Quick Note on Capital City Income Premiums
There’s a report by Sam Bowman, Samuel Hughes, and Ben Southwood, called Foundations, about flagging British growth, blaming among other things high construction costs for infrastructure and low housing production. The reaction on Bluesky seems uniformly negative, for reasons that I don’t think are fair (much of it boils to distaste for YIMBYism). I don’t want to address the construction cost parts of it for now, since it’s always more complicated and we do want to write a full case on London for the Transit Costs Project soon, but I do want to say something about the point about YIMBYism: dominant capitals and other rich cities (such as Munich or New York) have notable wage premiums over the rest of the country, but this seems to be the case in NIMBY environments more than in YIMBY ones. In fact, in South Korea and Japan, the premium seems rather low: the dominant capital attracts more domestic migration and becomes larger, but is not much richer than the rest of the country.
The data
In South Korea and Japan, what I have is Wikipedia’s lists of GDP per capita by province or prefecture. The capital city’s entire metro area is used throughout, comprising Seoul, Incheon, and Gyeonggi in Korea, and Tokyo, Kanagawa, Chiba, and Saitama in Japan. In South Korea, the capital region includes 52.5% of GDP and 50.3% of population, for a GDP per capita premium of 4.4% over the country writ large, and (since half the country is metro Seoul) 9.2% over the rest of the country. In Japan, on OECD numbers, the capital region, labeled as Southern Kanto, has a 14.5% premium over the entire country, rising to around 19% over the rest of the country.
In contrast, in France, Ile-de-France’s premium from the same OECD data is 63% over France, rising to about 90% over provincial France. In the UK, London’s premium is 71% over the entire country and 92% over the entire country excluding itself; if we throw in South East England into the mix, the combined region has a premium of 38% over the entire country, and 62% over the entire country excluding itself.
Now, GDP is not the best measure for this. It’s sensitive to commute volumes and the locations of corporate headquarters, for one. That said, British, French, Korean and Japanese firms all seem to prefer locating firms in their capitals: Tokyo and Seoul are in the top five in Fortune 500 headquarters (together with New York, Shanghai, and Beijing), and London and Paris are tied for sixth, with one company short of #5. Moreover, the metro area definitions are fairly loose – there’s still some long-range commuting from Ibaraki to Tokyo or from Oise to Paris, but the latter is too small a volume to materially change the conclusion regarding the GDP per capita premium. Per capita income would be better, but I can only find it for Europe and the United States (look for per capita net earnings for the comparable statistic to Eurostat’s primary balance), not East Asia; with per capita income, the Ile-de-France premium shrinks to 45%, while that of Upper Bavaria over Germany is 39%, not much lower, certainly nothing like the East Asian cases.
Inequality
Among the five countries discussed above – Japan, Korea, the UK, Germany, France – the level of place-independent inequality does not follow the same picture at all. The LIS has numbers for disposable income, and Japan and Korea both turn out slightly more unequal than the other three. Of course, the statistics in the above section are not about disposable income, so it’s better to look at market income inequality; there, Korea is indeed far more equal than the others, having faced so much capital destruction in the wars that it lacks the entrenched capital income of the others – but Japan has almost the same market income inequality as the three European examples (which, in turn, are nearly even with the US – the difference with the US is almost entirely redistribution).
So it does not follow, at least not at first pass, that YIMBYism reduces overall inequality. It can be argued that it does and Japan and South Korea have other mechanisms that increase market income inequality, such as weaker sectoral collective bargaining than in France and Germany; then again, the Japanese salaryman system keeps managers’ wages lower than in the US and UK and so should if anything produce lower market income inequality (which it does, but only by about three Gini points). But fundamentally, this should be viewed as an inequality-neutral policy.
Discussion
What aggressive construction of housing in and around the capital does appear to do is permit poor people to move to or stay in the capital. European (and American) NIMBYism creates spatial stratification: the middle class in the capital, the working class far away unless it is necessary for it to serve the middle class locally. Japanese and Korean YIMBYism eliminate this stratification: the working class keeps moving to (poor parts of) the capital region.
What it does, at macro level, is increase efficiency. It’s not obvious to see this, since neither Japan nor Korea is a particularly high-productivity economy; then again, the salaryman system, reminiscent of the US before the 1980s, has long been recognized as a drag on innovation, so YIMBYism in effect countermands to some extent the problems produced by a dead-end corporate culture. It also reduces interregional inequality, but this needs to be seen less as more opportunity for Northern England as a region and more as the working class of Northern England as people moving to become the working class of London and getting some higher wages while also producing higher value for the middle class so that inequality doesn’t change.
Pedestrian Observations 
what do the percentages refer to? I assume GDP and population premiums but it’s not clear which.
