Economic Recovery : But What Sort?

August 03, 2020, 7:12 AM UTC

Modern economies are immensely complex. Everything depends on everything else. So when one part ceases to work it can often seem that all the rest is threatened. The resilience of the whole comes into question. It’s even more the case when big shocks hit – shocks like the coronavirus pandemic – that our fear of general economic collapse and all that would mean for human hardship and social disorder should lead us to try to put the pieces back together not just as quickly as possible but also in much the same shape as they were before. Such is the urgency behind ‘recovery’ stage we’re now trying to get going if only the virus will leave us alone to do so. But is putting Humpty-Dumpty back together again how we should be approaching it?

There’s no denying that the economy has ‘had a great fall’. The numbers are so extraordinary that citing them is almost irrelevant. Suffice it to say that we’ve never seen anything like it and if economic historians want to rummage through their records in order to tell us that we have to go back as far as 1830 or whenever it is before we encounter anything comparable, well fine – but I think we know what trouble we’re in anyway. And since we also know that all an economy is, at bottom, is people working, we know too that we’ve all got to get back to work (if we can). It’s here, though, that some choices arise.

Economists, pretending to be scientists, tend to deal in abstractions of one sort or another and seem to inhabit a world in which real people often seem hardly to get a look in. It’s a world of aggregates and geometry. So it’s all about the percentage by which the whole caboodle has been poleaxed. Or the size of the gap we can expect to emerge between where ‘GDP’ will be in four or five years’ time and where they think it would have been if the virus had settled for an unambitious existence restricted to the live animal markets of inland China. Or it’s about the shape of recovery: will it look like a V or a U or a W or even, heaven help us, an L? The unquestioned assumption behind all this abstract modelling, however, is that we certainly need to get the economy back up to the size it was and then keep making it bigger.

Of course there is a familiar ‘green’ objection to this, shared indeed by some economists, that the permanent pursuit of economic growth risks destroying the planet and that, virus-induced economic shock or not, we should be looking to follow a quite different path. I don’t want to pursue that argument here not because I think it irrelevant (far from it), but because I’ve been struck by something else in our current predicament. It goes back to that notion of the intricate interdependence of modern economies, to the almost unquestioned belief that we need to put Humpty-Dumpty back together again, exactly as he was – and to the future of the city.

Anything looking less like Humpty-Dumpty than the modern business city is hard to imagine. There they stand, towering giants of steel and glass, vast multi-storey atriums with what look like whole tropical forests growing in them, floor upon floor of open-plan offices furnished with row upon row of the one essential tool of modern economic life, the computer screen. This is the future we have built for ourselves and are still building. It’s not just the City of London or its close rival, Canary Wharf, that bristles with cranes, the harbingers of yet more density to the concrete jungles. Everywhere cities have been seen as our economic future, and providing cranes has long been a good business to get into.

No, the business city doesn’t look at all like Humpty-Dumpty and physically, of course, tthose towers are still very much standing. Nonetheless, they’ve had a great fall. The streets at their base have become largely deserted. Human life there has fled. Birdsong can once again be heard, or would be if there was anyone to listen. So the issue is whether we should bend every sinew to return the modern business city to its old, noisy glory or whether we should be relaxed about tumbleweed taking up residence in the spaces the virus has cleared. In short, in getting back to work (as we must) do we need also to get back to the office?

It’s become an issue because we have discovered, perhaps to our surprise, that much of the work that used to be done in those rows and rows of computer screens up on the 57th floor can actually be done by everyone staying at home and curling up with their laptops. It’s not just employees who, perhaps for obviously self-interested reasons, have come to this conclusion. So have their bosses. Firm after firm – Google, the newly-rebranded NatWest Group, Facebook, British Airways, KPMG and many more – have announced that they have no plans to refill their city offices with their workers at least until next year, hinting in some cases that they may never do so at all. The Centre for Economics and Business Research has forecast that around a third of the entire British workforce will stick to working at home, at least for the most part. So whereas last year it’s estimated about 1.7 million people worked ‘mostly from home’, they think it will soon be 10.7 million.

