It is a truth universally acknowledged that whatever the problem, it is always someone else’s fault. Especially in politics. What, though, if there are some genuinely difficult problems to solve? Like why the north-east of England generates less wealth per capita than the south-east. Why 38% of our children live in poverty.
Because he doesn’t seem to know the first thing about the economy. Lower GDP is not wealth, it’s income. But lower GVA (to give the name for GDP of subnational units) is the reason why the high child poverty rates. So, they’re the same problem.
And no, not in the way you might think. So, wages will be connected with the income to be made from employing the labour. That’s not a controversial thought in the slightest – the workers’ wages will be determined by the average productivity of labour. This is obviously true at the level of an entire economy. Ha-Joon Chang devotes an entire chapter of one of his books to why the Swedish bus driver makes more than the (Bangladeshi, I think?) one. P. Krugman points out that it’s entirely obvious that this should be so. The example of the barber is oft used. Largely the same technology used around the world, chair, comb, scissors, but the incomes diverge wildly. Why? Because the determinant of wages is what could the bloke make in the next job along? That, in turn, defined by how much the capitalist has to bid to gain the labour the bastard can profit from.
This effect is lesser with sub-national economies, obviously. Obvious because migration to higher paying areas is easier. But the effect is still there. So, lower productivity area, lower wage area. Simples.
Another way to approach the same point. A large part of the cost of living is the labour incomes of all those around you who provide the haircuts, bus rides, food and so on that you live upon. If you’re in a lower wage area then the cost of living will be lower by whatever portion of your consumption is delivered by local labour. Servants are, after all, astonishingly cheap in poor places.
Child poverty is measured against *national* median household income. So, therefore, there will be more child poverty in a lower productivity area. Simples.
We can and should go further too. We do not adjust for the cost of living in different regions. We should. We should use some variant of PPP to adjust nominal incomes into something closer to what we’re really interested in – consumption ability. We don’t, but we should. Everything is cheaper Ooop North. Not just housing. A London pint is £6 these days. Try that in Wallsend.
But leave that aside. The reason for the high child poverty rate is simply that we’re measuring regional incomes against a national benchmark.
Now, anyone who doesn’t understand this shouldn’t be allowed anywhere near economic planning, QED.
BTW, the opposite is also true. London poverty is grossly underestimated. True, incomes are higher because it’s a high GVA area. That means that when measured against a *national* median income the number of those more than 40% below it is low. But prices are vastly higher in London (£6 a pint, right?) meaning that consumption poverty in London is very much higher than recorded.