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  • Brexit and the rise of the city-state

    Mike Walsh, Brexit and the rise of the city-state

    Britain’s fateful decision to leave the EU has been cast as a bitter split between young and old. It’s an old tune: selfish baby boomers squatting on the future, at the expense of the millennials. But what if the real conflict were not between generations but rather between the city and the countryside?

    Look closely and you will see a new pattern of discontent. Angry demagogues on both sides of the pond, are being empowered not just by an ageing population, but by the rage of voters in regions blindsided by globalization. City elites, with ties to big corporations and international finance, have been consistent winners in an age of porous borders. They don’t wake up each morning with a view of an abandoned steel factory or a mothballed manufacturing plant, and so struggle to understand why anyone would vote against an EU fast track lane for their weekend trip to St Tropez, or the ability to freely shuffle professionals from one corner office to another.

    Brexit is a perfect illustration of how city dwellers see the world differently.

    London was the main regions to vote overwhelmingly to stay within the EU, and now some think it should remain, even while the rest of the country splinters. Emboldened by city’s overwhelming support, Sadiq Khan, the new mayor, has already started campaigning for more tax-raising powers and control of public services. He won’t be the last leader of a super-city to ask for more independence. But will the 21st century drift to the city state be a force for greater productivity or just further instability?

    Cities are growing rapidly today, because scale matters. Unlike companies, the bigger cities get, the more productive and creative they become. Geoffrey West, a theoretical physicist, spent two years studying the underlying data of big cities. He discovered that the characteristics of cities could be reduced to equations. For example, if you knew the population of a particular area, you could accurately estimate its average income and the dimensions of its sewer system.

    As cities grow, they obey certain rules. Urban, social and economic phenomena become more intensive with city size. And most importantly, as West and his colleague Luis Bettencourt have argued, cities are social reactors. The more people who live in one place, the easier it is to facilitate human interactions, the exchange of ideas and creative collaborations.

    The trend to density is why cities, rather than countries, are becoming natural attachment points to the global network. It is also why innovation and investment decisions are being increasingly influenced by the interaction between cities and global companies, rather than the plodding regulation between countries and regional alliances.

    Left unchecked, the trend to urban ultra-density will only widen the gap between rich and poor. That is not a story that will end well, for anyone.

    Imagine a dystopian future of powerful city-states like London, New York, Tokyo and Shanghai, populated by the privileged, and protected by constant surveillance, high walls and swarms of AI drones. Freelance workers, necessary for jobs that cannot be automated by robots, will enter cities on daily or hourly visas, and be assigned tasks from their wearable devices. When they finish their assignments, they will be asked to leave. For just like Athens and Florence, the ancient city-states of old, only citizens have rights. And not everyone gets to be one.

    Avoiding this bleak outcome will require smart leadership and the ability to ensure a wider distribution of the benefits of globalisation. Although dinner party guests in tech hubs like San Francisco might enjoy debating the merits of providing a universal income, access to global opportunities may prove more effective than opportunistic compensation.

    Bringing rural and regional areas into the global arena will not be achieved with populist rhetoric, but rather with a more pragmatic playbook: investment in high speed transportation links, cheap connectivity and tax-free, regional business zones.

    Investing in development is harder than delivering a diatribe, and given the divisive nature of the current political environment, countering the rise of city-states may prove an impossible feat. After all, a poor and angry electorate is easier to manipulate than an educated, informed and enabled one.

    So, if you prefer, you might wish to simply upgrade your home security system and wait for this year’s annual purge.

    If you are interested in more of my ideas, you can stalk me on the Web. I spend 300 days a year travelling: researching markets, interviewing clever people, giving talks and looking for the future in the seeds of the present. Drop me a line if you would like me to speak at your next event.
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