When people think of the Industrial Revolution, most picture a “wave of gadgets” that includes steam engines, fly-shuttles and furnaces. As these new technologies swept over England, they drove the growth that formed the modern world. But physical invention and innovation was just part of the story. The impact of the revolution spun out into politics and policy, and even extended as far as sunbathing and the seaside resort. The idea of the “restorative sea” began with 19th-century elites and aristocrats, but soon whole factories of workers were descending on northern beach towns such as Scarborough. Across much of Europe, industrialization helped shape holiday habits that would see production grind to a halt in the summer, as labor decamped to the beach and factory floors were upgraded.
Today, technology and travel are driving a new revolution, the impact of which is again reshaping society, notably through the prevalence of remote work. Accelerated by the large natural experiment of COVID-19, remote work has become so common that in some countries, as many as one in five workers are now performing “anywhere jobs.” Untethered to a specific office or geographical location, a new class of potential digital nomads who roam the world—or hermits who seclude themselves—includes accountants, graphic designers, software programmers and many others in the “new work” that the digital economy creates. But while this geographical freedom creates new opportunities for many workers, it also causes problems for less desirable locations that will suffer a “brain drain” as their most talented individuals move elsewhere. These locations will need to rethink how best to address the new challenges that remote work presents.
Benefits and Costs of a Global Workforce
Many companies at the forefront of building decentralized and disintermediated technologies, including those leading the charge on Web 3.0, are driving the remote-work trend. The cryptocurrency exchange Coinbase went fully remote last year, seeing the decision as an opportunity to compete for a wider talent pool. The communications platform Slack and software development host GitHub have done the same. AirBnB, which facilitates a more global lifestyle, had 6,000 places report their first booking during the pandemic, and one-fifth of their bookings are now for a month or longer.
Having proven that the idea of being unchained from the office and the commute can work, technology has again been a liberating force for the individual. It has pushed greater bargaining rights onto workers, who can demand more choice and autonomy over their time and location. At scale, remote-work technology has also presented the possibility of a far more globalized and flexible labor market, with the benefits of geographical proximity now occurring online and opportunity no longer bound by geography.
Despite its benefits, this increasingly decentralized world presents a number of questions for nations. First, they will need to compete for highly mobile, highly skilled people who can globe trot for work and live in a climate that offers 12 months of summer, should they wish. This competition has already begun to happen in some places. Portugal has, for example, offered flat tax rates for “high-value” residents, while in the U.S., Vermont has introduced a Remote Worker Grant of $10,000 for those willing to move there and work remotely for an out-of-state employer—an offer that has been matched by other U.S. cities including Savannah, Topeka and Tulsa.
At the extreme end of such efforts is Estonia, which is trying to build a borderless digital society and has extended the world’s first e-Residency—a transnational digital ID that (the country claims) allows e-resident entrepreneurs from anywhere in the world to start an EU-based company and manage it online.
Possible National and Local Responses
Countries wanting to encourage remote workers to their shores will therefore need to keep the legal barriers to global remote work as low as possible. Local and national governments must be intentional in how they get the right mix of visa access, employment rights, universal child care provision and tax policies that are attractive to highly mobile innovators, creators and entrepreneurs. The spillover and multiplier effects will not be universal, but they can significant.
However, to attract these new workers, states will have to challenge hyper-localized and often nationalistic notions of community, which can lead to resentment within the country. And while the growth of borderless businesses, technologies and workforces risks a protectionist backlash, success in the modern world will require governments to build network nations that connect to technology, capital and labor at an increasingly global scale.
Second, there is a chance for businesses to be truly transnational. This means tapping into a wider talent pool as technology permits, offering new opportunities where they might not previously have existed. But it also means extending the role of the business further into society, with companies delivering elements of the social contract as they position themselves as prospective employers. This could mean tech platforms coming to the forefront of guaranteeing employment rights, parental leave and sick pay for workers, just as governments did in the postwar era.
Third, as technology has increasingly allowed for more individual sovereignty, it is also creating new and inspiring collectives and communities. New nodes of knowledge are being formed—and while every nation wants to create its own Silicon Valley, a building ethos is being generated online in which like-minded people can co-create companies and innovations that will drive industries of the future. For some, this ethos will change the potential pathways for how they build and develop their skills, networks and careers.
New Models of Governance
This presents a complex ecosystem. It disaggregates citizenship, disconnects personal from professional location and presents questions about tax jurisdictions and even democratic engagement. Ultimately, new models of governance will be needed as some people operate across multiple jurisdictions. For some it simplifies the question of where to live, as workers will not necessarily have to move to where the best economic opportunities lie. Together, all of this underlines the need for internet-era infrastructure and universal internet access. Those locked out of the new economy will be those without access to the technology reshaping the modern world.
The current reordering of society is more profound and larger in scale than what occurred during the Industrial Revolution. The historical implications of that era, however, show how far-reaching the societal impacts were. We are only at the beginning of a great decentralization of work and location, and some elements are likely to be difficult. Many localities will remain rooted to their place and people. But nations wanting to be at the forefront of the 21st century need to be network states that connect into the ideas, innovations and people driving this revolution, wherever they may be or want to be.