The following was posted by Charles Adams on Progressive Pulse a couple of days ago, and I thought it well worth sharing:
Something that I knew, but it still shocks me, is illustrated in this data from The Economist.
Exhibit 1
In terms of regional inequality, the UK is more divided than the US. The situation in the UK is extreme. It is as if a great crime has been committed on large parts of the UK population. The regions have become sacrifice zones, feeding the finance monster in London. The same crime committed on the heartlands in the US. The crime began in 1970s and it is still happening. As inequality drives political instability, it is vitally important for all, wherever they live that something is done. As the Economist suggested nearly two years ago, “Regional inequality is proving too politically dangerous to ignore”
— The Economist, 17 December, 2016.
Depending on where you live, and how much you travel, you may not have noticed how extreme the situation is. I live on the edge of the Durham coalfield and travel daily through old pit towns and villages. If you live where I live, London is another world. Compared to much of the North East, much of the South East plus westwards to Bath seems like another country. Both the statistics and the reality have been known for a long time. In 2014 the Mail published an article with the headline, “Parts of Britain are now poorer than POLAND” with a series of graphics based on Eurostat data including this one where the British Isles appears twice!
Exhibit 2
The numbers correspond to the percentage difference of local GDP per capita to the EU average. Similarly to the more recent Eurostat data presented in Sean's post on Northern Ireland
Exhibit 3
We can see that North East, Northern Ireland, and Wales have not been doing as well as say Slovenia. Now you could argue that this is more the fault of London than Brussels, but may be this data does help explain why some people in these regions might not be so emthusiastic about the EU. The wider EU context is discussed in more depth here.
In the UK regions, any disenchantment that was already brewing was further fermented by austerity (as discussed here by Peter). Austerity further disadvantaged those regions that were already suffering. The map below is from a paper “Did Austerity Cause Brexit?” by Thiemo Fetzer of the University of Warwick. It shows the loss of income due to asuterity across different regions of the UK. Again, we see that it is Cornwall, Wales, Northern England and Lincolnshire that have been hit the hardest.
Exhibit 4
The case is black and white, Britain is divided by extreme regional inequality. This problem has been building since the 1980s and political parties of both colours have not done enough to stop it. Inequality drives politically instability and eventually everyone suffers. Ideas such as the Green New Deal could be a part of a solution. Land value tax is another. We desparately need more than one.
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This is indeed shocking and goes some way towards explaining why some of the regions that voted most strongly for Brexit are also the ones that have very low levels of inward immigration (in some cases they will be experiencing an overall decrease in population, i.e. their problem is actually outward immigration). People from Poland are mostly unlikely to want to migrate to somewhere that is actually poorer than their home country.
Clearly more transfer spending is required in the UK to spread prosperity from the core areas that are doing well to the periphery. Unfortunately policy (which was already inadequate) is moving in the opposite direction with the concentration of capital spending in London/South East and the changes to the council funding formula (as highlighted by Owen Jones in the Guardian yesterday) giving advantages to already affluent areas.
I suppose one area where you could attribute cause to Europe is in the sense that countries often have a prosperous core or cores surrounded by a less prosperous periphery. So by being part of the EU the UK regions have become peripheral regions of a peripheral country. This effect is more severe within the Eurozone, but countries/regions that are lucky enough to be in the centre need to accept the requirement for transfers to the outer regions as a trade-off for having a larger market to sell to (and stability). One of the biggest losers from this has been Greece – where the willingness to provide fiscal support seems to have been inadequate to compensate for the disadvantages of being in the Euro.
It is quite neat (but sad and unsurprising) to find that the rule about wealth inequalities at a personal level causing societal instability and stress also operate at this wider level of countries and regions.
but look where Ireland is. It is geographically very peripheral.
“but look where Ireland is. It is geographically very peripheral.”
That is true, but I suspect a large amount of their GDP per head isn’t real – it’s been redirected there for artificial tax reasons.
Doesn’t however explain the Brexit result in Scotland…..
I got slated for commenting on this a few days ago, fairly.
I agree with your broad point, but apparently there’s a problem in the data that artificially makes the UK look worse than other countries in that chart.
Namely, the best / worst regions analysed in the UK are way more granular than other countries, making our richest areas look far richer than European counterparts, and poorest areas far poorer.
