Why do the Economist think other cities competing for exciting new firms is an example of “politicians causing harm”?
The Economist has a largely excellent article inspired by London’s Tech Week. It covers the usual bases: London is exciting, diverse, creative, in the right time zone and close to the world of finance. Here are some great examples of amazing businesses. The politicians are seriously pumped about being pictured next to the next WhatsApp. But there are problems: rising property costs, skills shortages, impatient capital, our dumb immigration system, and British companies not being long term.
I bet some diligent Googling could find those listed in any article any decade back to Queen Victoria. But they are still all accurate.
However, then the Economist says this:
“Politicians are causing harm in other ways, too. A bid to boost tech in other cities is diverting resources from London. “
So: Manchester, Cambridge, Leeds, Bristol, and a host of other places, all sensibly trying to attract great businesses too, and perhaps possessing some advantages London won’t have (a different set of universities, better property costs, perhaps better transport links at times …) are “causing harm” by doing so? We should keep the resources undiverted from London?
I can understand a model of harmful competition between regions. Cities in a zero-sum race throwing unnecessary subsidies and tax cuts at well connected firms. Competing exhibitions in Shanghai, rubbishing one another. But the aspiration to be a great place to grow isn’t in there. What we need is cities exactly like that. Showing favouritism to London (because that is where the PM has been wheeled out to cheer on Tech) is a clear sign of regional industrial policy gone wrong. It is what worried and irritated me in government when I saw a promotional drive to bring firms to the Capital risking turning into a set of distortionary policies to create a clear Downing St “win” in this sector.
You don’t have to possess the full satirical fury of Steve Bong to see this attitude as a problem. London has amazing qualities; it wins on its merits every time. A far bigger problem is cities away from the capital not being able to create the same growth enhancing buzz. When they do so, this isn’t “causing harm”.