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Periphery, migration & decline

by Metatone Fri Aug 14th, 2015 at 01:33:38 PM EST

So old-timers will recall that I've spent countless electrons worrying about the lack of thinking about how centralising forces in our modern economies creates regional wastelands.

At least in the context of the Euro, it seems Krugman has noticed the issue:

The Downside of Labor Mobility - The New York Times

So what have we learned? I'd say that we've learned that Kenen trumps Mundell -- that in the absence of effective fiscal integration, labor mobility makes a currency union worse, not better.

I've said this before, but it seems worth emphasizing again in the light of this FT report on Portugal's "perfect demographic storm." The debt crisis in Portugal, it turns out, looks alarmingly like the trigger for an economic death spiral: a depressed economy is leading to large-scale emigration of working age Portuguese (also lower fertility, although this will take longer to matter), undermining the tax base, making an exit from crisis even harder. It's not easy to see how this ends before you're left with a rump nation of old people with no resources to care for them.

Regional economies in the US are less vulnerable to this sort of thing, although our imperfect fiscal integration means that it can still happen to some degree: Puerto Rico is also in a sort of death spiral of emigration and fiscal stress, but the degree of hardship is much less thanks to the national safety net.

But the point is that the Single European Act, which was among other things supposed to prepare the ground for a shared currency, may actually have interacted with the failure to integrate fiscal matters in such a way as to create a whole new kind of catastrophe.

Your cheery euro-thought of the day.

Of course credit to Migeru and JakeS in particular who led the ET discussion on how government investment rules condemned periphery economies to a low productivity future. The crisis has accelerated migration to higher productivity/higher wage regions to the point where Krugman has noticed it - but the forces were there even pre-crisis...

I don't think this diary is well-written to spark discussion. I'm not sure where the question belongs...

Maybe it is:

Do we actually want to centralise the population of Europe?

(And along the way, centralise the population of each country around the biggest cities?)

And even if we do, is there a humane way to organise the transition?

by Metatone (metatone [a|t] gmail (dot) com) on Fri Aug 14th, 2015 at 01:35:12 PM EST
Can anyone offer a good reason why centralisation would lead to what we might consider as positive outcomes?

I used to be afew. I'm still not many.
by john_evans (john(dot)evans(dot)et(at)gmail(dot)com) on Fri Aug 14th, 2015 at 02:39:30 PM EST
[ Parent ]
To play Devil's avocado: Centralisation of Europe's population into a few megacities (Brit-City is already coming along nicely) will create a society where everybody is close to all services (except agriculture, which will be done by robots anyway).
by fjallstrom on Fri Aug 14th, 2015 at 03:22:11 PM EST
[ Parent ]
I knew that one was coming ;)

I used to be afew. I'm still not many.
by john_evans (john(dot)evans(dot)et(at)gmail(dot)com) on Fri Aug 14th, 2015 at 03:28:22 PM EST
[ Parent ]
I'm not instinctively for it, but I have heard reasonable arguments that properly planned centralisation is the easiest way to reduce overall resource (particularly water) consumption.
by Metatone (metatone [a|t] gmail (dot) com) on Sat Aug 15th, 2015 at 01:46:57 AM EST
[ Parent ]
The bugbear is in the "properly planned".

It is entirely possible to plan and build densified housing that hugely reduces energy and water use (wrt to the housing itself, and also transport, common services, etc). But this, insofar as it exists, is small-scale centralisation. Scaling it up to mass level would imply a totally different political, economic, and social organisation than the one we have and that is assumed to be at work in your diary, ie, unchecked Juggernaut liberal capitalism. Under which, btw, there is as much centrifugal movement (as soon as a household has enough means, it moves out into ex-rural suburbia or sunny vacation-land) as centripetal (impoverished outsiders are forced to move to poor-housing low-wages centres).

Consider, as a historical example, the English Enclosures: peasants forced off the land into industrial centres, the countryside gentrified.

I used to be afew. I'm still not many.

by john_evans (john(dot)evans(dot)et(at)gmail(dot)com) on Sat Aug 15th, 2015 at 03:17:11 AM EST
[ Parent ]
But as the poor are more numerous then the rich - and growing more so under present managment - the net transfer is into the cities.
by fjallstrom on Sat Aug 15th, 2015 at 06:40:30 AM EST
[ Parent ]
But the rich take up much more place.

