by Ed West
Friday, 16
October 2020

The Dutch auction for WFH elites has begun

Tax incentives are luring the rich away from their home countries
by Ed West
A Dutch auction for WFH elites has begun

Like the Black Death and the crisis of the late middle ages, Covid-19 hasn’t changed the world, it’s just aggravated already existing trends.

Take working from home, a trend linked to the increased mobility of the very richest and most highly-skilled. Perhaps the most important social and cultural fact of our age is that for the first time in history there really is a global elite with a single cultural worldview, a single language, educated in a relatively small number of educational institutions and concentrated in a few small sectors of the economy. The fact of their mobility defines them, and our age, because historically elites have been location-specific (which is why posh people have de or Von at the front of their names).

Members of this elite are highly-skilled and highly-valuable, and so competition for their services is now speeding up, like everything in this cursed year, not just among companies but but countries too: the UAE has just launched a drive to get people to work in Dubai remotely, using tax incentives.

There are huge benefits for the Emirates; even if they’re not drawing in tax from the individuals, smart people tend to attract other smart people, creating virtuous circles (and the reverse is true with a brain drain), and with it the benefits of agglomeration. A hundred smart people are more than ten times as productive, and rich, as ten smart people, which is why mega-cities have tended to increase their stranglehold on global economies. Covid-enforced WFH and the Zoom revolution has opened up the competition for where people working in London, New York and San Fransisco might live.

Dubai is not the first. Over the summer Barbados launched a similar scheme, encouraging Zoom workers to move to the tropical island and host their meetings by the beach.

In some ways this is nothing new. In the early modern period Britain, France, Prussia and Russia would compete to attract metallurgists, engineers and ironmongers, offering sweeteners to get them to move — but today the competition is far more intense.

This is great news for the very highly-skilled, wealthy and mobile, who benefit from various states offering a Dutch auction of taxes, but it’s perhaps not so good for the states themselves, their tax base, or the remainder of the population.

Indeed, we can see this dark side of mobility at its darkest with the Covid crisis finally hitting central and eastern Europe, where there is an acute shortage of medical staff. Some 43,000 doctors have left Romania since it joined the EU, and many, of course, have come to Britain, where their life-saving skills are appreciated — but it is a disaster for the home countries, and it is only going to get worse as global mobility accelerates.

Join the discussion

  • There is an entire debate to be had around the consequence for the home countries of high-end, high-education migration out of poor countries into rich ones. Not to put too fine a point on it, those countries are potentially denuded of their best talent.

    At the top-end of migration, it is often hard-working and self-reliant people that have the gumption to actually leave, surely the very talent that those countries can ill afford to lose. For example, those with sellable skills have left Greece in droves in recent years, precisely the people Greece needs to get it’s head back above water. The cost of a Polish Doctor who comes and works in the NHS in the UK would be evidenced by an even longer waiting list in a hospital in Poznan or some-such that lost the Doctor. But of course that would never be reported in the media here, which would happily let the gentle implication float around the ether: that of course there is no ageing demographic in Eastern Europe, and in any case, surely old people in Eastern Europe don’t actually need their Doctors as much as we in the UK need their Doctors anyway, given that being poorer they don’t live as long, right? Note that said Doctor would have been educated and trained by a nation that is significantly poorer than ours, and only an old cynic like me would class the vast subsidies being poured into those countries by the EU as blood-money.

    Migration is an awkward topic for me (as someone who came to the UK as a refugee out of Africa in the early 70s – Idi Amin and all that). I know a little about global migration flows in IT related professions – so not exactly your low-skill low-wage workers. Over the years I have flip-flopped in my views on the positives and negatives of these flows. At various Universities in the 80s, I came across and befriended many Indians from India doing postgrads, who came from elite Indian grad schools like IIT. Of course, much bigger numbers ended up in Universities in the US, getting to which was regarded as the holy grail even more so than to the UK. These were the very brightest produced by India, often educated with state-paid scholarships (in those days anyway, although I’m told things are different these days). So the most talented of one of the poorest countries on earth, were leaving in droves for the richest countries on earth – to make those countries even richer. Of course, no one can remotely be blamed on a personal level because everyone has the right to look for the best outcomes for themselves and their dependents.
    But there is undoubtedly an irony in there somewhere.

    **There is a postscript to this little rant, perhaps even two.

    Twenty years on, and it turned out I was wrong on the consequences for India of the IT exodus, at least in the first instance. That IT and management oriented Indian mafia which went to and still goes to the US, rose over the years ever higher within corporate America (I cite as evidence for example the CEOs of Microsoft and Google, but there are lots at every level), and knowing about the huge pool of dirt cheap, well educated labour available back home and how to monetise it, opened out the entire Indian outsourcing industry, and created the huge outsourcing boom in India – a great plus for Indian employment (even though it may well have cost the poor of the rich countries).

    Another decade on, and I now look at the Indian IT scene and wonder if I wasn’t right all along after all. Indian IT is massive, but about bodyshopping on an industrial scale, and little else. Product companies are few and far in-between, there is hardly any innovation and no IP. Tellingly and ominously, no culture of open-source contribution either. None of the high-end tech that drives the world belongs to Indian companies. To me, it indicates large numbers pouring into IT professions because it provides well paid employment – there is no innate love of programming and electronics, the reason which many of us grouchy old gits originally came to computing all those years ago, and the purist in me baulks just a little at that.

  • I think many of the smug WFH crowd who seem to actually have been enjoying the whole lockdown thing may not be quite so smug when their employer realises that the job which can be done from home in Godalming rather than in an office in London can also be done just as well, by someone just as skilled, from Bangalore at a fraction of the cost and with none of the other associated hassles such as maternity/paternity leave

  • Whereas in Islington – Richmond – Guildford or wherever you live they are 10 a penny no doubt.
    Let me think, what significant inventions of the industrial revolution happened in Eaton…………

    No can’t think of any.

    Romania is a third world country compared to every part of the UK. Suggest you visit sometime and see if you leave thinking it breeds a surplus of Einstein’s. If they can churn out doctors at the rate they do it stands to reason that the bar isn’t all that high.

    Scrape is spelt, S C R A P E by the way.

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