Working from home is a public policy problem now
"Software hub"s are emerging in most countries. For example Bengaluru is widely considered to be the software hub of India. Hyderebad is a close runner up for the top spot. The number of people that recognize what "Silicon Valley" stands for grows every day. The concentration of human capital in these cities and regions is mind boggling. According to the 2011 census of India, the Bengaluru City population stood at 84,43,675 (8.4 million). For comparison, this is higher than 15 States and Union Territories in India and higher than the 10 least populous States and Union Territories combined! Similarly, the Hyderebad Urban population in 2011 was 39,43,323 (3.9 million), higher than 14 States and Union Territories in India and higher than the 7 least populous States and Union Territories combined. And the cities have only gotten bigger in the past decade.
Such concentration of human capital seems to have had a positive effect on the overall economic output of the country. The Information Technology (IT) sector grew massively over the past two decades and accounts for a significant portion of the Indian GDP. Hundreds, if not Thousands, of new IT companies have cropped up in Bengaluru and Hyderebad over the past decade, and the cities have developed to support the human capital employed in the IT industry. Bengaluru and Hyderebad are the destinations for many college graduates who wish to make something of themselves.
But such concentration of human capital has a lot of downsides. For one, young graduates are fleeing smaller towns and cities from across the country, fundamentally depleting their tax bases. This is especially significant because an average IT industry worker makes more than people employed in other industries and therefore contribute more tax. Because of this smaller towns and cities are unable to reap the benefits from investing in foundational and higher educational institutions. This situation might lead to the smaller towns and cities completely abandoning the educational institutions because they assume the students will inevitably leave their tax base.
Such concentration of human capital isn't good for the cities themselves either. Overcrowding is a growing issue in both Bengaluru and Hyderabad. The IT workers who moved there for gainful employment are getting squeezed out by stagnant pay and growing rental fees. Given the sheer number of people employed in the IT industry, the industries themselves are setup far from the city, to reduce capital investment in office spaces parks. But the people employed by the industries are distributed across the city, which leads to rush hour traffic, increased pollution because of the vehicular traffic and a constant need to improve the public road and transportation infrastructure.
There are no winners here. In the long run, the country loses because the country as a whole isn't developing. The cities lose out too because they are fighting an uphill battle to contain their growing population. The people lose out because they exchanged close family ties in their native towns and cities for money and loneliness in the cities.
This, in my opinion, is why Working From Home is not just a private/company policy problem anymore. It has become a fundamental public policy problem. And until the government recognizes and steps in, the cities will keep growing and the country as a whole will grow poorer.
Acknowledgement : While these ideas has been in the back of my mind for the past year, the discussions I had with the TP-Charlie squad in the Sep 2022 cohort of the Takshashila Institutions GCPP course helped me mold and solidify the ideas in to what you see above.
