How to make poor areas richer

many across the rich world are feeling the pinch and it's hitting hardest in its poorest regions it's almost like we're not meant to have those opportunities in countries like Britain and America Regional inequality is already ingrained now Rising prices are making it much worse in much of the world now Divergence is a fundamental fact although globalization benefited many in well-off countries large areas have been left in the Lurch for decades our political classes have no idea about the scale of the problem and it's not just those in declining places who stand to lose it costs the country a fortune every single year people Revolt in The Ballot Box and that starts to become extremely dangerous as the cost of living crisis bites how can Left Behind areas be made richer and just how big is the challenge putting in place the necessary investment is the work of decades [Music] foreign [Music] Middlesbrough the northeast of England local venue disgraceland is hosting a show by one of the Region's up-and-coming musicians shark s cause I inject the truth inside my body like a science game but this is about more than just music Shaq is hoping to change perceptions of an area that has been culturally underrepresented for decades Make Some Noise if you're having a good time [Applause] I do this for myself but more than anything I'd love to to change the perspective on on the area Middle School is a really important place because it represents working-class people Shaq's Hometown is a reluctant poster child for regional inequality in Britain the northeast of England has some of the highest poverty rates in the country in my life I've seen a lot of Injustice grown up here drugs and crime is prevalent you can get yourself in a lot of bother and you know there's people really struggling around here very different picture in the late 19th and early 20th centuries Middlesbrough was a Boom Town for steel making and shipping but in the last few decades all that's changed and the steel Works have been demolished all shut down all shut down once a Bowman steel challenge the northeast of this country is certainly one of those regions that suffered very badly a lot of heavy industry shipping if you go up to tyneside when those Industries left those places were very very badly hit and they never really recovered what I was told is you're not going to become wealthy in Middlesbrough unless you're a drug dealer or work offshore Middlesbrough is part of a problem that is particularly extensive in Britain one often oversimplified as a north-south divide half the country today in the UK is poorer than the poorest U.S states of Mississippi and West Virginia and has a quality of life which is about the same as Tennessee or Alabama at the same time half the country in the UK today has Prosperity standards of living which are about the same as Australia Austria Sweden Canada [Music] this dark divide is bad news for the country's economy and politics and Britain is far from the only country suffering in the rich world where income gaps between wealthy and poor regions have been on the rise for years countries which tend to be very centralized and top down in terms of governance what we see is that only certain parts of the country seem to really enjoy the benefits of prosperity and they tend to leave other parts of the country behind so how can countries with unhealthy Regional divides fix them well a good place to start is addressing the tendency towards over centralization Britain's system of government sees the capital give money to Regional cities and tell them how to spend it this presumption that the government knows best has seen London pull away from the regions deepening the economic divide control oh the kids are talking about consequences one person who knows the impact of a london-centric approach better than most is Andy Preston his family has lived in the Northeast for four generations and in 2019 he was elected mayor of Middlesbrough back in 2002 the government created a small number of of City Mayors mayors that would sit above a town or city a Borough in other words the role of Mayor is really visible now in politics visibility equals accountability and that's great for the residents they hold you to account but it's only a step we need to go much further to really make a difference Andy says local Mayors need more power to go with their profile how can you have somebody sat down in Westminster deciding what bus route should come in it's completely insane it's undemocratic we have lots of restrictions we need more autonomy more Devolution more power and crucially more money between the camps of Britain you know definitely not happening power without money can't do much listen we've got a crisis we've got a crisis in suicide rates we've got a crisis in addiction levels with a crisis in crime Mayors and councils need to be able to deal with this but so they need more power but they need a lot of new money foreign has announced a plan to move the treasury from London to the nearby town of Darlington but policies like this can seem like token gestures when making poor areas genuinely better off should arguably be everyone's concern if you live in Surrey or Southampton or Stockport you care about middlesbrough's crime rate and our underachievement at schools you care because it costs the country a fortune every single year the gap between rich and poor is of massive consequence to your wallet the countries trying to make poor regions wealthier giving these areas more executive powers and resources is a crucial first step but it isn't always a slam dunk if a region is given more power and it has bad policies or policies that don't work it can go into a downward spiral even faster than it would otherwise avoiding this Pitfall can be tricky but one European city offers a valuable lesson from a seismic moment in history [Music] the Breakthrough came last night as the first concrete block was removed by East German Workers in 1989 when the Berlin Wall came down Leipzig was a poor City part of communist East Germany throughout the 90s it was blighted by Rising unemployment and poor Public Services of Leipzig there are vacancies for more than 900 tram and bus drivers foreign but now Leipzig has turned a corner and for those like Michael Weichert who remember the old days it's been a dramatic period of change in versus Michael used to run a restaurant when the Wall came down he witnessed firsthand the transformation of the city's hospitality industry [Music] and its cultural Reawakening [Music] the key to changing the city's fortunes has been sustained investment over time particularly in local infrastructure [Music] such as Transport Systems this is foreign [Music] Germany took on Regional development as a kind of national priority when the two halves of Germany were reunited the unification of East and West Germany is a very good example of how you need to make serious scale and long-term investment decisions if you really are going to reduce inequalities between areas Germany has put around 2 trillion dollars into making reunification work and Leipzig has managed to slash its unemployment rate from over 20 to under 5 in two decades [Music] but while it and other East German cities might be on the up there's still a 26 wage gap between East and West Germany not even Germany's economy could sustain the level of investment needed to revive every poor area of the country [Music] Germany has decided that only large cities can be made economically dynamic in England it's been decided that even quite small towns can become sort of economic powerhouses I think Germany is probably more correct deciding which areas to try to rejuvenate demands