6 ms·

Interesting perspective, but it really seems like state capitals just tend to siphon money from far away to invest nearby, and consequently, grow. Selecting a m

by nickff 2y ago

Interesting perspective, but it really seems like state capitals just tend to siphon money from far away to invest nearby, and consequently, grow. Selecting a major city as your capital seems to accelerate the process, but even countries which select minor towns as their capitals have had this happen.

James_K 2y ago
The process is quite simple and fairly obvious. Government policy is the bedrock of all economic development. Government officials will always have the most knowledge about the capital, so all policy is tailored to it. It's no surprise that they don't make policies that benefit the North given that they don't live there.
- casenmgreen 2y ago
  Berlin is not like this, though. If Berlin were removed from the map, Germany as a whole would economically (loss of people, loss of income) be on average better off. If this is the mechanism, why is Berlin not doing better?
  - taffer 2y ago
    Germany is the only Western European country with an Eastern European capital. As a result, Berlin was poorer than the rest of the country, but this is no longer the case. Since reunification, Berlin has had the fastest growing economy in Germany and is now close to Hesse in terms of GDP per capita.
    - wink 2y ago
      Berlin is odd... for several factors. Just looking at the last 100 years, I fail to see any capital (that was not directly a war zone) be: not capital, capital, divided, part of 2 countries, an exclave...
  - bryanrasmussen 2y ago
    how many generations from a city becoming the political center does it take for the effect to be noticeable?
- matt-p 2y ago
  What policy would benefit the north, without (even further) subsidising it? If we could invest £10Bn and get £20Bn back for the economy with our money back over time then not a single politician would turn that down, there's actually been a load of support over the past ~5+ years for "levelling up" (AKA investment in the north) but we've not invested much because the returns are abysmal. Meanwhile there's a whole stack of projects with good returns in london, but politically it's really difficult to "give more money to london" so we don't really do them. Bakerloo line extension and crossrail 2 for example. The Elizabeth line, will over time pay for itself entirely with fares alone, yet has also already added ~£2.50 to the economy for every £1 spent. This is a absolutely classic example of chicken and egg, network effects and first mover advantage. There's perhaps a case for being absolutely ruthless and just spending an obscene amount of money on Manchester/Leeds/Liverpool. What might it look like? -No third runway for heathrow, instead BHX gets 2 more runways (or MAN 1 more) and all the funding it needs to become an international hub, including an reduction in APD for 5 years or something. Central London in ~48Mins via HS2 is already committed and being built, frankly that's not that much different to what it practically takes to get from a random heathrow terminal to central. -HS2 to Manchester AND Leeds (via the branch just above BHX), that would connect BHX to those cities in <30 Mins or so and to London much quicker. -Trams for Leeds, maybe a metro for Manchester. -Liverpool>Manchester>Leeds express line (which seems committed). -Enterprise zone covering all underdeveloped commercial areas in Leeds, Liverpool, Manchester and Birmingham. Give rates, or tax relief on businesses investing, or employing in the zone, planning exemptions, easier permitting. Anything short of an absolutely insane bet like this, just isn't going to work. Chucking 1Bn to Leeds for them to buy some trams just isn't going to have a transformative effect, it might actually be a total waste because, in short, network effects. The North of England frequently runs a combined fiscal deficit in the tens of billions, with all of that subsidy coming, effectively, from London and the SE.
  - James_K 2y ago
    The reason for investing in the North is pretty simple: people live there. We have three options: do something productive with he area, do nothing and continue to pay for its decline, or move all the people to London and let house prices rise accordingly. What you said about first mover advantage rings true here. We can either pick the most developed city and devote resources elusively that area, or we can accept a proportionally smaller economy spread out across the whole country. I also fail to see how London is subsidising these areas. It seems to me that they'd be much better off if they were able to run themselves. This is a classic case of purposeful under-investment. You see it in business as well. If someone wants to kill off a given project, they'll deprive it of funding to he point it can't operate properly then use the lack of profit generated as an excuse to axe it. The issue we have is that we can't just axe the North. There is also the issue of measuring productivity. You say investments in London are more productive because they generate more profit, but consider that an equal investment in the North might have a much greater effect on the quality of life for the people living there. Should we measure investments by how much money they return or how much they improve people's lives? I am reminded of industrial strategy in the Soviet Union. They invested only in the most "productive" (highest ROI under capitalism) things such as heavy industry and very little in consumer technologies that make people happier. The result was rapid industrialisation which probably had the best effect in the long run. The question is how long term are we thinking? At some point, you've gotta start paying to make people happy instead of just investing in the most profitable area.
