Obviously The Future: Citizens vote with their feet

Since leaving Minnesota, I have spent meaningful time living in North Carolina, California, Nigeria, Pakistan, London, New York, and Washington state. That would not have been possible two generations ago and yet has been increasingly common for an increasingly large pool of mobile individuals from around the world who are able to relocate for a host of reasons and continue to do so in large numbers. Yet even this relatively recent phenomenon is changing once again. As the standard of living across the developing world continues to climb and the Internet enables individuals to live, learn, and work from almost anywhere, migration of commerce (and the associated opportunities and people who seek them) may shift as well, redistributing from the several urban megapolis that have concentrated wealth and talent into a broader set of cities. How localities compete for citizens - in the same way many have competed for business in recent decades, exemplified by the fervor surrounding Amazon's search for HQ2 - may differentiate the places that "win" and shape the rest of the 21st Century.

Situation:

All over the world, people want the same basic things. They want to be healthy, safe, and educated. They want a high standard of living for themselves and their families. They want to be productive, respected, contributing members of society.

Everywhere you go, the government makes the rules.

What should the government do? You could answer this question with an ideological lens—the debate about small vs. big government. But today, accepting that the existing government structures in place are not going to be radically overturned, it's hard to argue against the necessity of and demand for effective government. What does government achieve? What value does the government provide for us, for our communities, and for our society at large? And what do we demand of each level of government, from national to state to local, and how does government avoid tripping over itself with the complexity of delivering on its citizens' often-conflicting desires?

Who pays the bills?

No one I know enjoys paying taxes. Who wouldn't prefer a bit more discretionary spending money? Yet public goods cost money, and taxes are how government funds public services. The challenge comes when the public does not believe that it is getting good value for money.

Choice is all around us.

In a free society, everyone makes choices. Everyone likes being able to choose the life they want to live. Where to call home. What community norms to ascribe to. Where to educate your kids.

The wealthier you are, the more choice you have. You can choose to send your children to a private school. You can choose to see a doctor that doesn't take insurance. You can decide to get a second opinion. Wealth can mean that you don't have to play by the constraints of any particular government and its rules.

When people don't like the choices they are given or don't feel they are being honored - they choose to take to the streets or to leave. And protesting and leaving they are.

Since the start of the COVID-19 pandemic, many residents of New York City have sought refuge elsewhere. Tim Ferris wrote a blog about his move. And, this week, venture capitalist Keith Rabois announced he was moving to Miami. London real estate prices are down. Perhaps most dramatic are reports of those quietly leaving San Francisco, as Michelle Tandler chronicles on Twitter:

90k households recently filed a change of address form with USPS, leaving SF.
We have a population of 880k, ~400k households.
This is the budget doc published July 31 (pg 50). 👇https://t.co/EFRvmmU1wW pic.twitter.com/z82UM1hepj
— Michelle Tandler 🌁 (@michelletandler) November 20, 2020

In the US, if you don't want to pay state income tax you have a choice: the rainy pine forests of Washington, the arid expanse of Texas, the rolling hills of Tennessee, or the moist air and warm sea breeze of Florida.

And, increasingly, you can choose to be a citizen of another country. Former Google CEO Eric Schmidt has applied to become a citizen of Cyprus. Facebook co-founder Eduardo Saverin renounced his US citizenship and is now the richest person in Singapore. Others are attracted to New Zealand. Canada actively advertises that it welcomes diverse technology workers. More than 5,800 Americans gave up their citizenship in the first six months of 2020 compared to the 2,072 Americans who renounced their citizenship in all of 2019, according to Bambridge Accountants.

Those who can't move will make their frustrations known through protesting. The Carnegie Endowment for International Peace estimates there have been 100 significant anti-government protests this year.

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Why is the inflection point now?

People and work are increasingly mobile.

As we discussed last week, remote work is here to stay. Increasingly, consumers expect services that are on-demand and facilitated by a range of marketplaces. This has given rise to an estimated 58 million microbusinesses in the US. Gig-economy workers and freelancers can also work from anywhere as the platforms that support this have expanded quickly, especially during the pandemic.

E-commerce is booming.

Anything non-perishable can be at your front door in less than 24 hours. Even luxury goods. You no longer have to go to Paris to shop at Chanel. You can buy Tates Cookies, once a bakery in Southampton, at your corner grocery store, or delivered to your door. Where you live is not a limiting factor to what goods you have access to.

Culture is merging as 'creativity by an algorithm' prevails.

Yes, the West Coast is different from the Midwest, which is different from Australia, which is not Canada or Dubai or Singapore but... it is converging. It's covered in this FT article titled 'The Curse of the Airbnb Aesthetic: How the global anonymous chic that makes Budapest look the same as Brooklyn. Tom Goodwin put it best:

It's a sign of this eras obsession with algorithmic creativity. There is no imagination, no consumer understanding, no leaps of faith, no idea, no dream.
There is just a spreadsheet & tweaks towards a superbly executed converged bland middle.
The whole world optimized towards blah.
— Tom Goodwin (@tomfgoodwin) November 20, 2020

And, if the world increasing is converting toward blah, why are you paying more to live somewhere that isn't as special anymore?

Government dysfunction is becoming painfully visible and is in your back yard.

PM Boris Johnson was hospitalized with COVID-19. Beirut was set ablaze. Prices are rising in Pakistan. Dysfunctional public schools closing over COVID-19. San Francisco human poop maps.

How's it going to play out? Where are you going to live?

If you can choose where to reside and you can choose what taxes you are subject to pay. Do you get what you pay for? I have lived in San Francisco, New York, and London. I love these cities. Being in the center of culture, power, money, and technology used to be vital, but now the value for money equation in these cities is increasingly under question. People are relocating physically, Some jurisdictions will be winners. Some jurisdictions will be losers.

City-states, unencumbered by layers of overlapping jurisdictions, have done well and are likely going to continue to thrive. They also invest in in-house technology solutions. Singapore government has an impressive tech office. Dubai is a global leader in e-government and ease of doing business. Others, like London, have realized the risk and generated a plan: London Recharged: Vision 2025.

What's next?

Governments will increasingly feel the heat to deliver results and do so without increasing taxes. This will necessitate more innovation and more opportunities for the private sector to step in and deliver services and results traditional in the realm of the public sector. Large sectors such as education and healthcare suffering from cost disease will come under accelerating pressure.

Conclusion: A fight worth fighting.

The biggest risk all over the world is that political leadership is not able to think bigger, bolder, and faster to implement the solutions or contract those who create solutions that benefit the public at large and show return for their investment.

The government is not going away. Ensuring life, liberty, and the pursuit of happiness is a goal worth investing in. Those that can devise and implement solutions that benefit the public at scale should be sought out and rewarded. Citizens will vote with their feet to jurisdictions that allow them to live their best life or they will vote with their voice and unrest will continue.