GDP per capita premium. Southern Kanto has 14.5% more GDP per capita than Japan writ large, and 19% more GDP per capita than Japan excluding itself.
But Kanto only has 151 Pokemon….
Because it doesn’t. YIMBYism is a full throated endorsement of building things completely independent of what is actually being built, which is why the YIMBY argument for exclusively building “luxury” apartment towers is literally “it is fine because other housing will trickle down,” why YIMBYs are constantly attacking actual housing advocates especially when they are raising reasonable opposition to “luxury” redevelopment, and why YIMBYism is the second worst thing to happen to housing in the 21st century behind only NIMBYism.
New luxury housing triggers moving chains that reduce rents at all levels.
https://ideas.repec.org/p/fer/wpaper/146.html
Alon Levy:
That study is of a single city and a rather atypical one, Helsinki. By their use of the term “market rate” I am not sure they are talking about luxe or super-luxe housing of the kind infecting many world cities. NYC and London realtors and developers repeat this notion that building super-luxe housing (usually hi-rise apartments, and super-hi-rise in NYC!) actually helps overall housing but it clearly doesn’t. Not only is much of this housing created for investors but then they are often not occupied or only part time. The reality is that if most central or convenient localities are subject to this exclusive type of development it makes it worse for the majority who cannot afford it.
Further Finland has historically low population growth compared to most big cities in Europe, the US, Canada or Australia. Neighbour Sweden has 2.3x the rate and Norway 3x. Not surprising that with such conditions Finland is one of the few places that has conquered homelessness.
Even if true for Helsinki it is not a useful model for anywhere else. But it is not clear it is really true. As the authors mention there is quite a large variation in rents in Helsinki, and this kind of development forces the lower paid further out from the centre, exactly the problem in most other big cities with worse problems.
I agree with Transit Hawk that YIMBYism is one the one hand simplistic and on the other, an opportunistic move by all the usual suspects that will benefit, property developers and the privileged property class. And it is certainly not a solution to NIMBYism.
In the battle between your Francophilia and your Anglo-Boomer racist reactionary property owner predjudices is decided. French willingness to let the rich build second homes everywhere in France outside city centres is bad because bullshit leftist rhetoric. Developers making profit providing goods evil, forever land appreciation and social exclusion via restriction of supply backed by vague promise of magic social housing sometime. That’s good socialist/leftist praxis. Corbynism/Melanchonism in action.
Housing type is meaningless, measure output relative to demand/population. NYC and London do terribly on that. And what development does happen is luxury high-rises because it minimises the political cost to NIMBY local politicians, and to developers (towers require less land and have max value uplift for). No point building working class accomodation in London because the local socialist councillors will fleece you for money/refuse you because they don’t those riff-raff near them. Unlike in Austria, Japan, Germany, Belgium, Poland where they have self-build, a private working rentals etc.
YIMBYism is that building works and has to be done at scale. There are lots of people as in any political movement who are vague and simplisitic about it, missing implementation is complex and difficult. That’s normal. The basic solution is simple and clear, implementation is not because human life is complex.
I dare both of the NIMBY dipshits on this thread to tell me how much of their income they are willing to provide to socialise your property for the sake of the poor. If you’re not willing to do that, then fuck off and let us build some fucking apartments.
Do you feel better now that you got all of that out of your system?
Housing type is actually meaningful. The implementation is actually this simple: you can just build the housing that people need, instead of building housing-as-financial-instrument in the hopes that this will cause housing in other categories to trickle down- ah, sorry, “trigger a moving chain that reduces rent at all levels.”
It’s telling that your go to response to being even indirectly challenged is to immediately launch a bunch of invectives and then blame “good socialist/leftist praxis” for the inability of actual normal human beings to “enter the market” and support themselves and by the way I would gladly devote 50% of my income to my part of a tenant owned co-op if that was a thing that anyone was allowed to buy or build or own in this country, but it’s not, because a co-op can’t be made into a commodity.
YIMBYism is nothing more than a thin coat of progressive language painting on top of the same austerity-driven, anti-governance, rent-seeking conservative politics that got us to where we are today. How did we end up trillions of dollars in debt and millions of units short of housing? It surely cannot be because we have spent decades making conscious choices to eliminate funding on both sides of the budget sheet and sabotage our governments’ collective ability to govern, no, it must be that those mean nasty socialists are spending too much and on the wrong things and if only they would get out of the way, society would surely improve under the unrestrained guidance of the free market.
Well, I’m sorry to be the one to tell you this, but it won’t. Developers are not your friends, and your landlord will not save the world. Good governance is possible. Balancing the budget without austerity is possible. Taxation and regulation and public investment are all good things worth fighting for.
I encourage you to reflect on why you don’t agree.
