The New Globalization of Relocalization
The importance of competence and mutual responsibility
Brexit and US President Donald Trump are perhaps the best icons of the current era, marking the end of a decades-long march toward globalization. However, the saplings of this change were already watered by the Global Financial Crisis of 2008 and then fertilized by hostility to “elites” expressed during the last few U.S. elections by both political parties (Trump, Bernie Sanders and, to a lesser extent Elizabeth Warren). While some may be celebrating that “peak” globalization is clearly in the rearview mirror, the celebrants ought to be careful what they wish for, because last century’s globalization of manufacturing and production may just have been the warm-up act.
In fact, a more complicated version of globalization is about to take place: the globalization and general dispersion of high margin talent. This will be far more impactful and disruptive than the 20th century globalization of manufacturing. And, like many other trends and technologies, this process has recently accelerated due to the events of the past few months and it will be much harder to control through tariffs or other means.
President Trump’s recent declaration of restrictions on H1B visas and other perceived and real limitations of immigration to the United States, represent yet another step in the global dispersion of talent. No longer will Israeli, Ukrainian, Indian and Chinese talent flock to the United States, in general, and California and Boston in particular. These visa restrictions have added fuel to the early embers of distributed companies. COVID shutdowns spread like wildfire, while at the same time proving that “Work From Home” (WFH) and “Work From Remote” (WFR) could actually work. WFR and WFH caused many talented people to reconsider where they live. Recent riots in urban centers, vandalism and tearing down of statues, military style marches and general class and racial tensions seem to have significantly further accelerated this process of reconsideration, with some brains fleeing cities due to feeling that their personal safety was threatened, and COVID taught them and their employers that they could work remotely.
However, make no mistake: tech companies like Invision and Automattic had started with fully distributed workforces even before COVID. They were the embers that caught fire when COVID hit. Now, WFH and WFR are common wisdom even in Silicon Valley and in many places on Wall Street and the City of London. They are becoming a way of life and work, particularly in high margin industries, in areas of the economy from technology to financial services, where intellectual capacity is critical and where considerable tax revenue is generated.
Ergo, the global war for high margin talent is on. As Alex Danco articulates so well:
Today, we’re opening a chapter of the world where many of us will be working remotely by default. This is exciting, but scary: as a prospective employee or employer, you have to compete against the whole world for talent. Employers and employees both value stability, so extreme liquidity in the talent marketplace is scary for everyone.
Scary, unsettling, complicated and filled with opportunity. Just as Boston lost tech hegemony to California in the 1980s, New York City and San Francisco are now slowly emptying out. From our own little perspective, Israelis are returning to Israel, ushering in a talent wave that will benefit our country. And, if the Israeli government will get smart, and focus on visas and immigration, it can accelerate that wave, bring talent home and attract new talent to Israel.
People are preferring to live and be close to family rather than physically close to work HQ. People are preferring the relative emotional and physical safety of the familiar and the social network of real friends. They can “work” in New York, California, London or the cloud while still being able to have their parents — their kids’ grandparents — come over and babysit in Tel Aviv or Mumbai. They do not need to worry from afar about an elderly parent or sacrifice having cousins close by for their kids. They can Zoom to work and still scooter or bike to their friends and family.
Globally, other talented immigrants will struggle to enter the United Kingdom and the United States and other western countries. As for inside the United States, “high margin talent” from finance and tech are moving to the suburbs or to states with ZERO state taxes, like Texas and Florida. This will reduce city income, thereby reducing city services and accelerating this trend of “emptying out.” (I remember the days from my youth in New York where a woman — or child — could not walk in Central Park at night due to lack of policing and personal danger.) This same trend is hitting New York City, San Francisco, Illinois and others simultaneously, perhaps due to high costs of living, poor city management or, in some cases, orthodoxy of thought.
As I will chronicle in the introduction to the upcoming third volume of my book series (so far only in Hebrew) on the Bible, economics and ethics, tribalism will define the 21st century. People will go to places where they feel safer, closer to family, and that are more aligned with their values, and will increasingly work, at least in part, remotely. This is a long-term trend, and a deeply human way to cope with uncertainty. And we are at the beginning of a very uncertain decade. People will circle the familial and communal wagons.
This new globalization, which is actually relocalization with global connectivity, has profound consequences. It will favor well-run cities and countries. It will favor a population that shares solidarity and shared experiences. It will bring families closer to each other after decades of fragmentation.
It will engender global diversity of engagement but local tribalism. Because of it, I will interact with people different from me all over the world: people from different countries, cultural backgrounds and beliefs. I will do it more often because it is easier to conduct big Zoom calls than to coordinate big face-to-face meetings. I will meet more people on Zoom because it is more efficient and has less travel overhead. So I will be exposed to more diversity, albeit in a shallow way.
When travel returns (and it will), I will travel to meet these people after a few Zooms and my network will be wider, even if I will see these new acquaintances face-to-face fewer times because video will suffice in many cases. I will do it from a place where I feel comfortable, which meets my need for personal safety, childcare, familiarity and solidarity. Society and business need that diversity for creativity, values and serving customers in global markets. Moreover, we must develop respect for “the other,” because physical interactions will be reduced.
This relocalization of talent will challenge many societies even more by taking high earners out of areas that will need them most. It will force a reckoning for the incompetent institutions that run many parts of government, daily life and social services. It will challenge tolerance in what could become a tragedy of the commons if we are not careful.
The societies that will emerge most successfully from COVID-19, from the economic and societal reckoning that will come in its wake, and from the globalization of the high margin workforce, are those with the highest levels of mutual solidarity and, what we call in Hebrew, Arvut Hadadit (loosely translated as “mutual responsibility”). It will be those societies that will be safe for families and that will economically re-empower those left behind economically in the 21st century.
Unlike manufacturing, with its high up-front costs and physically limited plant, the good news about brain power is that it is not a zero sum game. I have an interest in improving the intellectual capacity and brain power of the other, my brother, helping to re-skill him for the 21st century economy. Social and economic changes are occurring very rapidly, while governments are reacting like giant ships that are hard to turn. This same civilian global talent will need to step up and use technology, empathy and creativity to help make the necessary adjustments. It is the civic responsibility of all of us to make sure that the global backlash against globalization of manufacturing does not attack the tech economy. It is in everyone’s interest that it does not. It is also in everyone’s interest that the relocalization and tribalization should cause everyone to improve the lot of the other, their brother, sister and fellow, by improving his/her education and his/her opportunity to work in the knowledge economy. As talent and brains grow in the knowledge workforce, all of our economies grow. If you are going back home, be sure to invest your time and talents in your community. At the same time, from the safety and security of your home and family, be sure to reach across the world and virtually get to know someone who is different than you. Respect them from a place of security. Work with them because creativity needs diversity. Empathize with everyone because this is not going to be easy.
Get involved. Help others around you. Help your community upskill and find jobs. Doing so is both ethically proper and in the enlightened self-interest of the economy and society . Feel free to do this from where you feel most comfortable and closest to family. If that happens to be in Israel, we are here to help.
