The Origin of Populist Surges Everywhere
Consider the following three maps at the county level in the United States that show:
- Change in the intensity of Republican and Democrat voting in the 2012 presidential election as compared with the 2004 presidential election
- Overdose death rates mostly from opioids
- Rates of firearm suicide
The question is, which is which?
Here they are again, with legends and sources:
Death by Overdose
Firearm Suicide Rate
Change in the Intensity of Republican / Democrat Voting
As you can see, with exception of the “Sun Corridor” and the Gulf Coast, the blue regions in the above maps correspond pretty much directly to US “megaregions” — the country’s major agglomerations of cities:
What does this mean?
We are indeed in a world where the rich get richer. But it is the fact that rich cities are getting richer that matters most (also see this); that rich people are getting richer follows from that. (More on the centrality of land ownership and real estate values in driving inequality here and here, and on the role of policy in the process here).
High land rents in San Francisco, New York, Boston, and the like don’t just reduce economic mobility in those cities; they also reduce geographical mobility across cities — which has implications for the country as a whole.
The “rise of populism” is in fact the latest chapter in a mistakenly framed battle of city versus rural. It is ultimately the consequence of two inexorable trends that are driving change globally:
- Continuing urbanization driven by the power of super-linear scaling (read about that here … it’s important)
- Population decline in rural areas and remote places and population aging throughout the advanced industrialized world, with first-order impacts on the macroeconomy, ref. my book with Joon Yun (conversations with whom helped inspire this post), this excellent collection from the Wall Street Journal, and this piece on the recent case of Puerto Rico. (Related: Negative bond yields anyone? Also this.)
To get a sense for the importance of population decline in the current political dynamic in the United States, compare these two maps of population growth/decline at the county level in the United States between 2002–2003 and, subsequently, 2012–2013:
Population Growth/Decline 2002–2003
Population Growth/Decline 2012–2013
(An animation of this change is accessible here )
The purple areas in the maps above are experiencing a loss of population.
Look at Ohio, West Virginia, Illinois, and Western Pennsylvania.
Compare with the maps above of diseases of despair.
Then ask: What is the source of the rise of populism? Rural places are losing — not just jobs, but people. People in rural, remote places are the “they”. “They” are angry because they are, disproportionately, suffering, and dying, from diseases of despair.
The city-rural divide is core driver of political outcomes (more here and here).
Also Bernie: With Massachussetts as a microcosm, the same city vs. rural phenomenon is manifest:
This is not just a US phenomenon. The same is true for England (leaving aside Scotland and Northern Ireland, which had different motivations). Here is the Brexit voting map, courtesy of the New York Times:
Central London and major cities in England voted strongly to “Remain”. Rural areas voted strongly to “Leave”. The suburbs decided the contest. (Scotland, Wales, and Northern Ireland are a different story, of course.)
Also Turkey (Erdoğan’s AKP is the dark blue; the non-Erdoğan-voting region in the middle of the country is Ankara, the capital city; like the North of the U.K, the East of Turkey is driven by a different political dynamic than the rest of the country, courtesy Brookings):
More on populist surges in Turkey here.
Also Japan: “Parties again failing in plans to promote decentralization”:
“With Tokyo alone growing in population while depopulation continues in the provinces, reviewing the relationship between the capital and the rest of the nation is an urgent task.”
Yes, the population of the United States is 80% “urban.” However, “urban” incorporates suburban. Cities vote Democrat. Rural areas vote Republican. Suburban decides the outcome.
The Origin of Populist Surges Within Cities
With regard to the relationship between technological advance and inequality within cities, the economist who first got the story right was Henry George. Anticipating by 150 years the theories of famed urbanist Jane Jacobs and the work on super-linear scaling at the Santa Fe Institute to which I referred above, George asserted in Progress and Poverty that increasing population density — not, as Malthus famously and wrongly claimed, population decline — was the source of increased prosperity in human societies:
Wealth is greatest where population is densest; that the production of wealth to a given amount of labor increases as population increases.
However, while population growth and increased density naturally bring with them increases in prosperity, they also, just as naturally, bring with them increasing inequality and poverty. Why? Because the fruits of labor are inevitably captured by the owners of land.
That increasing productive power [of industry] does not add to the reward of labor is not because of competition, but because competition is one-sided,” George writes. “Land, without which there can be no production, is monopolized, and the competition of producers for its use forces wages to a minimum and gives all the advantage of increasing productive power to land owners, in higher rents and increased land values.”
(The game Monopoly® originated as an attempt by one follower of George to convey these insights.)
The disproportionate capture of the value created in cities by the owners of land, as predicted by George, is exactly what recent analyses of the data from Thomas Piketty’s influential opus, Capital in the Twentieth Century, have shown to have occurred in the past 2–3 decades (ref. again here, here, and here).
Here is what the populists are sadly getting wrong: While cities and rural areas are — and have long been — politically competitive, they are in fact economically complementary. This was a core point made by Jane Jacobs. And this is also why a generalization of “farm-to-table” business models to every sector of the economy is on my own list of key solution pathways to increase economic inclusion in the digital age. The fates of rural areas are inexorably tied to the strength of the nearest major cities.
As a consequence — possibly counter-intuitively given the foregoing — the key for the any country’s prosperity is to accelerate and build upon the success of cities. This is what England has gotten wrong with Brexit, sadly. But London will endure, and thrive into the future, as it has in the past — just along a potentially different pathway, if a course correction does not come soon.
Cities are humanity’s greatest invention. They are platforms on which we share, create, exchange. They benefit from density. Returns accrue disproportionately to owners of land. This causes inequality and invites a backlash. Yet the fundamentals of value creation in human society are not going to change any time soon. Achieving inclusive prosperity requires working with, not against, those fundamentals.
Read The Origin of Populist Surges, Part II. Comments and observations invited.
My Econtalk discussion with Russ Roberts on the rise of populism.
My new book: The Code Economy: A Forty-Thousand-Year History.
My TEDx talk on the future of work: Eye Contact Can’t be Automated.