It does. It may not be as much as you would like but it does. Rich people move out of their apartment to move into the new super luxury marble bathroom, granite counter topped kitchen ( the take-out tastes better if you open the bag on granite ) leaving their old apartment with tiled bathroom, vacant. Some one moves into it. The apartment they vacated gets rented to someone else. Rinse repeat until you are examining a landlord who takes Section 8.
200 unit building opens just off the Strip in Las Vegas and 100 overseas investors buy apartments that’s still 100 apartments locals will be occupying, leaving their old residence available.
….In very special cases super luxury high rises can lower density.
This is one study out of many. Here’s a recentish summary of the literature: https://pubs.aeaweb.org/doi/pdf/10.1257/jep.32.1.3 with more references therein.
Helsinki is one of the fastest-growing cities in Europe.
Alon: Helsinki is one of the fastest-growing cities in Europe.
It is 15th in relative terms among the 19 that are in positive growth. But the absolute is under 200,000 compared to Berlin’s 680,000 (for most recent yearly data). And in housing absolute matters. It is also the lowest amongst the Nordic cities. It is also 19 out of top 20 in terms of economic growth (current ECGI).
There is no evidence that apartments in London are typically unoccupied as opposed to the residents being out, at work or asleep.
Srsly? Perhaps your vague statement refers to 100% of apartments, new & old, in London, which would be true. But of new build, nope.
Yeah, that cite is from the reviled Simon Jenkins.
The notion that building this type of housing caused overall rents everywhere to decrease is beyond risible. This is the kind of libertarianism/YIMBYism allowed free reign in London for the past few decades combined with lamentably low new social housing, has made it one of the least affordable, most expensive cities in which to own or rent, and with an awful housing crisis.
Re Alon’s equivalence of Starmer’s stated housing policy and YIMBYism is silly. Labour probably can’t achieve much but they are targeting both social housing and new-build low-rise (dare I call it Haussmannian though it is often referred to as “missing middle”). As I have repeatedly said on this site, there is huge potential for this kind of thing on brownfield sites in London (and all UK towns and cities) if only both government and brits would accept it. YIMBYism does not promote this kind of construction–even though technically they don’t preclude it–because given free reign developers and local councils (even Labour ones in London) favour the highest profit ones, which is entirely logical and correct on business terms.
Olympic legacy in East London (Stratford): Boris changed the plan for 8-10 floor Euro-blocks to the usual shit, expensive hi-rise with zero affordable housing:
OK so the Shard ones that have never sold. Sure I had forgotten about those.
But the others don’t prove much. All they prove is that no-one is registered to vote. Some will be owned by foreigners who live in them. Or by businesses for use by people on secondment. Or by people who are registered to vote elsewhere in the country. Or for AirBnB.
None of those uses are actively bad.
While I have a lot of respect for your view that Euroblock is the best height to build at and do almost always agree.
However if you were going to make an exception ultra connected locations such as Stratford would be the exception where you build towers.
Despite all my careful instruction over the years and you still haven’t got it! Both of us are failures. Those towers hardly ever, especially in the west, achieve the density of Euroblock. Then there is the dismal urbanism. I haven’t seen the redeveloped Stratford but it looks pretty grim from the pics in the Oliver Wainwright article. This whole thing is inexplicable to me. But then apparently you still believe towers produce higher density automatically.
Of course the UK having 2nd lowest vacancy rate is rather telling. Prime London is small weird space with lots of Air BNBs.
https://www.oecd.org/content/dam/oecd/en/data/datasets/affordable-housing-database/hm1-1-housing-stock-and-construction.pdf
https://www.ons.gov.uk/peoplepopulationandcommunity/housing/bulletins/numberofvacantandsecondhomesenglandandwales/census2021
But the “empty homes” is a excuse to not build, which we have done consistently since 1947
https://worksinprogress.co/issue/why-britain-doesnt-build/
@Borners I don’t quite believe the emptiness figures to be fair. And they do seem a little higher based on political campaigning.
That said a house is lived in for 80 years and you have 6 months to sell it after death or they go into care and 6 months empty to do it up – both of which are fairly aggressive – then that alone would point to a vacancy rate that is higher than the supposed figure.
And it certainly a single digit percentage. Though perhaps 2-3 not 1.
YIMBY is it is none of my business what you build so I’m going to stay out. If you want to build low income housing fine. Developers who sell to rich people will build for the risk, but there are also developers who know how to build for low income people and will build for them. However NIMBY wants to turn everything into class warfare because that war ensures nothing is built and in turn feeds into what they want. Better yet class warfare makes them appear like they care about those “down and out” and so they can hide all the harm they are doing to those folks.
Exactly.
