sacrificed for the majority good – or, ideally, fired.

This first possibility requires almost no change in the company’s business practices – the staff can all be dragged into the Indianapolis office every day if so wished. They will still be far better off than they were when the company was headquartered in New York, Los Angeles, Chicago, or London.

Better use of technology

However, a better solution will make more use of new technology. One possibility would be to break the company headquarters up into several “satellite” offices, communications between which would be handled technologically. Staff could then commute to the satellite offices, either full-time or part-time, with middle ranking bosses able to impose a pattern on their own staff (possibly with modest pay differentials to reflect the differing costs of different options). Like Indianapolis, this solution would ensure that junior staff were brought into a team and inculcated with “how we do things.” It would also have the advantage that recruitment could be carried out in each satellite office separately, thus recruiting in Colorado Springs the staffers who preferred skiing to Indianapolis’ basketball.

I’m sure there are many other possibilities, which for individual companies would work better. Certainly, for Tesla, moving the Fremont plant somewhere cheaper, thereby reducing costs for the company and all its employees, would seem a no-brainer. Whatever alternative is chosen, the metropolises will be emptied, their real estate markets left to Russian oligarchs (whoops! – another prop gone!) and the underclass attracted there by the Marxist local governments.

I have one piece of advice for its metropolitan readers: sell your apartment while you still can and move somewhere civilized. Your metropolis is going the way of Nineveh and Tyre – both nice places, in their day

This article was originally published on the True Blue Will Never Stain

Martin Hutchinson is a GPI Fellow and was a merchant banker with more than 25 years’ experience before moving into financial journalism. Since October 2000 he has been writing “The Bear’s Lair,” a weekly financial and economic column. He earned his undergraduate degree in mathematics from Trinity College, Cambridge, and an MBA from Harvard Business School.