- renewiltord 2y ago
  Neither Albany, NY not Sacramento, CA feel like the centers of their states.
  - marssaxman 2y ago
    Having spent my teen years in backwater Sacramento, I can confirm that it did not feel much like the center of anything. Adding a few more examples to your list, neither Olympia (WA), Salem (OR), nor Carson City (NV) are economic or social centers of their respective states.
    - LexGray 2y ago
      This may stumble on a solution to the problem. London combines government and financial centers. Axe parliament and 10 Downing Street and rebuild government infrastructure from scratch in some inland port where it can drag influence north. Sacramento may not be exciting, but it is self-sustaining with fairly high property costs and a huge commuter population. I think one of the things that makes California successful is the government is in a boring city with few distractions.
      - matt-p 2y ago
        Agree, chuck parliament and number 10 in a office building in Leeds or something. It really would be transformational, but will it happen? Not a hope in hell.
      - ipaddr 2y ago
        It worked for Ottawa,Canada
gumperbumper 2y ago
Like the U.S. and D.C.? NY and Albany? Canada and Ottawa? Germany and Berlin?
nine_k 2y ago
The US somehow avoids this, likely by putting state capitals and the national capital into smaller cities. Hence NYC, SF, Chicago, Dallas, Miami, Seattle, etc are all big urban agglomerations, but are not the points that concentrate everything important in their respective areas.
- Kon-Peki 2y ago
  Those cities aren’t really good examples of intentionally putting a state capital in a smaller city of the state. Albany is older than NYC, and anyway the concept of NYC as a single large city is barely 125 years old. The original capital of Illinois is (strangely) west of the Mississippi River and south of St. Louis. By treaty between Great Britain and France, the current area of Illinois was off limits to European settlement, until after the revolution when the US said “that treaty doesn’t apply to us”. Chicago wasn’t a big or important city until the civil war. Los Angeles has been the wealthiest and most populous area in Alta California since like 1800 or so. But it was established as a puebla and not a mission, so it could never be a center of government under Spanish rule. Miami was fairly unlivable until air conditioning and malaria control, and its geographic location was extraordinarily inconvenient until after the interstate system. The US government established a customs house in Olympia when it and Seattle were little more than a handful of homesteads. And guessed wrong on which would grow faster.
  - donavanm 2y ago
    more random support for your critique of a post-hoc, and historically ignorant, classification of "small cities". Offhand the CA capital contest was ongoing one and tracked from south/central CA towards the north in the mid 1800s. It's entirely unsurprising that they landed in the Sacramento courthouse; it was ~1850 and Sacramento was 1) last inland port for shipping 2) major terminus for the gold fields 3) an obvious rail hub for the connectivity in the 1850-60s, esp bay area to Sacramento and the east. Even a trivial look at the (flawed) 1850 census shows that basically all of the (mostly new) immigrant population was in Sacramento and the goldfields. eg Los Angeles was 3,500 people compared to 9,000 in Sacramento. Similar for the Washington Territory which was barely a collection of homesteads and tiny villages. IIRC Olympia was the first significant immigrant settlement in the northern Oregon Territory, the major (only?) early trade connection to shipping on the pacific, and connected to the few other settlers moving north in to the territory. Its not very surprising that it was the territorial capitol and remained so for the state. Yes, post statehood a lot of rail & shipping traffic moved north. But at least through the turn of the 20th century both Tacoma and Seattle were roughly equivalent in population and industry. Arguably the easier ship access for the Klondike is what cemented the prosperity of Seattle pre-war, and Boeing & related defence activity post war. But _at the time of territory & statehood_ Olympia was the major town in the region.
WorkerBee28474 2y ago
I think there's truth to that, it seems like every state has 1 major city. Possibly not always the capital (e.g. Toronto vs Ottawa, Albany vs NYC vs DC). I've heard that the book Cities and the Wealth of Nations [0] might talk about this more. I've been meaning to read it. [0] https://www.astralcodexten.com/p/your-book-review-cities-and-the-wealth https://www.astralcodexten.com/p/your-book-review-cities-and...
- jltsiren 2y ago
  It mostly depends on stable borders and a culture of centralization. Some US states such California and Texas have multiple major cities. Germany and the surrounding areas were historically fragmented, leading to many regions having multiple mid-tier cities instead of a single dominant city.