Britain 1947 anti-housing system was designed by an alliance of Landed Snobs around the CPRE and newly Landed Labourites (Bevan etc). They wanted to murder the new London mass middle class before it destroyed the Victorian Britain of both landed plutocracy and regional town based industrial workers (spoilers it didn’t work but it make them a lot of dosh for their kids).
it’s worked that way since agriculture happened.
Yeah, an urban wage premium over rural areas is pretty normal, but the level of the wage premium varies based on other factors (for example, in the US, the urban wage premium fell in the early 20th century as urban public health improvements made cities no longer more disease-ridden than rural areas). But then I’m talking about the premium of the capital region over the rest of the country, which is also urban – most provincial French, British, Japanese, and Korean people live in cities and their suburbs.
The U.S. has been majority urban since the 1920 Census. The 2010 Census was 81 percent. The U.S. Census Bureau is good at rearranging the deck chairs every census too.
I’m sure there are countries where the capital isn’t also the largest urban agglomeration and some other city has higher incomes.
So they basically treat “suburban” as “urban”?
because most Americans would probably not describe their place of residence as “urban”….
If you get up in the morning to go cubicle somewhere to type all day you are urban. Even if you live in a McMansion on a two acre lot.
Does Berlin still have a negative wage premium over Germany as a whole? (But of course a strong positive one over East Germany)
Yes, but it’s shrinking rapidly – in 2019-21, Berlin had the fastest per capita income growth in Germany, followed by Brandenburg (this is primary balance of income, not GDP).
I have been at the Labour Party conference in Liverpool this week and been to a fair number of different events (not enough on Transport as I was ill).
It is very clear that senior figures in the Labour Party – both ministers in Westminster and mayors like Andy Burnham – are extremely keen on international comparisons so we can learn from them – and that they are pro-YIMBY. Every talk I went to included multiple international comparisons.
Britain Remade who put out a report talking about transit costs have also been advertising in the city.
Andy Burnham also announced that he was doing a housing first strategy in Manchester (copying Finland) and him and Andy Street (Tory ex Mayor of the West Midlands) have also announced a cheaper HS2 proposal in the past couple of weeks.
It is also clear that despite poor national communication on what they are doing and Starmer accepting too many freebies at the football in particular that they are getting underway with a number of programmes to move Britain forward – although certainly that will involve levelling up and not getting every northerner to live in the South East.
My experience (in general) not in Labour Party conference, is that actually Labour and the government in general are pretty insular especially at the top. They are so wedded to the Great British ideology they cannot take other countries seriously (unless its the US).
If Burnham was copying Finland he wouldn’t be demanded 30% affordable housing on top of all the other demands for developers to provide monies. Or fire the head of Transport for GM who told me to F-off for mentioning Alon’s work or why they weren’t learning from Osaka. I could that ridiculous 7billion airplane connector boondoggle. When Anglophones talk Finnish model they mean “moral people do moral thing”, not “copy Finland’s more market oriented housing sector so that housing the homeless is cheap”, see education ca.2005.
As for HS2 proposal, they didn’t read Alon’s work on HSR or ask SNCF etc instead they did themselves according to GREAT BRITISH knowledge (i.e. keeping the stupid expenses and cheaping out the meaningful things such as NIMBY-panders).
You can see this with the New Towns commission which is keen to repeat previous failures and only learn from within the “British” tradition of New Towns (i.e. incompetence). All the people involved are aging failures who think the problem is just teh bad Tories in a “good” system (Barker, Lyons etc).
To be honest I see the Freebies as what happens when a bunch of people unused to power and attention suddenly getting a lot of it, worse their entire mental universe is based on “I am Labour, thus I am moral as long as I am Labour and not Tory”. Toxic combo of vainglorious morality, inexperience and utter inability to see how that not being as rich as the average Tory MP doesn’t mean you can’t be as selfish (and not just with material stuff).
Also being YIMBY is all very well, but they refuse to admit they need to get rid of the TCPA for a more international system of zoning let alone dealing with the other pillar of the UK infrastructure which that the central state steals most of the benefits of new development from localities through the centralisation of taxation. Not a single devolution proposal from Rayner or Burnham ever has the word “tax” because the dysfunction of the British state’s infrastracture is the only thing keeping Outer Britain and the Union alive. Without the incompetence and NIMBYism they have nothing.
N/B Its quite telling that almost all the engagement with the transit cost crisis comes from right-inflected Londoners. Whereas Northerners just angry and say how unfair everything is.
The challenge may be to give the senior train people a climb down so they aren’t fully blamed for the cost explosion.
And to be fair I think there is a fair bit of blame to go around, so no one individual is entirely to blame.
I do think with the HS2 proposal there is a lot of trying to let people within the industry climb down gently, and mentioning Alon’s work directly does make them look extremely foolish.
