Sean Gabb has some thoughts on the post-lockdown return so … well, not normal, but as the economy reaches toward a new working equilibrium:
Kensington High Street at the intersection with Kensington Church Street. Kensington, London, England.
Photo by Ghouston via Wikimedia Commons.
The Coronavirus and its aftermath of lingering paranoia are the perfect excuse. Decentralisation and homeworking must be done. They must be done for the duration. They must be continued after that to maintain social distancing. No one will think ill of Barclays and WPP for taking the leap. No one will blame them for taking the leap in a way that involves a few deviations from course and a less than elegant landing. A year from now, these organisations will be making measurably larger profits than they would be otherwise. The mistakes will have been ignored.
And other organisations will follow. Whether the present crash will bring on a depression shaped like a V or an L, there is no doubt that, even if slowly at first, the wheels of commerce will continue turning. But they will be turning on different rails. As with any change of course, there will be winners and losers. I have already discussed how I can expect to be among the winners. I will leave that as said for the other winners — these being anyone who can find a market for doing from home what was previously required by custom and lack of imagination to be done somewhere else. I will instead mention the losers.
Most obvious among these will be anyone involved in commercial property. Landlords will find themselves with many more square feet to fill than prospective tenants want to fill. Rental and freehold values will crumble. Bearing in mind how much debt is carried by commercial landlords, there will be some interesting business failures in the next few years. Then there are the ancillary sectors — property management companies, commercial estate agents, maintenance companies. These employ swarms of architects and surveyors and lawyers and negotiators, of builders, plumbers, electricians, of drivers and cleaners. If the humbler workers will eventually find other markets, many with degrees and professional qualifications can look to a future of straitened circumstances.
The lush residential estates in and about Central London will follow. I think particularly of the aristocratic residential holdings in Kensington. Houses here go for tens of thousands a week to senior bank workers from abroad. If the City and Canary Wharf are emptied out, who needs to live in a place like Kensington? It has poor Underground connections. It is close by places like Grenfell Tower. Its residents keep predators at bay only by heavy investment of their own in security and by suspecting every knock on the door and every sound in the night. Many of the shops and eateries that make its High Street an enjoyable place to be will not reopen. Those that do reopen will be hobbled by continuing formal and informal rules on social distancing.
As a result, restaurants and pubs and coffee bars will begin to disappear. All but a few of these were barely making normal profit before they were closed last month. So few are in liquidation as yet only because so few petitions have been lodged in the courts. Most of them will now be surplus to requirement. The same can be said of hotels. Speaking for myself, I used to visit Cambridge twice a year on examinations business. I was always put up there for a couple of nights. I shall now do from home all that I did in Cambridge. I doubt I am alone. Zoom will destroy business travel. In the same way, bigger televisions plus continued social distancing will finish off the theatres and cinemas — also in decline before last month.