by nickff 2y ago

James_K 2y ago

The process is quite simple and fairly obvious. Government policy is the bedrock of all economic development. Government officials will always have the most knowledge about the capital, so all policy is tailored to it. It's no surprise that they don't make policies that benefit the North given that they don't live there.

casenmgreen 2y ago
Berlin is not like this, though. If Berlin were removed from the map, Germany as a whole would economically (loss of people, loss of income) be on average better off. If this is the mechanism, why is Berlin not doing better?
- taffer 2y ago
  Germany is the only Western European country with an Eastern European capital. As a result, Berlin was poorer than the rest of the country, but this is no longer the case. Since reunification, Berlin has had the fastest growing economy in Germany and is now close to Hesse in terms of GDP per capita.
  - wink 2y ago
    Berlin is odd... for several factors. Just looking at the last 100 years, I fail to see any capital (that was not directly a war zone) be: not capital, capital, divided, part of 2 countries, an exclave...
- bryanrasmussen 2y ago
  how many generations from a city becoming the political center does it take for the effect to be noticeable?
matt-p 2y ago
What policy would benefit the north, without (even further) subsidising it? If we could invest £10Bn and get £20Bn back for the economy with our money back over time then not a single politician would turn that down, there's actually been a load of support over the past ~5+ years for "levelling up" (AKA investment in the north) but we've not invested much because the returns are abysmal. Meanwhile there's a whole stack of projects with good returns in london, but politically it's really difficult to "give more money to london" so we don't really do them. Bakerloo line extension and crossrail 2 for example. The Elizabeth line, will over time pay for itself entirely with fares alone, yet has also already added ~£2.50 to the economy for every £1 spent. This is a absolutely classic example of chicken and egg, network effects and first mover advantage. There's perhaps a case for being absolutely ruthless and just spending an obscene amount of money on Manchester/Leeds/Liverpool. What might it look like? -No third runway for heathrow, instead BHX gets 2 more runways (or MAN 1 more) and all the funding it needs to become an international hub, including an reduction in APD for 5 years or something. Central London in ~48Mins via HS2 is already committed and being built, frankly that's not that much different to what it practically takes to get from a random heathrow terminal to central. -HS2 to Manchester AND Leeds (via the branch just above BHX), that would connect BHX to those cities in <30 Mins or so and to London much quicker. -Trams for Leeds, maybe a metro for Manchester. -Liverpool>Manchester>Leeds express line (which seems committed). -Enterprise zone covering all underdeveloped commercial areas in Leeds, Liverpool, Manchester and Birmingham. Give rates, or tax relief on businesses investing, or employing in the zone, planning exemptions, easier permitting. Anything short of an absolutely insane bet like this, just isn't going to work. Chucking 1Bn to Leeds for them to buy some trams just isn't going to have a transformative effect, it might actually be a total waste because, in short, network effects. The North of England frequently runs a combined fiscal deficit in the tens of billions, with all of that subsidy coming, effectively, from London and the SE.
- James_K 2y ago
  The reason for investing in the North is pretty simple: people live there. We have three options: do something productive with he area, do nothing and continue to pay for its decline, or move all the people to London and let house prices rise accordingly. What you said about first mover advantage rings true here. We can either pick the most developed city and devote resources elusively that area, or we can accept a proportionally smaller economy spread out across the whole country. I also fail to see how London is subsidising these areas. It seems to me that they'd be much better off if they were able to run themselves. This is a classic case of purposeful under-investment. You see it in business as well. If someone wants to kill off a given project, they'll deprive it of funding to he point it can't operate properly then use the lack of profit generated as an excuse to axe it. The issue we have is that we can't just axe the North. There is also the issue of measuring productivity. You say investments in London are more productive because they generate more profit, but consider that an equal investment in the North might have a much greater effect on the quality of life for the people living there. Should we measure investments by how much money they return or how much they improve people's lives? I am reminded of industrial strategy in the Soviet Union. They invested only in the most "productive" (highest ROI under capitalism) things such as heavy industry and very little in consumer technologies that make people happier. The result was rapid industrialisation which probably had the best effect in the long run. The question is how long term are we thinking? At some point, you've gotta start paying to make people happy instead of just investing in the most profitable area.
renewiltord 2y ago
Neither Albany, NY not Sacramento, CA feel like the centers of their states.
- marssaxman 2y ago
  Having spent my teen years in backwater Sacramento, I can confirm that it did not feel much like the center of anything. Adding a few more examples to your list, neither Olympia (WA), Salem (OR), nor Carson City (NV) are economic or social centers of their respective states.
  - LexGray 2y ago
    This may stumble on a solution to the problem. London combines government and financial centers. Axe parliament and 10 Downing Street and rebuild government infrastructure from scratch in some inland port where it can drag influence north. Sacramento may not be exciting, but it is self-sustaining with fairly high property costs and a huge commuter population. I think one of the things that makes California successful is the government is in a boring city with few distractions.
    - matt-p 2y ago
      Agree, chuck parliament and number 10 in a office building in Leeds or something. It really would be transformational, but will it happen? Not a hope in hell.
    - ipaddr 2y ago
      It worked for Ottawa,Canada

