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What are we doing to ourselves?

By Ross Elliott - posted Wednesday, 21 October 2020

Walk the streets of Manhattan these days and it's hard to believe that, only months ago, this was one of a handful of "supercities" whose dense concentration of innovative businesses and highly skilled workers was meant to drive economic growth in the 21st century. Six months into the pandemic, less than 10 percent of the city's white-collar workforce is back in the office, with less than a quarter expected back by the end of the year and only half before next summer, according to a survey by the Partnership for New York City. Broadway theaters are closed indefinitely, tourists are nowhere to be found, and the Hilton hotel in Times Square has permanently closed.

So began a recent article in The Washington Post, surveying the impacts of Covid-19 restrictions on major US cities. It went on:

Empty or boarded-up storefronts are common along what were once the world's glitziest shopping districts, while nearly two-thirds of the city's restaurants say they could be out of business by the end of the year. Just about anyone who can has fled to weekend retreats in the country, some of them permanently, while home sales in the most sought-after suburbs have doubled. Most hours of the day, Grand Central Terminal is eerily quiet while the city's subway system, facing a $16 billion shortfall, warns of a 40 percent service cut.


The Washington Post article suggested that the positive in all this was that falling rents and prices – be it for office buildings, department stores, or housing – would render these centres once again 'affordable' and stimulate a long term recovery. I can't see that as a positive, given the scale of capital destruction in the interim will be something for which there is no historical precedent.

In Australia, the situation – apart from Melbourne (whose policy led self-destruction will be the stuff of entire history books) – is less dire. But are we making it worse for ourselves than it need be?

The fascination for 'working form home' will I suspect prove a more short-term phenomenon. Come a hot summer, those ill-equipped spaces in our homes will prove pretty uncomfortable as workplaces. There are many other WHS and related reasons why, long-term, homes are problematic but the bigger question is, in the absence of medical or government advice to the contrary, why are large corporates and much of the public sector continuing to work from home when there is no longer any need to be doing so?

The claims that people are just as productive or more so when working from home will need some scrutiny. It may be the case for some, but for positions that require supervision, mentoring, and leadership, it's hard to see how productivity has been enhanced. Yes, for many the absence of a commute is attractive. But let's balance this self interest motive against the capital destruction that is taking place across our cities. Shops, food courts, restaurants are suffering. Many are closing, some for good. Theatres, entertainment venues, pubs and clubs are struggling. And with them, jobs are disappearing. Public transport services continue to operate at the same frequencies but with a fraction of the passengers, making this an even more expensive service to operate for the taxpayer.

It's time that federal, state and local government workers returned to the workplaces that the taxpayers continue to fund. It's also time for major corporates to do likewise. In doing so, we have some hope of letting the real benefits of private sector spending do the job of keeping the wheels in motion. The idea that we are willing to sacrifice so much private investment in the form of vulnerable businesses and employment, on the basis of unproven, untested hypotheticals about home-based worker productivity, is illogical. The scale of value destruction could total hundreds of billions if this keeps going. And that will come to bite into superannuation balances and add to tax bills for those left in jobs.

This doesn't mean we shouldn't plan for changes in how workplace decisions are made. There will no doubt be an appetite for a number of suburban or satellite business hubs. There will no doubt be some occupations where the long commute to the city office is no longer necessary. But to continue a wholesale abandonment of city workplaces on the basis of how we feel, is foolhardy. There is too much at stake.


In the same way that the capital city does not thrive without viable regional economies, the suburbs and regions will not thrive without a viable city centre. The economies are inter-dependent. Yes, for too long we have been pre-occupied with the mystical allure of the emerald city, and invested disproportionately in it, while denying equitable investment into suburban and regional centres. You don't fix that by then allowing the economic life of the inner city to sucked from it, and redistributed into loungerooms or kitchen tables. On the basis of what?

At the very least, having over capitalised the city centres, the least the very people for whom this was done could return to using them!

We are making things worse than they need to be - for the city, as well as the suburbs and regions that are economically connected to it. It reminds me of that epic scene at the end of The Planet of the Apes, when Charlton Heston realises he was on earth the whole time, but in its future. "We finally really did it," he says, surveying the Statue of Liberty in a post-apocalyptic scene. "You Maniacs! You blew it up! Ah, damn you! God damn you all to hell!"

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This article was first published on The Pulse.

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About the Author

Ross Elliott is an industry consultant and business advisor, currently working with property economists Macroplan and engineers Calibre, among others.

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