Explain
Richard the gdp data for Luxembourg, Ireland and Netherlands are inflated by tax arbitrage from principally US companies, surely you can see that. How much value Ireland get out of that inflated GDP is open to question but the fact that Luxembourg and Juncker have done so well out of looting the tax treasuries of their neighbours on behalf of US mncs was one of the reasons I voted for Brexit. After March we could deny double dip interest charges to US through Lux owned companies and others and make google etc pay UK CT. Not that the tories will pursue that course. That extra CT could be used to level out the inequalities that EU regional development assistance have failed to redress.
On a different tack there is more to life than money and living in Lincolnshire I’d prefer to keep the rural idyll rather than having it fracked over to boost gdp per head with the negative quality of life that would bring. We may be poorer but very few up here over 25 would willingly move to London!
I understand all that
And my answer is so what?
Ignore them and the issue is still real
Don’t make excuses
Phil, do you really think that if Brexit occurs, we’ll get a decent British government that will actually sort out the gross inequalities discussed here? Have you actually swallowed the Leave lies that blame the state of the UK on the EU?
The hard right movers and shakers behind Brexit are the people whose free market neoliberal policies got us into the mess we’re in now. As others here have pointed out, EU funding ameliorated this to some extent. Sorry Phil, but you are an example of the one group of people even more guillible than right wing Leave voters i.e. left wing ones.
Richard what I said was addressed at part of the explanation for the differences between countries not an excuse for the differences between UK regions. Of course the differences should be addressed especially where the voters in poorly performing regions actively seek and demand that they be addressed. I agree the Green New Deal you suggest should be part of that.
I grew up in the 1970s and was influenced by the “limits to growth”, Silent Spring and Schumacher’s Small is Beautiful. I joined the Then Ecology Party at a time it advanced leaving the then EEC. So sickoftaxdodgers I would describe myself as green, not left wing. Having spent a career as a tax investigator on both sides of the fence, gullible is not the descriptor, more like hard bitten and cynical in the ways of the financial world. Particularly where the democratic deficit in the EU and it’s manipulation by corporations is concerned. I appreciate the same is true for the UK government but we can boot them out and choose a different one if we collectively wish. I do not want to see a Rees Mogg type future anymore than you do and I want to retain the benefits of the single market and freedom of movement as far as can be decently negotiated but for me the principle of exercising power as locally as possible is key and if I am asked in a referendum if I want to leave the EU, the answer was and still would be Yes. By the way money is a tool, not the be all and end all. Too many people forget that. It should be used to alleviate any hardship suffered by those least able to look after themselves. Preferably at the community, not regional level.
Good point. The Economist plot (Exhibit 1) is using a different definition of ‘region’ for different countries which distorts their results, so may be it is not correct to claim that the UK is more unequal than the US, as the US data is at the level of States which are larger. However, it is harder to dispute say Exhibit 3 which suggests that Wales is below Portugal, whereas South East England is above Finland, although even here one could make claims about how PPP distorts the data. Still however you cut it, the regional differences are extreme in the UK.
…”may be this data does help explain why some people in these regions might not be so emthusiastic about the EU. ”
Poorer regions in the UK have been neglected since the 70s and never fully recovered, as you know. Lack of political will,both from Labour and from the Tories.
I live in Wales, which voted Leave overall.
As with the rest of the UK, larger towns, especially university towns like mine, voted Remain, but large areas of South Wales voted against their subsidies from the Regional Development Fund, which created and helped maintain infrastructures, local cultural, educational and leisure facilities. All these are now being cut.
As EU funding coming to Wales dries up, we’re now hearing a lot more about where they were coming from: not Westminster, from bloody Brussels would you believe! And we’re giving them the boot…Too late.
Why did we not inform people about where the money for their new by-pass, their new boxing club, their after-school sports clubs, their new sewage works, their beach cleaning projects, their sea defences, were coming from? I could go on…but why?
Why were people not properly informed?
In France, every project funded by the EU has a large publicity placard attached to it. Impossible not to know.
So who’s responsible for keeping our ignorance alive? And why?
Back to money and Westminster: Will they replace all these subsidies? Or better still, will they help Wales help itself in the longer term? The Sawnsea Bay tidal barrage and the rail electrification fiascos suggest they won’t.
Wales is Labour lead, not useful to Toryland. Even Labour look uninterested when they come here fishing for votes and quickly out again.