gumperbumper 2y ago

Like the U.S. and D.C.? NY and Albany? Canada and Ottawa? Germany and Berlin?

nine_k 2y ago

The US somehow avoids this, likely by putting state capitals and the national capital into smaller cities. Hence NYC, SF, Chicago, Dallas, Miami, Seattle, etc are all big urban agglomerations, but are not the points that concentrate everything important in their respective areas.

Kon-Peki 2y ago
Those cities aren’t really good examples of intentionally putting a state capital in a smaller city of the state. Albany is older than NYC, and anyway the concept of NYC as a single large city is barely 125 years old. The original capital of Illinois is (strangely) west of the Mississippi River and south of St. Louis. By treaty between Great Britain and France, the current area of Illinois was off limits to European settlement, until after the revolution when the US said “that treaty doesn’t apply to us”. Chicago wasn’t a big or important city until the civil war. Los Angeles has been the wealthiest and most populous area in Alta California since like 1800 or so. But it was established as a puebla and not a mission, so it could never be a center of government under Spanish rule. Miami was fairly unlivable until air conditioning and malaria control, and its geographic location was extraordinarily inconvenient until after the interstate system. The US government established a customs house in Olympia when it and Seattle were little more than a handful of homesteads. And guessed wrong on which would grow faster.
- donavanm 2y ago
  more random support for your critique of a post-hoc, and historically ignorant, classification of "small cities". Offhand the CA capital contest was ongoing one and tracked from south/central CA towards the north in the mid 1800s. It's entirely unsurprising that they landed in the Sacramento courthouse; it was ~1850 and Sacramento was 1) last inland port for shipping 2) major terminus for the gold fields 3) an obvious rail hub for the connectivity in the 1850-60s, esp bay area to Sacramento and the east. Even a trivial look at the (flawed) 1850 census shows that basically all of the (mostly new) immigrant population was in Sacramento and the goldfields. eg Los Angeles was 3,500 people compared to 9,000 in Sacramento. Similar for the Washington Territory which was barely a collection of homesteads and tiny villages. IIRC Olympia was the first significant immigrant settlement in the northern Oregon Territory, the major (only?) early trade connection to shipping on the pacific, and connected to the few other settlers moving north in to the territory. Its not very surprising that it was the territorial capitol and remained so for the state. Yes, post statehood a lot of rail & shipping traffic moved north. But at least through the turn of the 20th century both Tacoma and Seattle were roughly equivalent in population and industry. Arguably the easier ship access for the Klondike is what cemented the prosperity of Seattle pre-war, and Boeing & related defence activity post war. But _at the time of territory & statehood_ Olympia was the major town in the region.

WorkerBee28474 2y ago

I think there's truth to that, it seems like every state has 1 major city. Possibly not always the capital (e.g. Toronto vs Ottawa, Albany vs NYC vs DC). I've heard that the book Cities and the Wealth of Nations [0] might talk about this more. I've been meaning to read it. [0] https://www.astralcodexten.com/p/your-book-review-cities-and-the-wealth https://www.astralcodexten.com/p/your-book-review-cities-and...

jltsiren 2y ago
It mostly depends on stable borders and a culture of centralization. Some US states such California and Texas have multiple major cities. Germany and the surrounding areas were historically fragmented, leading to many regions having multiple mid-tier cities instead of a single dominant city.