Regional divergence, growing again

[dspp]

thanks to John Kemp Reuters for this Paul Krugman piece, which is just as relevant to EU or CN:

https://www.gc.cuny.edu/CUNY_GC/media/L ... sition.pdf

1. The regional divergence we’ve seen since around 1980 probably isn’t trivial or transient.
Instead, it reflects a shift in the underlying logic of regional growth — the kind of shift
that theories of economic geography predict will happen now and then, when the
balance between forces of agglomeration and those of dispersion crosses a tipping
point.
2. This isn’t the first time this kind of transition has happened. In fact, it’s the third such
shift in the history of the U.S. economy, which went through earlier eras of both
regional divergence and regional convergence.
3. There are pretty good although not ironclad arguments for “place-based” policies to
limit regional divergence. It’s important to realize, however, that the U.S. system
already provides huge de facto subsidies to lagging regions. The fact that we’re
diverging anyway suggests that the economic forces at work are quite powerful.

I would suggest that the trend he is picking out will intensify as knowledge cluster forces are reinforced by increased movement costs in a energy transitioning world. Just as I think he correctly identifies the rail to automotive shift, but overlooks the electrification aspect that ran alongside automotive.

- dspp

[odysseus2000]

Kind of interesting, especially the charts showing how the republicans are now the party of the less well off & the democrats the better off. Similar things are emerging in the UK with the rise of the liberals and I wonder if the increase in personal wealth is the dagger at the heart of the Labour Party. We seem to be heading towards a whigs v tories political divide in the uk like the 19th century when the voters, most had no votes, were well off.

What I think he has missed completely is the rise of AI which effectively even in its current state is beginning to create centres of wealth wherever there happens to be an entrepreneur including some very expensive places like e.g. New York (Adafruit), Nevada & California (Tesla & space X) & in our capital some of Lord Sugar's apprentices. It seems less important what the overheads are & more important to have ideas & some funding that allows the use of sophisticated tools to create wealth with out the many skilled & expensive folk that were once essential for any business.

It looks to me like the limits to growth are back to the number of entrepreneurs as was the original case and much less location & capital as was the case since the development of machines & the need for many skilled folk to service them.

Regards,