We get a concentration in few metropolises - but with a lot of sprawl.

by IM on Sat Aug 15th, 2015 at 06:54:00 AM EST
[ Parent ]
Lower ecological foot print, far better environment for cultural and economic network effects. Cities are richer while consuming fewer physical resources.

But in order for that to work as deliberate policy, you can't just move the young, you ought to move everyone, because while urbanization tends to work out well for the urban, being the grandparent left behind to live on remittances in emptying cities? Not so nice.

by Thomas on Thu Aug 20th, 2015 at 10:09:30 AM EST
[ Parent ]
Generally, cities are relatively not thrifty with resources (even per capita). Even infrastructure maintenance, waste managements are not peanuts. Cities are actually resource attractors, slurping from everywhere, likely consuming clear majority of most resources. Countryside depopulation is a sign that there is not much left to feast on for the periphery.
by das monde on Sun Aug 23rd, 2015 at 10:05:16 AM EST
[ Parent ]
Hell of a lot cheaper to manage urban infrastructure than spreading it out over rural areas.
by Colman (colman at eurotrib.com) on Mon Aug 24th, 2015 at 03:44:57 AM EST
[ Parent ]
We are talking about the Matrix then.
by das monde on Mon Aug 24th, 2015 at 04:46:42 AM EST
[ Parent ]
Actually, we're talking about feminists hooking men up as batteries to fuel their oppression machines. Definitely.
by Colman (colman at eurotrib.com) on Mon Aug 24th, 2015 at 07:00:31 AM EST
[ Parent ]
Always handy to sort out edgy, pedestrian scrub types, so to have peace for all serious people. Back to brutish, nasty times, 80-90% male differentiation.
by das monde on Mon Aug 24th, 2015 at 09:36:55 AM EST
[ Parent ]

They tried to assimilate me. They failed.
by THE Twank (yatta blah blah @ blah.com) on Mon Aug 24th, 2015 at 04:36:03 PM EST
[ Parent ]
Uhm.. people have been leaving the country side for the city for all of human history. It's emptying out because farmers have discovered contraception.
by Thomas on Mon Aug 24th, 2015 at 10:55:13 AM EST
[ Parent ]
The interesting part is not whether humans always were leaving countryside to the city, but variations of the process. The recent tempo of periphery depopulation in Eastern Europe would not be characteristic anywhere on a century scale. Check out the role of contraception there...
by das monde on Tue Aug 25th, 2015 at 05:32:42 AM EST
[ Parent ]
That would be a very interesting subject to study. Is it really greater than, for example, the post-WWII rural depopulation in France?

It is rightly acknowledged that people of faith have no monopoly of virtue - Queen Elizabeth II
by eurogreen on Fri Aug 28th, 2015 at 06:24:25 AM EST
[ Parent ]
But it doesn't need to be greater - it could be similar and still be a problem because we no longer that the post-WW2 political consensus that allowed us to build infrastructure and grow economies to address the strain of the migration.
by Metatone (metatone [a|t] gmail (dot) com) on Sat Aug 29th, 2015 at 07:27:54 AM EST
[ Parent ]
I'll move to the city when they clean the air to tolerable levels, until then I'd rather tighten my belt and breathe clean(er) air.
Yours in resistance to this sucking dry of the countryside to create urban housing bubbles and favelas.

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty
by melo (melometa4(at)gmail.com) on Fri Aug 14th, 2015 at 04:12:12 PM EST
It's not actually that difficult to engineer better micro climates. Green roofs, stringent particulate emission standards... None of what is needed is prohibitive in terms of cost - mostly it comes out in the wash with lower health care overhead - it just has to be done.
by Thomas on Thu Aug 20th, 2015 at 10:12:09 AM EST
[ Parent ]
This article takes up a slightly different viewpoint, that of migration both within and from outside the EU:

The exploitation of migrants has become our way of life | Felicity Lawrence | Comment is free | The Guardian

Equally dishonest is the myth that migration can be controlled, if only we had sharper razor wire, or more border dogs, or more deportations of illegal immigrants. As the Ministry of Defence's strategic trends programme makes clear, today's large-scale migrations are a historic force, just as those from rural areas to emerging cities were in the industrial revolution. They will increase in coming years as the global population grows, as the tectonic plates of superpower relations continue to shift, as the world's resources come under increasing pressure from our patterns of consumption - and as more and more people flee war, climate change and poverty. Our failure to curb emissions will bring the victims of our footprint to our door.

