There might be a reason for this

The economic divide between north and south that is:

A fourth phase now looms because up until 2008-09, regional policy – such as it was – involved redistributing tax revenues from the south into higher public spending in the north. As work by Karel Williams and Sukhdev Johal for the Centre for Research on Socio-Cultural Change at Manchester University has shown, the state compensated for the retreat of the private sector. London accounted for almost half the full-time job creation while Labour was in power between 1997 and 2010.

Perhaps it\’s the way in which that higher public spending in the North has led to incomes being higher than productivity? Something which we know reduces employment as who is willing to employ labour for more than the value of employing labour?

The solution therefore is to reduce said public spending so as to reduce that cost of labour.

Or, if that\’s all too much, why not reduce the burden of the State? In fact, when I\’m dictator, this is what I\’m going to do.

I\’ll leave all of the current planning permissions and HSE and EU and all rules in place in London and the SE. And I\’ll abolish them everywhere else. Then let\’s see the power of capitalism and markets red in tooth and claw against the social democratic compromise.

It\’ll be the current England rules against Hong Kong rules and may the best man win. Me, I think that the North would be richer than the SE within a decade: but at least this way we\’ll find out, won\’t we?

11 comments on “There might be a reason for this

  1. What we call “The South East” is where new money is poured into the economy. People naturally cluster around capital cities because that is where the patronage is concentrated. When a major element of that patronage is the creation of new money, the effect is vastly greater, due to the benefits of receiving freshly minted money (before it has lost its value via inflation) as described by Von Mises et al.

    The result is a need to constantly transfer money to a wasting hinterland. Where there is no easy means of money transfers, the hinterland will ultimately collapse, as we have seen in the Eurozone. If there is, a hugely imbalanced economy results with large dependent areas who do not receive the financial patronage, living on a form of “regional welfare”.

    But, wait! Isn’t that regional welfare itself patronage? Well, not in the same way. The money creation goes into the “private” sector. The money transfers go into the “public” sector.

    So, one essential policy to return to a free market in Britain is the abolition of the money creation system. Without doing that, nothing can be repaired. Pop the Westminster Bubble. The problem is not in the Sticks, but at the Centre.

  2. A good answer, IanB, which changes Tim’s question not one jot. But let me give the other half of the answer.

    Cities are social hubs (see Jacobs et al) and easy varied connections promote opportunity. Thus every metropolis has an inbuilt advantage over the rural hinterland.

    You could put a thumb on the scales by abolishing planning permission in the countryside…

    OOPS!

  3. I think Tim’s idea is well worth trying. Plus move the British capital to Berwick, of course. Residents of England can have a vote on where they’d like the English parliament to sit.

  4. The European Parkiament migrates between Strasburg and Brussels. Is the the example you had in mind, dearieme?

  5. The Netherlands has a capital city – amsterdam – and a seat of Government – The Hague – which means that not all the bureaucrats and oliticos live in the capital. Soth Africa takes it a stage further by having separate seats for the legislature, executive and judiciary – thus meaning that Cape Town, Pretoria and Bloemfontein have not become as over-expanded as London. I would stick the legislature in Manchester, the Executive in Birmingham and let the Judiciary remain min london as they are all too old to travel unless Saga Holidays comes to the rescue.

  6. diogenes (#5) said “I would stick the legislature in Manchester”

    No, no. Liverpool is where the crooks and welfare fraudsters are. Our expense-fiddling MPs would fit right in there.

  7. BlokeInFrance

    Cities are social hubs (see Jacobs et al) and easy varied connections promote opportunity. Thus every metropolis has an inbuilt advantage over the rural hinterland.

    But it’s not a city vs. rural effect; hinterland cities suffer too. Think of that former great trading city, Liverpool, for instance.

    I would stick the legislature in Manchester, the Executive in Birmingham

    It’s not where the legislature is that matters. It’s where the money cannons are, and ours are mostly crammed into, literally, one square mile.

  8. There’s nothing more hinterland than the Australian capital Canberra. It’s a city of 360,000 people (seriously, that’s all), 200kms from the coast, built around an artificial lake. Even most of the politicians don’t live there. It was simply a compromise between Sydney and Melbourne, the two largest cities in Aust, both of which wanted to be the capital. So they agreed to stick it in the middle.

    And yeah Ian B, apart from little things like passing legislation and Question Time, all the important stuff happens elsewhere. It’s fly-in/fly-out for anyone with important stuff to do.

  9. Don’t get this explanation of Hinterlands.What would Liverpool’s hinterland have been in its heyday?
    It was taking cotton from the USA,all kinds of plantation crops like sugar (Tate’s ) and tobacco (Ogdens) from the entire globe .The Yorkshire wool towns’ hinterland must have included Australia where most of itsa wool came from .
    The real bogeyman behind the decline of the British regions must be the European Project which stopped the massive inflow of quality raw materials.Britain was more globalised then (over a greater number of products) than now when only the financial sector gets inflows of capital which have not been affected by economic fortess tactics.

  10. ours are mostly crammed into, literally, one square mile.

    Well if you will insist in ignoring every change in the world since 1973, it is understandable that you missed pretty much everything moving to somewhat more roomy premises to the east.

  11. Tim, I don’t follow your argument at all.

    You seem to be saying that public spending in the north financed by a transfer of tax revenues from the south creates unemployment in the north because it leads to incomes levels there that are higher than productivity. What mechanism creates the unemployment ?

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