I do think given the lack of Londonesq complexities and the lack of inclusion of the maintenance that phase 2 is even more ridiculous than phase 1.
Extending to Crewe or East Midlands Parkway should cost perhaps $30m/km and each is 50km, so perhaps a total of $3bn. But given phase 1 is rumoured to be £65bn with some phase 2 planning included that would point to the phase 2 sections being £15bn each in todays money or $15bn at Alon’s PPP values. That’s literally 10x cost with no real excuses.
I don’t trust anybody to have that level of brains. Otherwise they wouldn’t have proposed the stupid Airport connector to Liverpool (which is part of the scheme). Its a bunch of incompetent plunderers pissing around (note they hired a British consultancy). That’s all the North knows how to do. Its a region that hasn’t done anything productive without Whitehall sugar-daddying it for 100 years.
East Midland parkway is bad. HS2 should not be connected to the Midland Mainline cities at all. Too much time-table complexity for little benefit. They haven’t maxed out their incremental improvements to the current system and the ECML handles the NE/East Scotland services. The distances are such that getting HSR speeds is relatively poor returns for our costs. Complete electrification, get rid of Cross-country, lengthen platforms/trainsets, build passing loops and if you want a new alignment do it between Glendon South Junction (Kettering) and Meadow Lane South (Nottingham). With that you could easily get Leeds via-Sheffield below 2 hours*.
FFS Leeds-Sheffield-Nottingham-Derby are all such idiots that they can’t actually put together anything approaching a transit approach that isn’t just “evil London pays for everything on our terms without us doing any real work because I speak with a regional accent that makes me hereditary moral aristocracy”.
Seriously would it kill a single person in the North to study Kansai? Very similar geography, 1st class railways etc. But they don’t because 1. Xenophobia 2. Osaka’s decline despite good transit kind ruins all their get-rich-quick-schemes.
*Building HSR through West Riding of Yorkshire is a nightmare since its got lots of low density towns in an uneven landscape. Hence you get the wacky alignment of HS2 2b which wanted to avoid every population centre between Nottingham and Leeds. If you’re gonna build a full HSR line in the UK, Midland Mainline zone is very much after you’ve done parallel system for the WCML and the ECML.
Yeah, much of the weird criticism on Bluesky was “how dare these right-wing thinktankers say that Britain should build more housing?” while Starmer is literally planning to do just that.
British Left is raised on the dream of total victory for all time. They never admit they are an interaction game with the right and it never ends. They never bloody learn and think the Tories are only ever 1 magic Labour government away from disappearing.
My gut feeling is that there is further to go on infrastructure costs to get full acceptance that that is fixable in Britain. But I think we are in a better place with the senior politicians than with the Twitterati – and I think that is OK.
I don’t think we are. The problem with the right-inflected people is they are still Thatcherite and refuse to engage with proper civil service reform (and the pay increases/tax rises needed for it) and instead want to do more politicisation of the bureaucratic structures we do have.
That UK foundation article’s author’s belief that France’s procurement efficiency and YIMBYism are “despite” its high taxes and “high regulation” rather related to it drives me mad. Their engagement with France is better than 1990’s “France is socialist and stagnant”, but its still mired in stereotypes and poorly grounded assumptions.
On the left, Resolution types don’t engage with structures and economic growth much at all. They are welfare people before they are anything else. Wrong skillset for the generating the cash for the welfare stuff. And worse Starmer’s inner circle are all people who think the human rights- New Labour mix of 2004 was the best mix. They think pandering to big business rather facilitating it is how you get magic investment. That they are willing to disavow Corbynism (rightly) while not admit Labour (old and new) complicity in creating the housing crisis is I think quite telling.
N/B I will admit my English separatism leads to motivated reasoning on this. But I have several pathways on planning and infra reform that have pointedly not been taken. Everything is path-of-least-resistance so far.
I think the Foundations paper is good besides a few minor mistakes. They think that French workers are more productive because France does a good job building the things that Britain blocks (housing, infrastructure and energy supply) and despite high employer-side taxes and business regulation. Actually, high taxes and regulations do not lower productivity, they raise it by eliminating low productivity jobs (and unfortunately raising unemployment).
You think that high French taxes and infrastructure building are related. I am not so sure. Developed countries have comparable levels of taxation and diverge spectacularly on their ability to build new infrastructure. Who gets the money and how it is spent makes the difference and Foundations got it right by emphasizing the importance of local control.
