Category: History

From Tom Forth:

In at least six Conversations with Tyler, Tyler Cowen asks his interviewee why they think North England is poor. I don’t think he gets good enough answers, which is why I guess he keeps asking.

So here is a better explanation of why North England is poor with a bonus explanation of why so many Britons think much less of Margaret Thatcher’s Premiership than he and his guests do. It is a heavily simplified and selective story, but I think it tells the key parts of how North England fell from being the birthplace of the industrial revolution and among the richest places in the world two centuries ago to being an economy substantially lagging everywhere else in Northern Europe today.

The North’s economic decline is made even clearer when it is compared to two near neighbours and far more prosperous counterfactuals. Scotland and Ireland, who have achieved greater independence within and from the United Kingdom, and whose success is awkwardly ignored and denied by the people responsible for the North’s decline, are today far stronger economies than North England.

I will publish my expansion of these points in detail as soon as I can, but for now I offer this summary,

1. The Norman conquest.

Since at least 1066, England has been ruled from the South East for the benefit of those who rule it and the places where they live and work.

2. Ban on Northern universities.

In the 1600’s, and for two centuries after, England and then Britain’s overwhelmingly and disproportionately Southern Parliament in Westminster rejected North English requests to establish universities in the North. The outsized influence of members representing Oxford and Cambridge and graduates of their universities played a big role in this. The Parliamentarian victory in the English civil war was working on the problem but the Monarchy was restored before Northern universities were established.

3. The industrial revolution.

The lack of universities in North England meant that the industrial revolution was heavily powered by Scottish science and largely occurred at a distance, both geographically and culturally, from London and Westminster. It was this distance that allowed North England to prosper through industry, despite constant effort by British national institutions in South East England to constrain their success. And it was the competition of ideas across that distance that led to great Northern social ideas such as Manchester Liberalism, an end to the Corn Laws and more free trade, professional sports, and a fairer democracy eventually triumphing nationally.

4. Universities were allowed too late.

North English universities, although quickly successful once they existed, were permitted too late (1880 for Manchester). They could not quickly enough achieve a critical mass of high-skill and elite institutions in North England that would help the economy to retain a technological advantage or transition to higher productivity service activities when Britain’s industrial advantage started to decline.

5. Grouping, nationalisation, and privatisation destroyed the North’s institutions.

North England’s strongest local institutions were born of the industrial revolution and included the railways and the municipal corporations. Alongside wealthy local industrialists municipal corporations built and municipalised gas, electricity, and water networks, healthcare, education, and social housing systems and much more. These service and assets were taken out of local control and run overwhelmingly from Westminster as they were grouped, nationalised, and privatised by UK governments of both left and right from the 1920s onward.

6. Thatcher and the end of competition of power.

The process of transferring assets and power from local government to central government or to the private sector (regulated by central government) was substantially completed under Thatcher. Major changes included the abolition of metropolitan county councils in the North’s great cities, the removal of most remaining local taxation powers, the removal from local control of the Mechanics’ Institutes and Polytechnics (the North’s locally-created alternative to the Universities they were denied during the early industrial revolution), the privatisation and deregulation of local bus services, and the introduction of right-to-buy forcing local governments to sell their largest asset base and source of income at well below market rates and give a portion of the proceeds to the central government.

Absent any of the protections against it that exist in the US constitution, Thatcher moved the British state past the French state into being the most centralised in the developed world. “You can just do things” is an emerging meme in the pro-growth community, but since Thatcher that has been largely untrue in North Engalnd. Most of the time, someone from central government will block you, if you succeed they will try and stop you, and if you continue succeeding they will subsidise your competitors.

7. Ultra-centralisation of the state.

Since Thatcher there has been no effective local counterbalance within England to the UK government’s power held in Westminster, no right for cities or regions within England to raise taxes to fund investment in growth, and no limit on the power of the UK central government to constrain growth in the North. The UK central government, backed by Britain’s national institutions, has intensified its preference for South East England. Britain’s government and institutions have moved Britain’s science and innovation from the rest of the country to the South East, focused on London, Oxford and Cambridge.

The central government, holding the monopoly power on such investment, has invested heavily in transport infrastructure in, around, and to London and almost nowhere else in England. The development of a competitive agglomeration to London in North England has been deliberately constrained almost continually. These patterns have deepened even while central governments claim to be focusing on regional investment. In the last fifteen years, while the UK government has claimed to be moving power out of Westminster it has centralised its civil service, centralised its investments in R&D and transport infrastructure, and moved an extra million employees from local government control to central government control.

8. A new generation of policy thinkers.

A new generation of British national policy thinkers, policy advisors, politicians, and custodians of Britain’s national institutions now live almost none of their lives outside of South East England. They rarely have a memory of, or interest in, an England that is not ruled overwhelmingly from the centre.

While arguing for growth today these people and their organisations repeat the mistakes that Thatcher cemented in British political economy thinking that a well-managed central monopoly on power is better than a competitive dispersal of power. They celebrate new scientific institutions in London such as ARIA that repeat — against strong evidence that it will not deliver greater returns in doing so — the centralisation in the South East of England of our national research capacity.

We are repeating today previous disasters for the North’s economy such as the relocation of Britain’s synchrotron to Oxford, the relocation of AstraZeneca to Cambridge and London, and the centralisation of biomedical research in South East England with the construction of The Crick Institute. Our institutions celebrate the creation of new organisations such as The Open Data Institute, Nesta, GDS, Tech City, and the AI Safety Institute that employ large numbers of well-paid people in the capital. At best these organisations allocate their money with preference to South East England and represent local interests as national objectives. At worst they actively oppose and shut down success elsewhere in the country.

This all happens largely without malice, though prejudice against people from “the regions”, while greatly reduced, remains rife within British high society. It is the result of England having forgotten, and — embarrassed by the comparative success of Ireland and Scotland having rejected this centralisation — not having taken the opportunity to remind themselves of the power of competition and markets in government.

There you go.  Agree?  No mention of behavioral factors?  How would social indicators compare to the much poorer Kerala or Sri Lanka?  And is Scotland, especially without subsidies, such an economic success?