making tough and sometimes unpopular choices but if some areas are left to fail it's important people aren't too parts of countries do simply fail the important thing I think is that entire regions must not decline there's got to be areas within those regions which are economically Dynamic where you know people from a failing Village or a failing small town can can move to and become productive [Music] one way to increase productivity in declining regions is to rethink the approach to education the Pittsburgh Steelers came away with their seventh AFC Championship the Pittsburgh Steelers are famous for wins on the field and off the field the city has a game plan for Success too Reinventing itself as roboburg by rewiring its universities for the future so basically the first thing is you can go back here this is called the circuit breaker at Carnegie Mellon University Ava Miller belongs to girls of Steel a robotics training program it's part of a blueprint to make Pittsburgh a flourishing hub for this technology if you're into robotics it's one of the things that can most help the world it's something that anyone could benefit from in recent times Pittsburgh's universities have focused on specializing in robotics and AI with the aim of creating a pool of graduates like Ava skilled in these sectors Pittsburgh is an exciting place to grow up a lot of my friends grandparents worked in the steel industry and it was a lot dirtier and it wasn't as Innovative as it is now Pittsburgh steel capital of the world stands as a symbol of the power generated along the Monongahela Pittsburgh is another city which built its fortunes on the steel industry only to see them reversed with the collapse of heavy industry in many parts of the rich world but today the growing pool of Robotics graduates are helping Pittsburgh to create a new cluster economy with over 100 robotics companies the city is beginning to Boom again over the last 30 years unemployment in Pittsburgh has fallen from eight percent to under 5 percent the partnership between the cities universities and businesses now offers plentiful job opportunities to graduates giving them good reason to stay put we produce more students than we actually have jobs for and so it's created this ready-made work pool for Innovative companies to expand and create the ecosystem that we have but creating a pool of Highly skilled graduates doesn't always mean they stay to benefit the area it can lead to a brain drain if you make a local population more skilled there is of course a danger that many of them will leave to get the sorts of jobs they want in other areas one way to manage this risk of brain drain is to make an area attractive to large companies and employers as Pittsburgh has done for some of the world's biggest tech companies Google it's an international brand that calls Pittsburgh home Apple has its eye on Pittsburgh Uber is totally pulling a kit from Knight Rider and introducing its self-driving cars to the streets of Pittsburgh although the arrival of large Prestige firms can price some residents out it's generally good news for struggling areas the incoming Champion companies have the heft in in many cases to not only hire lots of local people but also to train them and to influence the rest of the regions uh labor market from reskilling to power and resources there are various traditional ingredients for making deprived areas more appetizing and richer but with no reliable catch-all approach there's a growing hunger for new ideas so how about luring new residents not with a better job but a better life even when I told people we told them we're like we're with the tallest MP would be like where welcome to Tulsa Oklahoma now home to Jonathan and Haley who recently gave up the bright lights of Houston Texas to put down Roots here I honestly had never been to Oklahoma or even heard of Tulsa don't I think maybe through friends you know there's an episode in friends where Chandler has to go to Tulsa I think that's the extent of it Tulsa Oklahoma The Sooner State that's you know that was the reaction we get from it yeah and then we just found just come visit us and see it you have to come and the secret to getting Jonathan and Haley to migrate paying them the city is now rebranding itself as a honey pot for remote workers by offering them perks to move here a privately funded program called Tulsa remote Leo's new residence with ten thousand dollars worth of housing free workspaces and other incentives the idea is to attract people to the city like a hub attracts entrepreneurs let's go directly to creators right um and and let's invite them to collaborate we are now seven years uh into that business and I am back home in Tulsa because I love Tulsa the hope is that the Tulsa remote program will help kick-start a bigger transformation [Music] folks that haven't come through toaster mode they just themselves have come here because they've started to hear you know a buzz about something happening here it's a bold new idea for poor areas to make themselves richer and although the program only started in 2018 Tulsa remote says it's delivering bang for buck the Tulsa remote program has made a huge impact on the Tulsa economy we know that for every dollar that we've spent on that ten thousand dollar incentive there's been a near 14 return on investment to the city other places have followed Tulsa's lead in trying to change their fortunes by enticing new inhabitants with cash incentives over 80 cities in America now offer similar schemes but while it all sounds promising so far the share of America's population who have moved hasn't really changed since the pandemic my sense is that remote work though important is a secondary form of work and not a huge impact in most places whatever the methods it's clear that reinvigorating long neglected regions is an enormous challenge for wealthy countries in the current economic climate what's less apparent is the political will to take on that challenge and some say that's a big mistake for me the dangers inherent in allowing some places to fall behind isn't simply that it's morally wrong but it is also a waste of talent giving the same opportunities to people from around the country to achieve their full potential will be good for the national economy as a whole America and Britain have been all too aware of their Regional inequality problems for a long time and they continue to suffer the damaging political consequences of not fixing them a backlash which may yet get worse when people start to censor their pride in places being undervalued they themselves will start to react against the institutional systems that we have the Forgotten men and women of the United States are forgotten no more and in a democracy that is potentially a very dangerous thing to face we need to invest now in the things that will help bridge that gap between rich and poor because as that gets worse everybody pays [Music] hello I'm Tom standage Deputy editor at The Economist if you'd like to learn more about this topic click on the link opposite and if you'd like to watch more of our now and next series click on the other link thanks for watching and don't forget to subscribe

Channel: The Economist

Views: 444,216

Keywords: The Economist, Economist, Economist Films, Economist Videos, Politics, News, short-documentary, inequality, regional inequalities, regional inequality, britain inequality, us inequality, middlesbrough, tulsa oklahoma, pittsburgh, leveling up, poor areas in usa, most deprived areas in uk, poor areas in uk, regional development, economy, us economy, global economy, news, joe biden, united states of america

Id: 5Y5moVvzayc

Length: 19min 30sec (1170 seconds)

Published: Thu Jan 19 2023