Foundations said that France built 1740 miles of HSR versus Britain’s 67, which is true if one credits HS1 to both countries. They did not make the mistake of thinking that the Lignes a Grande Vitesse were built because of massive State interventionism or financing. Adjusted for consumer price inflation up to 2021, 60.1% of the overall cost of the LGV network has been covered by loans based on ticket sales, 23% French State (16 billion Euros spread over 40 years), 13.2% local councils, 3.3% EU/Switzerland/Luxembourg, 0.3% private. States like the UK, Germany, Spain, California or Italy may have lower taxes but have spent more than the French one on HSR. The local input not only helps to pay the bills but insures that the costs are reasonable.
I think they just refuse to realise it can be true that France has a more market oriented economy, with a more capable corporate sector* and a vastly more competent state bureaucracies than the UK. France has some badly designed employee and enterprise taxes that segment the labour market and distort firm size. But of course GREAT BRITAIN would never do that (looks at all distortions created by the exemptions for self-employed in VAT, NI and Income taxes).
Thing is as Peter Lindert showed decades ago anybody who think taxes explain economic differences has to explain why exception the tax-evasion and oil rentier states, the only countries that compete with US productivity per hour are the high-tax states of NW Europe i.e. Nordics, Low Countries and France. 1st world East Asia has American taxation and southern European productivity. Southern Europe has lower tax rates and lower productivity than NW Europe.
This is where we get to utter stupidity of the post-1980 paradigms. US isn’t de-regulated its just got a continental scale internal market which allows it to clobber the rest of the OECD with economies of scale in the service sector making up for its deeply dysfunctional state less affordable. Smaller European states have to trade on state capacity to make up for lacking market access (EU closes a lot of the gap, but its not nearly as integrated).
I do think at some level the high-tax high-welfare model can buy you enough legitimacy to impose hard budget constraints on the public** and private sector. France has been much better at reforming itself over the last 30 years than Southern Europe, Japan or the UK (starting from a position of superior productivity and living standards). Its possibly hit a point of diminishing returns as the high-tax technocracy runs into points where bribes to the regional poor don’t actually keep them content that the price is social-economic change. This is why the traditional French centre-left is in such a bad way, they won so many battles that they don’t really have anything to offer.
*UK has never really developed a corporate sector with the capacity and solidity of the US, European or East Asian models. It outsources that to foriegn countries while political and media elites are dominanted by SMEs or Professions. This also explains the lack of an English plutocrat class compared to even France/Germany, London is playground for global superwealthy not its own.
**I’m talking about procurement and state employee wages here, not benefits which are as far as I can tell efficiently implemented but generous.
You think that the English bureaucracy and corporate sector are less competent than foreign ones. I don’t know enough to argue with you but I disagree on one point. You think that the high-tax high welfare model can buy you enough legitimacy to impose hard budget constraints on public procurement and state employee wages. Hard budget constraints on procurement are a given because of EU tendering laws and France’s finances. Legitimacy was not bought by the welfare state. A close look at the French tramway revival or HSR mentioned in the Foundations paper shows that legitimacy was earned one city and one line at the time by competent technocrats and engineers. The tramway trend started in Nantes. While they were inconvenienced by the tram works, the Nantais elected a conservative mayor who was most forcibly opposed to the project. Once the tram opened to great success, the mayor had no place to go and did not dare ask for a second mandate. The Versement Transport, a payroll tax used to finance such projects is a French specialty but legitimacy, which can be lost at any time if the new shiny trains are empty, is the true currency pushing these projects forward, and it seems to be sorely missing in the US and the UK.
UK acquired its cost disease under similar financial pressures with the same EU tendering laws. We just don’t have a technically competent bureaucracy. Furthermore everything is politicised discretionary “guidelines” rather than proper administrative regulation (I’m reading building regs…good god its badly written managing to micromanage building while allowing lots of poor quality work).
Small picture yes , big picture I think not. France has vastly fewer industrial policy boondoggles than the East Asian or Southern European states which prefer to reward incompetent businesses over. Nor does outsource its economic problems to other countries like Germany or Japan via sado-masochistic mercantilism.
Peter Lindert who is the No.1 global expert on comparative state size and welfare points out the most efficient taxation systems are the Nordics because they have to be given the scale of taxation share of GDP (i.e. low taxation on capital formation, high on incomes and consumption). France’s reliance on payroll taxes imposed on employers isn’t quite at that level of efficiency but its closer than the US or Italy.
PS I can totally understand if you’re a French upper-half-of-the-income distribution and in the private sector that you’d resent this especially since its not buying you social peace right now.
The UK rail sector has had a string of failures with the 1980’s APT, Railtrack going bankrupt trying and failing to install moving block signaling on the WCML, the Great Western electrification cut short because of exploding costs, the infamous iron board seats, and HS2, but one should not generalize. Pre-Brexit, London was the obvious choice for the European Medicines Agency headquarter because the British had the best reputation in the field.
