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However, one problem that is not getting enough attention is what happens to companies that have already benefited from all the expenses related to staff offices crammed into high rise buildings and central business districts.
The Commission says the shift to working from home could see “some businesses that require high foot traffic to be viable – like cafes and hairdressers – [choosing] to settle in the suburbs rather than in the city center â€.
It is plausible. But what if some people never go back to their old drinking habits again?
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This is where the “savings paradox†can come into play. Economists generally agree that an individual’s decision to increase their personal savings may benefit them from the start, but it would be. detrimental to the economy as a whole due to reduced activity (especially if many people have chosen to save more than usual). It is then bad for that individual and for everyone in general.
Ultimately, the extra savings many are enjoying during the lockdown are money that would typically have been reinvested back into the economy in cafes, restaurants, and dry cleaners. This is money that these companies no longer receive and can no longer use to pay their staff.
It is possible that some people choose to spend their money with as much abandon as before, but now in their region. As the Commission theorizes, some companies will benefit from relocating the city to the suburbs and perhaps serving morning coffee to workers in those localities.
But it’s also possible that some of these expenses will change for good. Some people will do well to brew their own coffee in the morning if the convenience of having someone else brewed coffee requires the inconvenience of having to leave the house when you don’t need it otherwise.
There are also fewer obstacles in preparing your lunch rather than ordering it when your pantry and refrigerator are right in front of you. The wider ramifications of this on a more permanent basis could extend to a sustained decline in demand for a range of other goods and services, such as corporate clothing, catering, dry cleaning and clothing. transport, which will not find enough customers even if they move.
It may mean more savings and debt reduction at the individual level, and it could also mean the shrinking of major industries that have served as the cornerstone of business parks and CBDs across the country. It could also lead to the creation of new industries and businesses to take advantage of that extra money that is no longer spent on things like lattes and take out.
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