Lockdowns & remote work help create a new social class. The Sovereign Individual.
The pandemic lockdown is creating a new social class. A group of emerging Sovereign Individuals that are changing how governments provide services to address collective action problems. This modern class divide is no longer a blue-collar versus white-collar issue. Rather, it’s a divide between digital workers and physical location-based workers.
The root of the problem is the adaptability of these social classes. Digital jobs can now be conducted from anywhere in the world and are inoculated to the pandemic. Location-based jobs are less flexible and are harmed by the lockdown.
This new social class divide is a major reason why the pandemic is more than a health crisis. It’s an economic crisis that highlights a growing divide already underway. Large populations have different needs. And governments have limited ability to apply support programs to meet these needs.
The consequence is a global shift that rewards sovereign and independent individuals. This class of people conduct digital work and are an emerging social class separate from physical modes of work.
As this class divide continues, global governments will change how they appeal to the diverging groups of people. Some will create favorable digital age policies. Others will cater to the location-based worker.
Read on for what the new class is, the key factors causing the change, and how it will impact your life.
The Sovereign Individual is a New Social Class
Leveraging digital infrastructure to maximize individual choice
Digital workers have the flexibility to move to locations that better meet their needs. These sovereign individuals include new types of occupations such as influencers and content creators.
Location-based flexibility creates a new form of personal sovereignty. Digital workers can now earn a living anywhere and choose a community that will appeal to their beliefs. Ex: moving to locations with lower cost of living, healthcare not tied to employment, or tax havens.
This change will force governments to start marketing to the needs of these sovereign individuals.
Bypassing protectionism of service industries
Because of the ability to change locations at a whim, digital workers will experience new forms of leverage over political leaders. Adapting to this new class divide will prove complicated for lifelong politicians. The political elite will experience loss of influence with their traditional constituencies as these new social groups don’t form clean coalitions.
As digital workers move to foreign jurisdictions local governments will react. Tactics will include new laws including subsidies to one social class or another. They will implement capital controls and expatriation taxes.
In the past, this would be unavoidable but there are new digital technologies to bypass these controls.
As a result, we can expect to see these alternative global technologies like bitcoin benefit. Primarily because bitcoin appears to be a method for bypassing capital controls. Bitcoin may also prove to be an ideal method of global transaction leading up to this societal shift. Businesses with global workers in foreign jurisdictions may opt to pay all workers in bitcoin for ease of accounting.
The Pandemic is Reinforcing Social Class Change
Lockdowns harm some more than others
The early and primary solution for stoping the pandemic has been a lockdown. Closing all non-essential businesses. This harms any location-based businesses that don’t have the ability to generate income digitally. They either close operations completely or operate at severely restricted capacity.
This greatly impacts the ability of the business to survive and impacts employees ability to meet their financial obligations. Companies with digital workforces are able to push operations to remote work and retain business. Life in a pandemic is challenging albeit manageable for digital workers.
But it’s an impossible situation for the location-based businesses and workers. Many live paycheck to paycheck and without government support a collective actions dilemma arises. Ie: you can go to work and get paid risking possible illness, or you can stay home and risk the consequences of no income.
Local governments, schools, and colleges are also closing
Schools are also subject to lockdown measures. In many cases, lessons have been moved online. And with online classes, parents are finding they must supervise and often coach their young children through the process. For location-dependent workers, their children don’t receive adequate at-home support for their studies.
Digital workers while working remotely, can supervise their children’s education in some capacity. By doing so, they can see their children get ahead of location-dependent workers unable to do so. Creating a self-reinforcing feedback loop and perpetuating this new class divide.
Government welfare & subsidies for location-based workers
There will always be a need for physical and location-dependent labor throughout society. These jobs will continue to be productive contributors until robots are capable of replacing them. So, government support of this emergent location-based class is essential. Especially during the pandemic to prevent a widening class divide. This has manifested as the temporary stimulus checks and increased unemployment compensation in the US.
As the class divide widens, we can expect a push for governments to continue subsidizing location-dependent workers.
Trends in remote work – relocation of digital workers
Silicon Valley companies are leading the charge in offering remote work. Facebook and Twitter are large examples. The emerging trend: workers that can conduct digital business are exploring new living arrangements.
Digital workers have indicated they would relocate if given the ability to work from home. With greater frequency, this means leaving undesirable locations. As a result, locations with poor conditions in local jurisdictions are seeing a flight of digital workers.
Examples include New York, San Francisco, and other major cities seeing the flight of digital workers to the suburbs. Why? Because the virus impacts densely populated areas and lifestyle shifts under quarantine and lockdown in these environments are constrictive. Digital workers are opting to move away from populated areas in favor of rural and suburban locations. They are seeking homes that provide better amenities to their lockdown and remote work needs.
Countries alter policies to appeal to remote workers
Relocating also occurs for other reasons. As an example, some national jurisdictions have favorable policies for digital workers.
In the times of COVID-19, many small nations that rely on tourism are suffering from lower tourism. This has accelerated the push to find new ways to attract visitors. One way is reducing the restrictions on visas for digital workers. This allows digital workers an ability to live in new locations for extended periods of time. ex: Bermuda, Estonia
The Other Consequences of Remote Work
In a recent research paper by Britta Glennon indicates that multinational corporations will offshore their workforce when skilled worker visas are unattainable.
An increasingly high proportion of these workers — and particularly STEM workers — in the US were born abroad and immigrated to the US
restrictions on high skilled immigration caused increased foreign affiliate employment and made firms more likely to open up foreign affiliates abroad.
The effect is strongest among R&D-intensive firms in industries where services could more easily be offshored
US multinational firms are responsible for 80% of US R&D and employ about ¼ of US private employees
Nations opt for tight border controls
In a world where fear of the Pandemic is rampant, the US passport is no longer what it once was. The world has placed significant travel restrictions on US Passport holders. Likewise, the US is implementing its own nationalist policies. Many of these policies are to protect the labor force from international competition.
Ex: the government implemented student visa restrictions to foreign nationals. Thus restricting who can attend school in this coming semester. As foreign students stop coming to the US for education, we can expect them to go elsewhere.
New global labor arbitrage opportunities
As digital workers begin moving to new locations, companies will alter how they manage labor. It will open new possibilities for hiring. Companies will seek out labor in new locations.
Combined with restrictive visa rules they may look outside of national jurisdictions. The foreign students rejected from coming to America will get educated elsewhere. And they will remain viable employment candidates.
This will create labor arbitrage opportunities. We can expect jobs will move to new locations based on where the digital talent lives. We can also expect this to create a great equalization of opportunity. As companies grow their workforce across time zones we can expect to see foreign national workers benefit.
This will reduce costs to businesses as they pay salaries according to localized costs of living. Further reinforcing the expansion of opportunity to globalized markets of digital workers.
Why You Should Care
Where you live and who you elect to create laws are affected by this evolving social class divide. Governments are adopting new ways to protect their workers both location-based and digital. But not all traditional policies impact these classes of people in the same way.
As we enter the next phase of the pandemic, the real economic burdens of lockdown will begin to show. Digital workers embracing remote work will start to move. Students will experience inconsistent schooling environments. Like always, government officials will bicker over how to support their constituencies but their constituencies will change.
Digital and location-based workers will need alter voting preferences for these new conditions. Communities will live and die based on their local governments ability to adapt to the times at hand.
Where do you fall in this growing class divide? Is your job location dependent or is it digital? Based on the changing dynamics this should impact your voting preferences.
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