We’ve all been paying a lot more attention to developments in Britain since June’s Brexit vote. As we noted at the time, some of the same kinds of political divides that play out in America—between globally-integrated, knowledge driven cities and more rural areas that are older, less-educated—also happen in Britain. (Population density helps explain the red blue division in the US and the leave/remain divide in England.)
The UK’s Centre for Cities, a London based think tank studies many of the same issues on the other side of the Atlantic that we find so interesting at City Observatory. We were particularly struck by one of their recent reports looking at economic development strategies for cities. Much of what is said in this report could be said with equal force — if in slightly different English — for cities in the U.S.
Paul Swinney and Elli Thomas of the Centre have written a strongly historically grounded description of urban economies, entitled A Century of Cities: Urban Economic Change Since 1911. Looking at economic trends over the past 100 years, they draw a stark contrast between cities that were dominated by mass production, and which have clung to older manufacturing industries, and those cities that embraced services and build a knowledge economy.
In Britain, this plays out as a North/South divide. London and other smaller cities in the South, like Reading and Brighton, developed a strong service sector and thriving new industries. The North the Midlands and Wales, all clung to manufacturing, and relatively low skill jobs like call centers and distribution. Not only did incomes in the South outpace those in the rest of the country, so did job creation: For every job created in the North, Midlands and Wales, 2.3 jobs were created in the South.
Swinney and Thomas offer sharp and clear policy advice. Three takeaways from their report make every but as much sense on this side of the Atlantic as in the UK. From their report:
- Improving the skills of the workforce. Knowledge businesses require high skilled workers. The ease with which they can recruit these workers is a key determinant of where they locate.
- Supporting innovation. High-skilled workers don’t just work anywhere – they cluster in successful cities. This is because a worker isn’t more productive just because of the qualifications that he or she holds, but also because of the workers he or she works with and the institutions that he or she works in. The ‘knowledge networks’ that workers are part of are place specific, and cities need to be able to facilitate innovation and the creation of new ideas via their knowledge networks to increase long-run productivity.
- Dealing with the scars of industrial legacy. The 21st century economy requires less employment space – an office has a smaller footprint than a factory. And this employment space tends to be in a different part of the city – jobs in our most successful cities have been concentrating in their city centres. This shift has left large swathes of empty land and buildings in some cities, so encouraging density of employment should be done alongside dealing with land remediation.
All three of these points mirror analyses we’ve done here at City Observatory. Businesses are increasingly choosing locations based on worker availability, and, for the first time in decades, jobs in city centers are growing as fast or faster in than the suburbs.
The critical factor is a city’s ability to reinvent itself and its economy in the face of major technological or economic changes. In many ways the argument made here is similar to one that Harvard’s Ed Glaeser has made about New York and Boston compared to other rust-belt cities in the US. Places that embraced trade and openness and had a well-educated population have been much more successful in adapting to industrial change than more insular, less-educated places.
Or, more simply put: Nostalgia is not an economic strategy. Economies don’t go backwards, and efforts to forestall, or reverse fundamental economic changes are usually costly and ineffective. The challenge of economic strategy is to plan for the kind of economy we’re likely to have in the future, not pine for the restoration often-imaginary glory of an economy past.
And that, in a way, is a sub-text of the Brexit vote: a majority of voters, dismayed with the changes wrought by globalization and epitomized by the European Union, and with their patience worn thin by the lingering effects of the worst economic downturn in eight decades, not surprisingly voted for the past. Meanwhile, the young, the best-educated, and those living in cities voted to remain, and move forward. The question of whether we go forward, or try to go back, is one that is equally relevant on both sides of the Atlantic.