Sunday, 11 August 2013

Global Cities and Regional Crises. London and Scottish independence

London is a Global City. With New York and Tokyo it is one of the top ranked global cities of the world. At a lower level we probably have Frankfurt, Hong Kong, Paris and a few others. Decisions, social, cultural, political and, especially, economic taken in top global cities are truly global in their effects. They house the real levers of international power.

Having a global city as its capital can bring massive economic benefits to a country in terms of international trade and in attracting international investment and events, and looking in particular at London it is clear that the power of the global city contributes massively to the economic growth and performance of the economy of the United Kingdom. The City of London generates enormous wealth and its contribution to the U.K.'s Gross National Product cannot be overstated.

This means that in national terms the U.K. can be seen as one of the richest countries in the world despite its relative lack of geographic area. It can, and does, demand a seat on the United Nations security council and a variety of other world institutions. Having a successful global city as its capital helps the U.K. punch well above its weight in the world. The result of that is that the U.K. has to fulfil a role in world events and that means becoming involved on a regular basis in the internal affairs of other nations as an international policeman or 'peacekeeper' or some other modern type of colonialism in order to maintain its position as a global power led by a global city.

The real problem, however, of having a global city as the capital city of the U.K. is that, although global cities reside geographically in the countries that they lead, they exist more in another notional country where the only relationships which matter are those relationships with other global cities. Rather than being involved with other parts of the country London has a stronger relationship with New York and Tokyo than it has with Glasgow or Sheffield, Newcastle or Birmingham. Trillions of Dollars are sent whizzing around the globe in milliseconds between London, Tokyo and New York to generate wealth for those cities, but very little of that wealth finds its way out of those cities and into the real wealth creating areas of their respective countries. They are like black holes sucking in wealth and power of which practically none escapes further than the distance of the daily commute to the institutions of wealth and power.

So we end up with travesties like the London Olympics where billions of pounds were raised from the whole country from taxation and lottery funding and poured into the most affluent area of the country. The billions of pounds of returns which we were led to expect, if it eventually materialises will remain with the south east of the country. It will not escape back into the economy of the whole U.K. but it will be traded with New York and Tokyo to generate more wealth for the global city.
Similarly, the high speed rail project which is supposed to increase the flow of wealth to the north will only serve to suck wealth and investment into London, because given the choice, and if it is within easy travelling distance, business in search of higher profits will not re-locate out of a global city, it will re-locate to where the money and the market is. The cities of Manchester and Birmingham are in danger of becoming dormitories for workers who service the bee hive but can no longer afford to live in London.

It ends up in a situation where the south east of the country, in relative affluence, have little or no real understanding of the problems and situation of the other regions. They fail to see the problem because they don't have the problem of poverty and deprivation experienced by those unfortunate enough to live north of the Watford Gap. London has 281,000 millionaires (and it's been said that one in seventeen Londoners is a Dollar millionaire) while 34% of Glasgow primary school children receive free school meals and that tells its own story.

The conclusion is reasonably clear. Scotland would not be deprived of the wonderful economic benefits of the U.K. in the event of independence. They receive very little of the benefit of the sparkling economic performance of the economy of the south east at present and there is no real reason to believe that the black hole of the global city of London will surrender up any of its wealth any time in the near future. That's not how global cities work. Global cities make nothing but money. They trade currency back and forward between themselves and believe that the value of their currency assets is the price the last person paid for them. Until the bubble bursts and the last fool in the chain has to come cap in hand to the rest of the country to bail them out by increasing tax (but never on the rich) and cutting benefits for the vulnerable they have created.

Global cities are only good for themselves and other global cities. For the rest of the country that they occupy geographically they are a curse. A real economy can only be sustained in the long term by real people producing real goods and services in the real world, not in the cyber-world of the global city.

The other regions of England can do little about it because as soon as their representatives are elected into position they are absorbed into the London Parliament and sucked into the black hole to become part of the grand conspiracy. But Scotland can escape, so I'll take my chance on government from Edinburgh.

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