The Prospect editorial: Capital-ism

Growing up in Huddersfield 25 years ago, we heard Bradford bard, Justin Sullivan, sing about “the land of gold and poison.” We knew exactly where he meant. Regional resentment of a glitzy metropolis has been a feature of British life for decades. But in the run-up to the financial crisis, average wages and wealth in London raced further ahead than ever (Paul Collier paints the big picture, and Torsten Bell supplies all the figures). After the crash, City antics morphed into nationwide austerity—the gold may not have been shared around, but the poison assuredly was.

This is of course a crude rendering of the tale: many Londoners are locked out of the housing market and struggling with high rents. But the sense of the capital sapping energy, prosperity and opportunity from the rest of the land is real and damaging. Many a town feels that its proud past has been betrayed.

Too often stagnant pay and poverty are conceived only as problems within the individual home. In truth, the sight of once-charming and distinctive high streets running to seed darkens the mood across entire communities. Certainly, the electoral map in the UK and the US suggests as much, with the nostalgic Trump and Brexit campaigns both over-performing in places that feel forgotten.

Such electoral realities have spurred some late in the day soul-searching about whether the economy is truly being run in the broad interests of the nation. From the left, there is a resurgence of socialist ideas: Clare Malone reports how an age-old taboo on the s-word is being broken in the US.

At home, the Labour conference was dominated by John McDonnell’s audacious plans to grab a chunk of big companies and hand them to the workforce. This spooked the Tory conference that followed: MPs there complained the McDonnell plans didn’t add up, but also bemoaned their own side’s inability to come up with anything comparably compelling.

The irony is that, whatever merit there might be in some of the leftist proposals, they are gaining much more traction in young and vibrant New York and London, than the aging regions that have been so down on their luck. Collier offers a different agenda that speaks more directly to them. He suggests taxing London to fund prosaic but practical measures in the regions: new investment authorities, souped-up training and various nudges to encourage enterprise to cluster away from the capital.

Rebalancing isn’t easy: even relocations of the government’s own workforce have often gone wrong.  For the sake of holding the country together, however, a way will have to be found. Britain is better off with one world city rather than none. But how much better would it be if we could nurture a couple more?