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Category Archives: De-urbanization

The Corona virus will push us further into the digital medium

27 Thursday Feb 2020

Posted by beyondoverton in De-urbanization, Decentralization, Travel, VR

≈ 1 Comment

The facemask will become a feature of our daily life: it was already turning into a fashion symbol before the virus hit. In the near future, the face mask will be incorporated into the VR ‘goggles’, 

The Corona virus will only accelerate the shift towards the digital medium at the expense of the physical medium of human existence. Millennials have more or less embraced this change: apart from having to go to school they do not leave their bedrooms anymore (and I suspect, if the quarantine stays on longer, governments will start to consider settling up virtual classrooms). If you don’t have a teenager just have a cursory check on some of the comments on Tiktok to get an idea that the young generation does not consider the virus a big issue at all – it affects mostly the older generation, plus a quarantine allows the young to spend more time in the digital world of their bedrooms.

But, if the quarantines remain a feature in the developed world, the virus could also have a profound effect on the older generation in terms of travel and work preferences. For example, the trend decline in car sales globally will accelerate. Long distance vacation travel is also likely to slow down; physical social interaction, already massively in decline, as well. The older generations may be ‘forced’ into the digital medium for health and safety concerns, as well as to avoid increasing living costs.

Does that mean any physical infrastructure not directly linked to the new medium becomes obsolete? This is an important question for policy makers to consider especially now as the calls for fiscal action become louder and louder. In that sense, the thinking in the higher echelons of power in the West are either at level zero (a border wall), or level one (a bridge in the Irish sea, high speed rail). Instead, we need at least second level thinking here, for example, what is the new mobility landscape?

If Chevron’s London office staff working from home proves to be either non-disruptive or even possibly increase productivity, would that become the new normal? Outsourcing office space for free from your own employees, and saving massively on real estate costs, which company wouldn’t jump at the opportunity (note this is no different to getting consumer data for free in exchange for social media access, or booking your own travels in exchange for lower prices – it’s all part of the same trend)?

This means more de-urbanization. The concept of the city as a melting pot of ideas and people is also becoming obsolete. Moreover, this is again an existing trend: urbanization rates have been decreasing in the developed world independently as a feature of decentralization.

Will the supply chains shift as a result of all this? Yes. Again, a well-established trend already which started in earnest with the decision to Brexit in 2016, Trump’s de-globalization campaign and the ensuing US-China trade war. While China is the more obvious ‘loser’ here (though, not necessarily clear, as China was already moving up the value chain and this process may have only accelerated this, as well as its push to ‘own; the digital medium through the development of 5G), the beneficiaries are not clear. It is unlikely, though, to be any other emerging market countries, as that does not take care of the issue at hand (the start of this trend in 2016).

Though actual production is likely to come back to the developed world, this does not necessarily mean higher employment long term. There is yet another trend, which has already been in place for a few years, which will get a strong push here, that of automation of production. We haven’t seen the benefits of automation yet largely because it has either not been profitable enough, or because of politics (keep employment higher until we figure out what to do with people, and in return, we ‘let’ you book revenues in tax havens so you save on corporate taxes and have more cash for share buybacks!). But automation costs have been coming down as technology advances, while human costs have been perking up. Political developments, plus massively increasing federal budget deficits, have also put pressure on clamping down on tax havens. We can finally see the seeds of 3D printing and precision manufacturing bear fruit. This is very bullish companies in these two sectors.

With manufacturing supply chains practically disintegrated, the only ones that will matter in the digital medium are commodities supplies – this is very bullish commodity exporting countries.

Is that the new normal?

My flight from London to Rome on March 26 was practically empty

We are entering a ‘Ready Player One’ world. The trend-decline in physical infrastructure, in the developed world – decades long, will probably accelerate. It is too late to build the HS2. The trend-increase in alternative ‘realities’, on the other hand, whether we call them fake news, social bubbles, or whatever, will only accelerate. So, focus is shifting to building the foundation of the equivalent of the digital ‘Interstate Highway System’: 5G is the most important development in that regard at the moment, and the main reason the US-China trade war started in the first place. 

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