4 ms·

The process is quite simple and fairly obvious. Government policy is the bedrock of all economic development. Government officials will always have the most kno

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.
  - matt-p 2y ago
    Good luck with the "but people live there, thier lives can be improved who cares about a poor ROI" argument. I mean that kind of genuinely, I see your point, but good luck trying that argument on the treasury. It's a fact that they're subsidised. They have regional mayors, do you think a devolved solution for each northern city is really reasonable or desirable? If we think it's desirable and will stop them being subsidised then why hasn't it worked for Scotland, Wales or NI? All of which take more than they put it.
    - 2y ago
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

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.
- matt-p 2y ago
  Good luck with the "but people live there, thier lives can be improved who cares about a poor ROI" argument. I mean that kind of genuinely, I see your point, but good luck trying that argument on the treasury. It's a fact that they're subsidised. They have regional mayors, do you think a devolved solution for each northern city is really reasonable or desirable? If we think it's desirable and will stop them being subsidised then why hasn't it worked for Scotland, Wales or NI? All of which take more than they put it.
  - 2y ago

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