Five reflections on ‘the revenge of places that don’t matter’

In our latest podcast, Professor Andres Rodriguez-Pose claims spatial inequality is the root cause of rising populism

One of the dominant narratives around the rise of populism is that it amounts to a backlash by globalisation’s ‘losers’ – individuals, communities and social groups that have felt the more malign effects of global free trade, such as job losses, depressed wages and insecure future prospects.

But what if actual places – and people’s ties to them – have shaped voting patterns far more than demographic or social factors? Should populist electoral reactions be understood as a form of collective, place-based ‘revenge’ by lagging-behind regions?

This is the argument put forward by Professor Andres Rodriguez-Pose of the London School of Economics in our latest City Talks podcast, drawing from his recent paper on the same theme. He points out that the outcome of the UK’s Brexit referendum, as well as the US and French elections of recent years, demonstrate a direct relationship between political and economic geography – with declining regions using the ballot box to say ‘enough is enough’.

You can listen to the podcast here – but as a taster, here are five key issues that underpin Rodriguez-Pose’s argument:

1. Populism has been driven more by middle-income people living in struggling localities, than by the poorest people in successful places

The idea that populism is primarily linked to economic geography is counter-intuitive to some economists, who insist that the focus needs to be on people rather than places and that the starkest inequalities can be found within places. The poorest people in New York City, for example, are poorer than those in Ohio or Wisconsin.

But, as Rodriguez-Pose argues, these poor people are not rising up (yet). Instead, the populist surge seems to be coming from middle-income people in places that have long been in relative decline. Surprisingly, the average voter for Trump in places like Ohio or Wisconsin was wealthier than the average voter for Clinton in those same places.

Until relatively recently, most of these people had jobs with a secure future and lived in places that had enjoyed a glorious past. But many such places have seen a decline in population, and residents have watched their children move out in search of opportunities or become increasingly dependent on welfare. Typically they’ve also witnessed the failure of regeneration policies and subsidies and defeated attempts to attract investment from other parts of the country.

In short, it might seem to these people that the places they call home – which they may have strong emotional, cultural and community ties to – have no future in a globalized world. These are precisely the sorts of places that Rodriguez-Pose defines as ‘the places that don’t matter’.

2. Agglomeration and density doesn’t necessarily drive growth – especially in places where regional inequality is at the heart of the problem

The current phase of global economic development strongly favours the influence of major cities. Policy makers seem to widely embrace the idea that, in a globalised world, density and economic agglomeration – a spatial concentration of activities, firms, people and assets – are what boost productivity, increase innovation, enhance dynamism and ultimately generate jobs and growth (a process outlined by Centre for Cities here).

For all its advantages, however, Rodriguez-Pose argues that agglomeration doesn’t necessarily guarantee growth, or that bigger, denser cities are always going to do well. Both in the developed and developing world, he points to places such as Mexico City or Berlin as examples of big cities where the benefits of agglomeration have not been felt. Indeed, in the UK, many of our biggest cities still lag behind the national average for productivity, skills and wages.

3. The strength of a city’s institutions matter more than its size and density

Sometimes size and density do matter, but what’s much more important is what you find inside a city. The following features are important: the endowment of human capital, the capacity of firms to innovate using skills, the strength of civil society, and the ability of local universities and busiensses to attract talent from all over the world. The above can be found in big cities, but also in relatively small cities.

In particular, Rodriguez-Pose argues that the effectiveness of local institutions in organising cities has a particularly strong influence on economic growth over the longer term – whether they are big or small places. In Nigeria, for example, most economic activity is concentrated in the biggest city, Lagos, which has a dense and growing population – but which is held back by high levels of corruption.

4. The places that ‘don’t matter’, do really matter, because they have untapped potential

The places that don’t matter have often been characterised as ‘rustbelts’ or ‘flyover states’, especially in the US. But Rodriguez-Pose argues that many of these places do really matter, because they have potential that is untapped. The problem is that sometimes growth takes longer to happen in these places – you have to dig deeper, and it’s more difficult to achieve.

Across most of Europe, Rodriguez-Pose suggests, many places have given up on true development policies in favor of government transfers and welfare. For example, over the last 50 years, the Italian state has spent significant amounts of money on subsidising the South, in the process destroying whatever economic fabric was there and making the society permanently aid-dependent. It’s no coincidence, he argues, that votes for the Five Star movement tends to be concentrated in the old geographical South.

5. Fixing populism means smarter, place-sensitive, regional development policies

The revenge of the places that don’t matter – as reflected in the rapid rise of populism – is a significant challenge to current economic and political systems. If they’re not addressed, Rodriguez-Pose argues that the territorial inequalities at the root of the problem are likely to increase, creating social, political and economic tensions, and they may possibly even spark conflict.

To avoid this, Rodriguez-Pose argues that we need smarter regional development policies. Together with his LSE colleague Professor Michael Storper, he is currently proposing a place-sensitive development solution for lagging and declining areas. This approach will attempt to ‘dynamise’ and make the most of the economic potential that exists in places, particularly in parts of northern England, the north-east of France and the South of Italy.

Going beyond the traditional dichotomy of people-based versus place-based development, Rodriguez-Pose and Storper identify groups of territories, cities and regions that share similar problems, and offer tailored solutions that empower local stakeholders to take greater control of their future. These solutions are grounded in theory and evidence-based, building on the success of past interventions.

Listen to the podcast to hear Professor Rodriguez-Pose outline his arguments in more detail.

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