The TGV is a source of pride in France. Unlike HS2 and California HSR, it is widely supported left and right. The Foundations paper noted that thanks to lower costs, 29 often smallish French cities could afford modern trams. What it did not say is that not only these tram lines are being built but they are being built right. The average km of tram line picks up about 1.5 million passengers per year (1.29 million if one excludes Ile-de-France) against about 0.5 million in the UK. This is the kind of legitimacy I am talking about. The legitimacy evaluated by an independent expert like P Lindert is an interesting exercise but the one felt by the people is the powerful one. Right now, tramway and subway lines are being built because the support is there but the last elections showed that the French, maybe more than the British, think that their technocratic elite is otherwise out of touch and incompetent.
I mean the elections weren’t that different its just Labour vote was insanely efficient under our stupid electoral system.
Medicine is very much the exception that proves the rule. UK system is very good at spitting out scientists and has inherited vast agglomeration networks in established industries thanks to London. Medicine (as opposed to medical equipment), is where the line between research scientists and tradable output is narrowest. Its terrible at generating bureaucrats corporate or public and giving them appropriate. Which is a big problem since most big industries are more like railways or car manufacturing than medicine.
One thing about why a left-inflected Bluesky/Twitter response to UKfoundations essay is so negative even though it certainly better than most stuff written on these subjects in Britain. Its mostly on vibes, its love of the 1980’s, clear conservativism, nuclear-philia, its nationalist chestpounding-declinism*, EUphobia (while being pro-Gaullism) its somewhat uncritical appreciation for privatisation and its also its daring to not pander completely Northern delusions. All these code “Evil Tory”. Which is unfair.
For me the Interwar Britain is not a model, absolutely catastrophic mismanagement plus a good-housing boom in London gets you catastrophic mismanagement plus a good housing boom in London. Many of Thatcher’s reforms are actually reversing the 1930’s legacy of protectionism and cartels in Britiain as much as the nationalisations of 1940’s.
*Of course the “British” left is does this just as much with the Negative/Positive exceptionalism mix reversed.
N/B It drives me mad when “British” Europhobes harp on about how bad EU digital regulation is while not wondering why its clear US specialises in IT and the EU in capital goods. Or realising that the US may not have as many Social Media regs but sure has plenty of stupid ones like Buy America, the Jones Act or the insane guild regs for Doctors. Which tells you that its really about nativist reaction politics hating the EU for making Great Britain a failure.
Yeah Alon you’re right there’s a tension between class equality which pushes you towards letting the Primate cities advance and “regional equality” that it much vaguer (we have always prioritised the latter in the UK). Japan and South Korea throw massive subisdies as their peripheries and it all doesn’t matter because minimum wage people can afford to rent a flat in the 23 wards or Seoul. (Other reasons to, there is also gendered migration of women away from more sexist rural areas).
Its important to keep in mind that the UK can’t do this because its Imperial Ideology sees peripheries as more valuable in than its core, hence gerrymandering. FPTP and Barnett formula targeted against Southeastern England. Northern Ireland Scotland and Wales have consistently rejected separation because the massive slate of fiscal and political priveleges are so embedded losing them would destroy and remake their societies on a scale like that of post-1989 Eastern Europe. One of those priveleges since 1947 (which was explicitly about this look at the Barlow report behind it) is that Southern England will de-urbanised and deindustrialised while being denied local taxation autonomy of the kind normal in Europe. Infrastructure incompetence of the British state is targeted towards SE (which is only superior in electric trains and inferior in all other forms of public physical capital to Outer Britain).
That said tellingly the eras of greatest class mobility in England were the decades of peaking migration from North to south, Thatcher actually slows this process down through her NIMBYism and her successors have effectively shut it down. London and the SE grow through immigration plus demographic momentum. And indeed if you look Orwell or Bevan, they are all horrified by the mid-20th century socially mobile workers of Southern England a destroying the moral order of Britain (and socialism). Little wonder those southern workers (Essex Man etc) have their revenge under Mrs T when they are the dominant class not the decaying industrial working classes of Northern England (and Brexit is their union against the new university educated professional class and immigrants).
…is Essex mostly a place for migrant workers from Northern England? I thought the social history of it was that the working class of the East End suburbanized there, viewing getting out of the city and avoiding stereotypical elements of urban working-class culture as markers of success and preferring ownership of material goods; for example, Essex is Crap mentions mobile phones and satellite dishes as elements of Essex tackiness.
Its a mix. Essex had historic port communities, then London suburbs, then seaside holiday towns from the 1870’s with a speed up after 1918 as the Southeast/London rapidly outperformed the rest of the country. That’s when it started pulling both Londoners and Northerners. Then post-WW2 it had New Towns and relocated slum communities, plus the shift from the port of London to Tilbury/Felixtowe plus Stanstead made London’s factory suburb. Home counties were the centre of population growth since the 1920s (London had a enforced depopulation 1945-1980). I wouldn’t surprised by next census that it matches West Yorkshire in total population.
