“ ‘The risk that societies are entirely torn apart results in the realization that the COVID-19 measures weren’t a mere panic response, but the start of a permanent new universal basic income (UBI) reality. ‘ ”
That’s Saxo Bank global macro strategist Kay Van-Petersen ringing the potential death knell for major cities in the company’s annual “Outrageous Predictions” report, which was released this week.
“The COVID-19 pandemic has only accelerated the K-shaped recovery that was driving inequality and tearing at the social fabric before the outbreak,” Van-Petersen wrote. “For years, the younger generation has come to realize that even a solid education and the right attitude are not enough to get moving up the socio-economic ladder in a way that was possible for most of the 20th century.”
He explained in the report, which is not part of Saxo’s “official” views, that even if younger workers manage to find a job in this climate, it’s becoming increasingly clear that a single income isn’t enough to support a family once insurance and rent and other expenses are taken into account.
Enter universal basic income, in which everybody gets a flat rate payment on a regular basis. It’s not a new concept, of course, but it has gained traction this year in light of the pandemic, as well as with the support of high-profile backers like Andrew Yang and the pope.
“UBI leads to a seismic rebalancing of the forces and structures within society, and how they apply geographically. Big cities have been the chief drivers of job growth for generations,” Van-Petersen said. “But in the new era of UBI, tech-driven job redundancies, and frequent work from home jaunts made more normal by COVID-19, city office real estate is suddenly faced with 100% or worse overcapacity. Commercial office property values are crushed, together with the commercial real estate containing restaurants and shops aimed at servicing commuting worker drones.”
In other words, there’s a potential overhaul of society, as attitudes toward work/life balance shift and younger generations embrace the suburbs and the communities where they grew up.
“Meanwhile, the professionals and the marginal workers in big cities also begin to leave, as job opportunities dry up and the quality of life in small, over-priced apartments in higher crime neighborhoods loses its appeal,” Van-Petersen wrote.
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