It took a pandemic for us to realise that the world’s 20th-century model of production, in which people huddled into large enterprises, honed specialities and shared their competences with co-workers, was no longer working. 2020 has shown that many people are able to study, work and organise their everyday life independently from their habitual geographical location. The online world has made borders redundant and this challenges the very nature of nation states. In 2021, states will have to respond.
So far states have been built on the idea that most people live at fixed addresses and work for specific employers. They and their employers pay taxes to the government, which redistributes them back through society – schools in people’s neighbourhoods, doctors within a reasonably close distance to home, and so on. But if remote work and remote schooling function well when someone is outside these institutions, shouldn’t they function just as well when they are on another continent? This will be a significant challenge for states, as it will threaten their established models of taxation and redistribution.
As distance working and learning pan out, we will see citizens living elsewhere in the world while still requiring their “home” governments to be safe havens, providing them with administrative and redistributive services. States will have to shift from a geographical definition to being providers of a “service pack” that is available to all their citizens wherever they happen to be.
So far most governments have failed to achieve this. They have been trying to fit the concept of a digital society into the framework of the industrial model. The year 2021, however, will be a turning point for many, if they want to succeed. If their own states are struggling, people will turn to more suitable and flexible solutions for them. Education, social security and many other necessary services can already be purchased from the global market. In doing this, though, many of these citizens will opt out of their state’s taxation system.
This is a new world we are not prepared for. We have spent years in the Organisation for Economic Co-operation and Development for example, trying to negotiate a common agreement on how to tax companies that exist more online than in physical locations. It is not the likes of Facebook and Google – which are relatively stable entities – that we need to tax. Instead, we will need to find ways of taxing and serving those independent citizens who live, work and earn globally, and who don’t feel the need to supply the relevant authorities with a permanent work or home address. They will agree to pay taxes to any government in the world only if they see a point in doing so.
At some point in their lives, those people may then choose to opt back into the system – and move back to their countries of origin – perhaps when they are older and in need of, for example, healthcare or education for their children. But, by then, the state will be short of the resources it needs to service them.
Unless we tackle this issue, we will see the opportunities of distance work unravelling the nation state, as individuals instead shop globally for a government that best suits their needs or that follows the values they ascribe to. This is not a matter of finding technical solutions to the problem – governments will have to adapt and turn the lessons we have learned in 2020 into a new idea of what a state is in 2021.
Kersti Kaljulaid is the president of the Republic of Estonia
This article was originally published by WIRED UK