The Welsh press has been blowing Aston Martins trumpet, all good and well, but how are those marginal successes going to pull a whole region out of its poverty and make up for the huge loss of funding from the EU?
South Wales, and to a lesser extend some of North Wales, are to the rest of Wales a mirror image of what London & South East are to the rest of England. Divided country, divided regions, abandoned communities who struggle on with community solidarity and volunteers.
Skilled youngsters have to leave to find good jobs, leaving councils with less tax income to provide for the growing needs of an ageing local population.
And they voted to leave. Despite benefits from the EU.
The UK is in danger, not just because of disillusioned voters and divided regions.
Its unity is not secure. Its democracy is failing those who need protection from power grabbers.
We need a wake up call which doesn’t completely destroy this country.
I have spent a lot of great quality time holidaying in Wales and have always noted the small (but definitely there) hoardings self-consciously highlighting EU investment in the area.
Even the works being done at Derby Midland station at the moment have some EU funding as one of the hoardings is there telling anyone who is interested.
And that is the point. People these days spend a lot of time looking into their phones and devices at other things (because these devices make access to leisure activities more easy – betting, networking, film and video). Add in the outrageously right wing anti-EU press with a sprinkling of nationalism that has its foot in two world wars (which we apparently won all by ourselves – we were never invaded – giving us a false sense of superiority) and you have a perfect storm of ignorance and standoffishness about how the EU works.
I have always felt that our attitude to Europe was at odds with the benefits of membership. We seemed to be reluctant members for some reason.
I am not for an unquestioning membership of the EU but we are better off working within it to improve it rather than encouraging it to break up.
I know some major projects have those hoardings, but for local ones the signs are almost invisible.
Locals are the ones who need to be made aware. They vote, sometimes…
Today I was walking my dog on a cycle path which was partly EU funded.
The sign was tiny…locals use it daily for walking, cycling, it’s used by many tourists too, joining up with the Ceredigion Coastal path, also EU funded…ending up up the road in an EU funded very popular (famous even!) wildlife project, close to an EU funded forestry project…hardly any visible sign, if you ask people how we got the money for that they answer Council…really, desperately ignorant of what goes on to make tourism and local life more attractive and comfortable.
Schools should play a part in educating and informing, but many don’t.
Councils too, but they’re too inward looking.
As for the media…let’s not go there, it’s nearly the weekend and I need to relax.
Marie Thomas says:
…about the tiny EU funding signs….
And what would be the reaction if there were big signs? “Look at all the money ‘they’ waste with their great big signs 🙂
The stark statistical evidence is shocking, especially when it confirms what one had believed intuitively. There’s another ‘non-measurable’ factor which adds to the grief, and that is the quality of life. In many EU regions, whose per capita GDP may be lower than in a UK equivalent, the intrinsic quality of day to day life is actually better than in wealthier areas. In the UK quality of life is reflected disproportionately by wealth. It’s probably most evident in rural areas, especially in parts of France where incomes may be relatively low but the quality of life relatively high. But it’s also true of nations as a whole.
I appreciate that one’s judgement of life quality is to a large extent subjective (“If only I could get a decent cup of tea!”) but my personal experience of living on the Continent for many years is that you get better ‘cultural’ quality per unit of currency. At a basic level, food is better and cheaper. Deprivation in the UK seems starker and more depressing (I’ve also lived in post-industrial northern towns) which maybe was a contributory factor in the ‘Brexit’ result.
While certainly no fan of the ECB, my non-professional assessment is that since the early 70s successive UK governments undemocratically signed up to the neo-liberal Faustian Pact which has been remorselessly implemented across the board, with any significant opposition being successfully neutered by the wealthy élite (as per the above charts) in cahoots with American corporate giants and via its control of the MSM. Such wholesale capture of a nation’s soul didn’t occur to he same extent on the Continent. And this flies in the face of the Brexiteer’s mantra ‘let’s take back control’. I’d argue that the Dutch, Danish, Italians, Spanish and Romanians have a greater sense of their own culture than the average English person, which has been scarcely diluted – and maybe even enriched – by membership of the EU.
As I’ve yet to have a cup of coffee, I fear I haven’t expressed myself sufficiently clearly but I hope you get my general drift.
To be honest I would much rather see increased Government investment from within the UK than from an EU grant or at least a mixture of the two (maybe this happens).
