Monday, July 09, 2007

The UK’s North-South divide

In The Times today (9 July) Gary Duncan in his Economic View quotes an Ove Arup study which covered 1971-2004. Over the period, in the North of England 10,100 net jobs were created, whilst in the South the figure was 2.73million. The article is worth reading for its details into the appalling disparity in wealth between the two areas. He points out that some counter measures such as planting government jobs in the north are counterproductive as they drive wages up faster than regional productivity growth and undermine the area economically. He has three suggestions for reform, and the third is of particular interest. He says that corporate tax incentives must be introduced to make the overheated south less attractive.

The full answer can be found in Fred Harrison’s Ricardo’s Law. Taxation is indeed the answer but it is not just corporate tax that needs reform. Harrison clearly and thoroughly argues that the way we allow land value gains to accumulate privately without taxation is a scandal and is the root cause of the comparative poverty of the North. The solution was clearly spelt out by the economist Adam Smith in the late 1700’s. If you want to see the solutions to this problem in a very different way to almost every commentator in the popular media you must read Ricardo’s Law ( ). See also more about it on this BLOG for 5 Nov and 11 Nov 2006.

Poverty related to location is world-wide. Every nation is polarized into rich and poor areas and in the interests of fairness they would all respond to the solutions suggested by Harrison. For more on these themes see:

No comments: