The reality is that the supposedly rational act of moving is not what people do. They stay instead. The result is the demand for a levelling-up package.
I support the idea of such a package: many such areas do need help. But I also think that addressing the bigger question of why people do not move is just as important.
Is it because they do not have the capital required to move? That must be part of it. A new rent deposit is beyond the means of many, I suspect, having spent a long time looking at wealth data.
Or is it that the importance of family, place and connections is so strong that moving is simply not on people’s agenda? There remain, despite low incomes and higher risk, good reasons for staying that trump the economics of moving. If so, it shows how out-of-touch supposedly rational economics is with the reality of many people’s lives. That is a massively important lesson to learn.
In economics “rational” means “consistent”. If you prefer A to B and B to C then you prefer A to C.
But OK, let’s use this other definition of rationality that Spud prefers. People are rational calculators of what makes them better off. We might want to add in a bit about limited information and such but OK, at least a reasonable starting point. So, what is it they try to maximise through their calculation?
Spud is assuming money income. Which is nonsense. Economics assumes people maximise utility. Which includes things like continuing to live next door to Dear Old Mum so as to have her plum duff on a Thursday lunchtime.
Which does bring a larger amusement of course. For it’s absolutely all those – as with the Potato – which so loudly insiust that money isn’t everything who then insist that economics assume money is everything. When, in fact, right at the heart of economics is the agreement athat money isn’t everything. Yet still they rage because they’re clueless.