But if the EU grant system stops, then who will invest in these areas? Relations in Ireland tell me that before the EU, Eire was ‘shite’ and then EU investment helped things along but Eire always had to be chasing the money or the grant regime because otherwise it remained ‘shite’. Why?
My response to any domestic government is just fucking invest will you? And if that is not your game, sod off and we’ll get some one in who gets it done. Honestly!
This comment obviously ignores the corrosive effect of the ECB and the poorly thought through Euro which should just be abandoned in my view.
Thank you so much Richard for shining a light on and providing analytical data for something we all instinctively know to be true but cannot possibly have imaging how extremely true.
Apart from Northern Ireland, which has a unique position regarding Brexit, there appears to be a clear regional correlation between high/low GDP and remain/leave voting. The Westminster establishment has played a blinder in the way it has deflected the anti-establishment sentiment onto the nearest available scapegoat. I try my best to hate the crime but not the criminal by my oh my is it hard.
This is what you get with de-industrialisation and the over financialisation of the economy.
But austerity and welfare reform is making these factors worse – much worse. I see it all around me and do not feel that far off from being subjected to it myself.
Damning is all I can say.
There has been a bit of furore over a certain high profile Tory’s children being subject to barracking by so called extremists over his links to the party doing this.
Although having a go at the kids is not my idea of promoting accountability for MP’s for cruel and bad policy, I like the principal that is being evoked – that is, making politicians confront the harm they are doing in some way so that they have to reconsider.
Exactly PSR. Left wing activists have a go at Rees Mogg and all hell breaks loose; condemnation from all sides in Westminster, ‘not fair to attack the man while his kids are there, blah , blah , blah’
Meanwhile, Mogg and his ilk have spent their political careers producing policies that have pushed millions into debt, fuel and food poverty, and ever increasing levels of desperation and suffering. And a fair percentage of these people are children. Where are the howls of indignation from Westminster about these children?
As far as I know the person ranting at Rees-Moggs children is not a left-wing activist.
We should devolve the budget for farm support to Local Authorities and fisheries ( if you have a port ) should be devolved too. Let LAs opt out of the NPPF, and LW rules and set their own, and set their own rules on the sin industries.
If for example Hartlepool landlords were permitted to offer smoking in non-food pubs, it would be a little liberal boost in the right direction.
Oh come on……
You know this will end in tears
Regulatory competition is always a race to the bottom
In your view regulatory competition is a race to the bottom, but to the bottom of what? From a supporter of Scottish independence, I find it strange that in a world of trade-offs, that you would choose a denial of local democracy, local freedoms and devolved powers as a regrettable loss and banning regulatory competition as a benefit.
I don’t deny anyone freedom
States do not compete
States owe each other a duty of mutual support
I suggest your micro approach cannot be translated to a macro requirement
What comes across strongly with the wide disparity of wealth in the UK is why on Earth the country’s citizens have allowed it. Obviously ignorance based on an under-performing educational system helps explain why the citizens have not used economic and monetary system knowledge to prevent but even worse is the lack of solidarity of will to do anything about it.
It would seem to me that if you asked the questions “given the choice would you have preferred to have been born than not and why” a majority would agree with the proposition they’d prefer having life to experience love and caregiving not just because of the opportunity for material well-being. Such a result contradicts why they can’t make the connection in life that free market capitalism has a major flaw in that it doesn’t do well in encompassing love and caregiving as one of its drives. Here’s Marx and Keynes indirectly picking up on this:-
https://larspsyll.wordpress.com/2018/02/19/marx-and-keynes-on-the-contradictions-of-capitalism/
There are also a lot of powerful, rich, and on some measure clever people intent on persuading the public that the “other” people (be that people on benefits, public sector workers, immigrants, people living in the regions) are lazy/leeching off the state etc. etc.
History shows that if you have control over enough of the information that people receive you can make them believe/do almost anything.
I think people have allowed it to get to this state because of a lack of common knowledge and trust.
A person might think change is necessary, but without knowing that everyone else, or a sufficient number of people, also want change then it is too risky to take action.
More importantly you must trust those other people enough that you do not think they are lying if they say or indicate they support change. Or that they are only supporting change now because it might benefit them, but once they have taken their piece of pie they will turn on you.
Hand in hand with that is a breakdown in trust.
I am in my late 20s, and I have never experienced a Britain where the state, and all large institutions, along with the population at large, do not appear to be , on the whole, manipulaive liars out to screw over everyone and everything for purely selfish gain or ideological zealotry.
