A simple theory of urbanism and British economic growth

Have you ever visited Zagreb, Ljubljana, or Bratislava, and noticed how boring they are?  They still feel like backwaters, not the national capitals they are.  That is no accident, because they “grew up” under the Habsburg monarchy and in the Austro-Hungarian empire as second- or even third-tier cities.  Vienna and Budapest, the seats of that empire, are correspondingly overgrown, and remain so to this day.

Britain faces this issue in a much more extreme form.  London was once the capital of the largest empire the world ever has seen, was it 1/4 of the world’s population at its peak?  After that it was the de facto financial and economic capital of the European Union, and it remains the de facto financial and economic capital for Europe more generally.  The global ascent of the English language strengthens these tendencies.

That leads to an extreme hypertrophy for London, which indeed is currently the best city in the world but in a modestly populated country.  However this central role for the city makes the UK as a broader nation richer to only a limited degree.  So the extreme wonders of London lead to a partial (permanent) atrophy for the rest of the country, which is precisely what we observe.

For all the mockery of “Singapore on the Thames” as a concept, southern England and the London-Cambridge-Oxford triangle already have far surpassed Singapore, and I am referring to recent not historic achievements.  Does Singapore have innovations that compare to the vaccine and Deep Mind?  I don’t see it.

Therein also lies the curse of southern England.  The region’s most marvelous achievements are ideas, and the value of those ideas is largely capitalized elsewhere.  Unknowingly, southern England is playing the “effective altruist” role for the world as a whole.

Singapore, in contrast, doesn’t generate many new ideas.  It invites in MNCs, and the capitalizes much of the value of that production in the form of higher wages and higher land rents, the latter often accruing to the government and which are then (to varying degrees) distributed back to the native population.

And there you go.  Whatever you think is the best British fiscal policy, it isn’t going to reverse that state of affairs.