Nick Shaxson ■ The myth of competitiveness: how to build a fairer city


London panorama

In recent years we’ve been talking a lot about ‘competitiveness’ from the perspective of whole nation states. There’s a whole lot of nonsense that’s talked on this subject, and a whole lot of unnecessary damage caused to economies in the name of ‘competitiveness. Our blog about Bono and Ireland a few days ago was just the latest in our thinking in this area. There’s a whole lot more on this issue here.

Now here’s a fascinating article from September, written by a group of UK academics. It’s fairly long, but if you’re interested in issues of national competitiveness (and you certainly should be, if you’re interested in tax justice) then it nicely complements and extends the work we’re doing. We’d generally agree with it.

Here’s a snippet:

“Our manifesto is about how the fairer city can be achieved by changing both the imaginary and the practice underlying economic and social policy. The central argument is that we can move towards a fairer city by reframing our problems and rethinking our solutions in two ways:

1. Break with the dominant old problem of the competitive city, which competes economically against other cities and sponsors internal competition for limited opportunities.

2. Stop fixating on redistributive policies which will not deliver fairness, and start thinking about reorganising policies which build a grounded economy in the areas which are not exposed to competition.

The global obsession of our age is competing everywhere with everyone for everything. In the mainstream imaginary, every city has to chase competitive success in a league table where it secures prosperity by getting ahead of others.”

And, by way of a sort of conclusion, they put forwards a positive agenda:

“The success of a city should not be measured externally by relative size and the ability to come first ahead of equals; rather, the measure should be a city’s internal ability to distribute mundane goods and services which ensure the civilised life of the largest number of its people.”

In short, in the modern discourse, the starting point is wrong.

And now, unusually, we’re going to highlight a long section of this article, because it all hangs together and says a lot. We agree with all except, perhaps with the phrasing of the few words in bold italics.

“Increasingly, the dreams of urban prosperity through competition have served to legitimate hugely costly – and publicly subsidised – spatial urban interventions in prestige redevelopment. Real-estate investments to keep the upper-middle classes in the city, to accommodate a growing army of international students and young service workers, to attract major corporates and financial service providers to business parks, to persuade the hypermobile cosmopolitan ‘creative class’ to nest locally.

The promises sounded fine because redevelopment projects always offer the prospect of a revitalised urban economy with more service jobs and taxes paid so that the poor and vulnerable gain. Take any report, website or paper: unfailingly, public investments in locations and areas frequented by the upper middle classes – campuses, museum quarters, central business districts – are being sold politically with the argument that the additional employment and tax revenues will ultimately reach the poor and vulnerable in socially disadvantaged neighbourhoods.

This was ironically called ‘trickle down geography’ in 2005 by the doyenne of critical economic geography, Doreen Massey. [TJN see Massey’s article for Tax Justice Focus, here]. After the intellectual (and sometimes actual) bankruptcy of the old-style industrial policies in the 1970s and 80s, after the broadside implementation of generic competition policies of neoliberal mercantilism in the form of wage moderation, product and consumer market liberalisation and labour market flexibilisation in the 1980s and 90s, the ‘trickle down geography’ of the new urbanists of the 1990s and 2000s provided national and local elites with a new tool that projected governmental vigour, and suggested win-win solutions all around: growth and equity, prosperity and sustainability, competitiveness and emancipation. Urban redevelopment with public sponsorship and private profit was industrial policy reinvented for new times.

And so, all our cities took a post-industrial turn and ended up looking increasingly alike. Each and every would-be international financial centre built its imitation of Canary Wharf, as in La Défense in Paris; cities with heritage invested in inner-city museum quarters, municipalities handed over derelict industrial areas and harbour fronts to private real-estate developers who have transformed them the world over into the same kinds of loft apartments and cafe bars while pocketing handsome returns; every municipality designates some shabby, upcoming areas for artists and/or digital hipsters; every city builds expensive light railways and metro-networks (which always exceed budget and rarely get the number of passengers planned); huge investments in multimodal railway stations promise to resuscitate blighted inner-city areas.

The punishments for cities which failed because they did not – or more realistically, could not – take the post-industrial turn were real enough. In a flat world where labour, knowledge and capital can move across space to where they generate their highest return, cities have to make sure they attract mobile production factors. If not, they end up with a wasted economic base and an overconcentration of the poor and vulnerable which could bankrupt any city: see the fate of Pittsburgh, Detroit or Liverpool. Nothing new there; capitalism has always moved on and blamed the people and places left behind. The shock is only that the left behind now include former centres of industrial prosperity.

But, more significantly, the rewards of success were elusive, narrowly socially distributed and (despite large-scale commitment of public resources) have never trickled down for a majority of citizens, who see no benefit from the success of their city – which is celebrated, not examined. The competition for mobile capital has transformed every would-be global city into a tax haven, eroding real and nominal tax rates, enhancing global wealth and income inequalities.

Taxes on households are further increased by the way in which big firms benefit from, but hardly contribute to, the maintenance and renewal of the material and immaterial infrastructures of our cities.

Similarly, the competition between national financial centres accelerated regulatory capture and contributed materially to lax regulation before the crisis. Again, the benefits were private and concentrated, while the costs were public and diffuse.”

The point about those words in bold is that we – and indeed, it seems, the authors: (this may merely have been slightly unfortunate phrasing?) – don’t think countries “have to” compete. There are, as the article shows, other ways.

We think that ‘competitiveness’ is a fascinating new lens through which to view the world. And it’s potentially of profound importance.  As UK tax barrister Jolyon Maugham asserted in the comments under one of his blogs this morning:

“Do they need to” compete is the question. The conventional view – the perception of Governments around the world – is that regimes need to be competitive. Prove that perception wrong and you’ve put policy making back into the hands of nation states.


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