Monday, 18 July 2011
London - The Great Wen Revisited
Last Friday, John Redwood in his blog under “Central London Is Booming” wrote that escaping from the Westminster Oflag IV-C and looking around its hinterland of Central London he noticed how many people were there and evidently spending money. He contrasted this with the situation on many UK High Streets and how London seemed to be booming whereas beyond it is not the same.
All that glisters is not gold as The Bard said, who knew both London and the country. Many commentators visiting London during the 18th and 19th Century had a lot to say about its riches, style, spending and splendour. But we know that the reality for the majority of people in London, including those who serviced and supported all this, was very different.
On Saturday as we made our way from Charing Cross, avoiding the plump rats by the rubbish bins on the platforms, past the hordes of blank faced tourists, many of whom are there on the cheap and on their credit cards, we considered all those low and minimum wage employees who were required to keep it going.
Skirting past some noisy Hen Parties, a recent feature of the streets, we thought about the high rate of unemployment, the “swamp” and gang run estates and that the money involved in propping up the activity was from unreliable sources and highly vulnerable to serious disruption for reasons beyond any UK control.
As for the shoppers, the bulk of the consumables they are buying are imported. The energy they consume and that is needed to transport them etc. is also largely imported. The places they stay in may well be foreign owned or financed.
Where most of the profits end up from all the spending is not in the UK, it goes elsewhere and there are slim pickings from the relevant company taxation. VAT may be payable on some of this spending, but only so long as people can and will spend.
Just how much is supported by effective subsidy from other parts of the UK is a matter of continuing debate. This largely depends on whether you look at the more obvious and direct movements of money or whether you factor in the indirect.
Given the centralized nature of so much of government, finance and other activity, this must be pulling a great deal of money in to a greater extent than it is going out.
All this is partly an explanation of the divergence between The Great Wen and the rest of the UK. The centralized government and its agencies and hangers on have so far distorted the structure of the UK economy to the financial advantage of London that necessarily this is the only place that as yet is riding the storm.
Wikipedia has an interesting entry on “Potemkin Villages”, the original story may be something of a myth but as the term is applied to Stalinist propaganda gains a great deal of truth about his regime.
So much of The Great Wen is now a shopping, party playground and entertainment attractions all designed to extract money and give little in return.
Rather like Redwood’s Westminster.