Essex (and Kent) are the most right-wing home-counties because their historic fishing and seaside towns are disproportionately old and white (that’s where Reform won). Their economies are less white-collar too. But I think the Metropolitan snobbery has moved from their accents to projecting onto their culture*. And Northerners join in because they hate that Essex manages to be prosperous while not filling their stereotypes about Southern all being evil Surrey stockbrokers.
*Essex is racist, yeah but they build more housing than anywhere else in the Home Counties and they have better public transit than most of them too thanks to C2C.
Mean center of population is an interesting intellectual exercise. The place where everybody would balance if everybody weighed the same. When it comes to real people taking actual trips you want to look at the median, the place where half the people live south of it and half live north of it, or half live west of it and half live east of it.
The median is only well-defined relative to the coordinate system you choose – for example, think of a population distribution in the shape of a Y with all three legs equal and the angles between them also equal.
Instead of 120 degrees you could do 60. or 22.5. Conventionally and in the orbit of the way normal conceive of the world it’s 90 degrees aligned on latitude and longitude lines. Or East/West and North/South. Quite handy in the case of the U.S. It tells you that the smallest quadrant, in area, is the Northeast and the Midwest east of Chicago. Or that roughly half the population lives in the Eastern time zone. Since there are four time zones in the contiguous U.S. that means, very roughly, that half the population live in the quarter along the East Coast.
And deciding to do 120 degrees or 22.5 doesn’t change that the mean center is more than an interesting intellectual exercise.
Greater Anglia is very good too. Those two operators are the only two better than the Swiss.
I’m not sure its that they are good so much as they are less connected to the rest of the network, have high-electrification rates, and connect London to its commuter belt, Unitowns (Norwich, Cambridge) and coastal retreats. By franchise standards its playing on easy mode because they are saved from the worst aspects of British railways. I have sooo much to criticise them for based on comparing them similar sized Japanese operators (Tobu, Kintetsu etc).
The average household income in the US is about $75,000
The average household income in Washington DC is about $100,000
So, I would say there is a “capital city income premium” of about 33%.
The same OECD link has GDP/capita figures for American metro areas, at CSA level. The premiums for the top ones (SF, Seattle, NY) are lower than for London and Paris but much higher than for Tokyo and Seoul.
No one speaks of average household income in the U.S., probably most places, because it’s shockingly higher than the median household income.
Japan’s relatively unproductive service sector does keep the wage premium lower than say Paris or London but the concentration of Japan’s service industry in Tokyo is significant even compared to the other two cities.
I imagine people complain about Tokyo’s dominance there as well despite the smaller premium because it seems the new industries that Japan does create go there.
People complain about the dominance of both Tokyo and Seoul, to the point that the South Korean government is moving some capital functions to Sejong. But the wage premiums remain low.
Isn’t that also partially for military reasons? To get the stuff out of range of the North Korean artillery?
The unproductive parts of the service sector aren’t concentrated in Tokyo, quite the opposite. The LDP keeps a vast array of unproductive SMEs in “the regions” going through soft loans either direct from the government or indirectly through the regional banks (who are going to be the bit that breaks in the next decade). Add to that regional Japanese government in rural areas are funded to the point of inefficiency, too many localities, too many museums etc. You may have heard of “private affluence and public poverty”, regional Japan is the opposite “public affluence and private poverty”.
Shifting the population to the major cities has counteracted the negative effects of these parasite sectors to a large extent. If Japan could reform the banking system and public loans system while increasing pensions to bribe the Oji-san’s in Tottori they could easily have a good decade of convergence growth.
That’s what they say, but if rockets start hitting Gangnam do you really think it makes much difference? Part of it is also building a new town is easier than building a welfare state. East Asian states much prefer to build useless infrastructure rather than like have a good pension system.
Japanese/Korean inequality has a different form. The poorest people tend to be elderly, who receive relatively small pensions and often were youth where education systems were weaker. Europe and the U.S. tend to have more poor single parents and minority issues. So I feel like it is harder to compare.
One thing the Japanese/Korean system does well is reduce unemployment. Working class people in Tokyo/Osaka/Seoul often have millions of jobs that they could potentially join and they generally don’t require car ownership to access. Whereas in other places, the number of accessible jobs to the typical worker is smaller and it’s easier to struggle to find work. This is where efficiency shows up in the form of much lower unemployment in Korea/Japan compared to Europe with their smaller cities.
The U.S. has the best data due to BLS having wages for all occupations and locations
https://www.bls.gov/oes/current/oes172051.htm#st