Further than that, it I don’t physically know you then I do not, will not, and can not trust you. Now or ever.
And even if I do know you, trust is not certain.
My experience to date has taught me that people in this country simply cannot be trusted, especially those in institutional middle class positions.
I cannot dispell the lingering feeling that any advocated positons, even with evidence and reason behind them, are intended to somehow screw me and other people over for personal or ideological benefit.
My feelings of this kind are turned up to 11 whenever any government policy is announced, whenever a politician or MP takes a position. Whenever the civil service, or the ONS, states facts (“are they presenting these facts so as to benefit themselves?”). Whenever a friend makes a post on social media, etc.
I will gladly help people I know in person, where there are real consequences to lying and manipulating me, but otherwise no I am not prepared to help strangers for I do not trust them to not be manipulating me for their advantage.
Any solution to the UKs problems cannot require widespread social trust, for it does not exist anymore.
I’m really sorry for this huge dose of negativity!
I know the people I do trust are pretty good.
Positive things are happening somewhere, it’s very unlikely that they aren’t.
I just don’t trust society at large.
I voted Leave in 1975 as my boss had an economics degree and told me that in joining the Common Market we would see production move towards the main market. He was Tory and ended up voting Remain.
I don’t suppose it’s coincidence that the top three in the GDP bar chart are all tax haven centres.
“I don’t suppose it’s coincidence that the top three in the GDP bar chart are all tax haven centres”
Quite. In fact you could say the top 4 – wasn’t one of the common tax avoidance strategies called Dutch with an Irish sandwich or something like that?
I would argue Schofield that they have not ‘allowed it’.
Voters have been enabled to enable this state of affairs in part because they have been allowed to take on more debt (replacing shrinking income) in the mistaken belief that the expensive cars and houses that they buy on credit indicate that they are wealthy and are doing well.
@ Pilgrim Slight Return
“Voters have been enabled to enable this state of affairs in part because they have been allowed to take on more debt (replacing shrinking income) in the mistaken belief that the expensive cars and houses that they buy on credit indicate that they are wealthy and are doing well.”
That’s still a naive under-educated approach to life. It reveals a mentality that fails to have a clear grasp that having to go into such high levels of personal or family debt is indicative of a faulty society both psychologically and economically.
It is faulty thinking Schofield – no doubt about it.
But as Richard has suggested – we are sold the products, sold the dreams with them and then sold the finance!
People do not stand a chance if their wages shrink but debt is the way offers a way to keep up.
Yes this is a weakness. But it is also being exploited. There are two sides to this coin.
And we have a capitalism that has worked out that if it pays less wages and then makes up the reduction in offering credit, it makes more profit!!
Which is why it will deliver another crisis
The points raised by Tom and Philip Espin usefully illuminate the degree to which the activities of Britain, only for example (but it possesses probably the largest number of tax-haven dependencies in the world; wich is not an accidental acquisition); does not demonstrate the operation of an open, free-market economy, but the distortions necessarily the product tax-haven driven globalisation imposes on a delbiberately mangled faux-market economy by neoliberal politicians.
Re the UK as a tax haven – I was gobsmacked to read a post on Progressive Pulse recently that stated that the UK tax code is 17,000 pages long!
The following article in the Guardian may have been a source for this statement:
https://www.theguardian.com/commentisfree/2015/feb/13/britain-tax-code-17000-pages-long-dog-whistle-very-rich
I wonder how much the code could be pared down by the sort of reforms that Richard promotes, as the complexity can only assist tax avoiders?
Most of the complexity is to beat Rac avoiders
Onc it is created most of ur never has to be used
I did some research once that showed 40% of legislation was solely for this reason
My own research suggested 43% and so is supportive of yours.
There are older works that reveal north v south issues in the UK, just another case of nothing ever getting done. I had a few years on the regional development circuit and it was stacked with unusually odd bureaucrats and people peddling Michael Porter with no idea his ideas had largely been debunked. Various EU schemes were largely useless other than in temporary relief. Arguments over whether to use ‘Northwest England’ or ‘England’s Northwest’ on brochures were about the level.
The answer since I can remember has been to move to a green economy. The problem is always that money is fundamentally misunderstood and largely left in the hands of a parasitic mechanism. There have been alternatives since Veblen and Soddy (around 1910 on). I can only conclude there is a very large apparatus protecting the “no change” politics.