Nice work if you can get, as you might say. But plenty of economists (and certainly many fearful politicians) are saying: ‘No! Get back to the office smartish!’ And the reason is this interdependency issue again.

The point is that it might be fine for, say, the financial workers who used to work in those Towers of Mammon to stay put in Godalming, St Albans or wherever and do it all from home, but what about everyone else? Let’s start at the top. What about the developers who put their money into building those towers: what’s going to happen to them if there’s no longer any demand for their office space and the rents on which their whole investment depended dry up? What’s going to happen to those who’ve put their money in cranes? What’s going to happen to the finances of public transport if no one needs the Tube and the buses any more to get to work? Or to all those Uber drivers? And what about the security guards employed to sit there all day and night thumbing through copies of The Sun again and again? Or the maintenance staff and the cleaners? Or beyond the towers themselves, all the little shops whose livelihoods and entire existence depend on the steel and glass boxes being filled with people rushing out at lunchtime to grab a sarnie, drop something into the dry-cleaners, get their shoes repaired, or have quick hour at the gym? Or the pubs and restaurants empty at four but chokker from six? And what about the government itself, hugely reliant on all the tax revenue that this frenzy of city life generates? All gone.

It’s too awful to contemplate. Which is why Humpty-Dumpty must be put back again, exactly as he was before.

But is this a case of dread getting the better of commonsense and, indeed, of obscuring a future that might be better? The dread lies in imagining that without all this economic activity we have been used to there will just be collapse with a capital C. Unemployment will be permanently astronomic, government will be permanently starved of revenue and developers will be reduced to begging for crusts. Such a vision, though, arises only if one eye is shut. For economic change brings opportunities as well as casualties.

Back in Godalming and St Albans (so to speak), there will potentially be a boom. Towns and villages that used to be empty during the day will discover that there is a new and growing demand for sandwich bars, for dry cleaners, for shoe-repairers, for gyms. It could be the renaissance of the high street. Village shops and pubs might revive once more because people were really living there again rather than just treating the village as a dormitory. And night security guards who used to have to work unsocial hours and traipse in from the outermost suburbs of London just to read the paper and be paid peanuts for doing so might find more fulfilling, more human and maybe even more remunerative work closer to home.

Dynamic economies require what economists call ‘creative destruction’. For economies to ‘live’ and be healthy what doesn’t work needs to be allowed to die so that other things can be born and thrive. Those who resist this are Luddites. Of course it is hard because we all get used to the lives we lead and disruption is never easy. But in the long run it’s better all round than trying to keep something going because it’s all we have known. The familiar can be the enemy of the better.

We’ve been here before, of course. And it may be that, looking from afar at the sudden plight of the gleaming city, people in old mining areas, or where ships used to be built or steel manufactured, may have a wry expression on their faces. They were once told they had become the past and had to accommodate themselves to the fact that it was true. Now, what then seemed the future – the city and the office – may be following the same path. “Yes, you were the future … once”, they may feel inclined to remark.

Shelley’s famous poem ‘Ozymandias’ talks of a ‘traveller from an antique land’ who in the desert comes across the broken statue of ‘the king of kings’, around which there is nothing else left of a once great empire. You might ask whether, as they saw the end coming, Ozymandias’s subjects worried about what was going to happen to the sandwich-makers and the shoe repairers. History, of course, does not relate. But we’re all still here, doing other things.

So should we try to ‘save’ the city by turning our back on what we have discovered – that a modern digital economy does not so much need, as we had thought, the Towers of Mammon to survive? Or should we embrace change, even if it is disruptive and abandons those towers as brash monuments of a world that once existed but does no more? What’s your view? And what’s your view especially if you are an office worker?

Let us know what you think.