We are all interdependent. We have enjoyed the growth globalisation has brought to advanced economies, but we cannot escape its flip side. The Dover-Calais route, with its queues of holiday-makers and freight lorries is the perfect symbol of the contradictions inherent in the anti-immigration view. It wants the free movement of goods and capital, the ability for its own to come and go as they please, but it wants fortress Britain for everyone else.

There has been a lack of honesty on the left too. The flexible workforce was a mantra of the Labour years. While insisting that migration has been of overall benefit to the economy, Labour was slow to acknowledge that the benefit has flowed mostly to capital and the rich, and far too slow to articulate that at the microeconomic level some British groups have clearly have lost out. But to imagine now that the solution to these new global realities can be found by tacking to the right, or by turning back to the answers of the 1970s pre-globalisation is deluded.

I used to be afew. I'm still not many.
by john_evans (john(dot)evans(dot)et(at)gmail(dot)com) on Mon Aug 17th, 2015 at 02:04:52 AM EST
We may also being seeing an intensification of "lifecycle migration" were 20 somethngs migrate from the periphery to the centre in search of better employment/career opportunities only to return to (much cheaper) peripheral areas when they have made their money - to start small business or retire and raise their kids in a more congenial environment.  Many in the metropolitan areas also retire to the periphery in search of better weather or more affordable lifestyles.

I suspect the net migration of wealth is still to the metropolitan areas, but the demographic trend of an aging population will turn peripheral areas into giant retirement homes away from the hustle and bustle of metro life.

There will also be a huge concentration of political power in metro areas.  The 2 Million British expats in France and Spain will have almost no say in the UK Brexit debate.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Aug 17th, 2015 at 05:51:04 AM EST
The Irish solution to the centripetal forces of global capital is to compete with metropolitan centres on the basis of lower headline corporate tax rates  (although effective rates are often even lower in (e.g.) France, Holland and Luxembourg when all the tax breaks and dodges available to global corporations are taken into account.

Not only is this socially regressive, it accentuates the trend towards lower corporate tax rates globally. Additionally, as there is a finite amount of FDI available, it is not a strategy replicable to other peripheral states without greatly diluting the amount of FDI available to any one state.

In addition, such corporate tax breaks and dodges greatly advantage global players over smaller local companies which cannot avail of them as they are particularly targeted at attracting FDI by global corporates.

There are also huge centripetal forces within global corporates, with all strategic management, marketing and R&D activities concentrated in HQ in metropolitan centres for the convenience of Board members, if for no other rational reason. (The centralization of marketing functions usually degrades marketing performance in peripheral markets).  Smaller or regional companies are taken over, all their core functions are centralized with often only a token manufacturing presence remaining in the markets they serve.

Much of this is rationalized on the basis of economies of scale, the availability of specialized skilled work-forces, and proximity to transport and communications hubs. However the figures often don't really add up when the increased costs of operating in metropolitan centres are factored in.  Mostly its a plain power grab by central management keen to reduce local autonomy and to enforce a more uniform corporate culture.

This centralization within corporates is happening in a way almost completely hidden from local and national political cultures and processes which are powerless to prevent it. The residual national political structure within the EU are almost irrelevant to this process - serving mainly as useful idiots and scapegoats when the national economy of peripheral countries crumbles in direct consequence.

Ireland may not get away with its corporate headline tax rate competition strategy for much longer, but at the moment it is probably the main thing preventing the systematic asset stripping of Ireland of it's human and natural resources a la Greece and Portugal.

Index of Frank's Diaries

by Frank Schnittger (mail Frankschnittger at hot male dotty communists) on Mon Aug 17th, 2015 at 07:07:26 AM EST

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