Raising the volume on poverty and inequality in cities

On the back of an ever increasing devolution of powers, cities are getting a good press. A buzzy narrative portrays them as beacons of innovation, creativity and general wellbeing. However, there is a less indulgently supported and quieter story, in which the same cities are also crucibles of poverty and inequality.

Poverty and inequality sit uneasily alongside this positive city ‘boosterist’ narrative. In the global competitive battle to retain and gain capital investment and attract incoming talented people (‘creative class’),  poverty and rising inequality are a hard sell! They are inconvenient truths – to be avoided in the global beauty show.

This is regrettable, but understandable, given the pressures cities are under to attract investment and the best talent. After all from Bishtek to Bangkok to Birmingham, this is the game to be played.

Amid the buzzy narrative around cities, we must

question the ‘progress’ of agglomeration being advocated.

What is less excusable are the domestic urban policy drivers, which pay scant regard to poverty and inequality. Take the dominant policy emphasis on ‘agglomeration economics’. Its appeal is its singular focus on economic growth, in which networks of policymakers, companies, consumers are seen as the essential elements to the innovative stimulation of economic growth.

Agglomeration economics has become the dominant frame for much city economic policy.  It follows a long line of economic policy which views growth as of much higher importance than that of inequality and the distribution of that growth.

In agglomeration policy, diversity and size are vital ingredients. That is why there has been so much focus on the larger cities and successful areas where the potential for even greater economic growth can be readily realised. Poorer people and places are seen as benefiting either through trickle down in wealth through jobs or a ‘trickle outwards’ of wealth toward any outlying (and poorer) areas of the city and neighbouring towns. However, this is assumed, and not actively planned for, as agglomeration is not about directly alleviating poverty or tackling inequality.

Instead, agglomeration policy is about investing in supply side items such as training and cultural vibrancy with the aim of creating the context for advancing economic growth in areas which already have growth or where the pre-existing inputs are untapped. There is little consideration as to the quality of the growth, the job opportunities it creates and how wealth is distributed. For agglomeration the focus is not on deep rooted spatial inequalities. Quite the reverse, they see place ‘losers’ as the inevitable price to pay for the higher order importance of winning on opportunities, economic growth and global competitiveness.

However, the distribution of income and wealth is not just a social issue. It is also an issue for economic growth. Indeed, recent OECD research has shown that more equal societies do better economically in terms of innovation and social mobility. As such, a growth in income inequality and spatial imbalances are wasteful and socially destabilising. They are a constraint on growth, not least because poorer members of a community are less able to invest in their education and skills.

Amid the buzzy narrative around cities, then, we must question the ‘progress’ of agglomeration which is being advocated. We must create more wealth from within an economy, with less reliance on trickle down. Growth from within needs more activist policy which harnesses the potential of the public, business and social economy.

As devolution grows, the making of a truly progressive city political economy, must not hone in on spatially blind wealth creation and turn its back on poverty and a new geography of inequality. Instead we need a city devolution which works with wealth creation to actively confront it.

• For related ideas, see CLES’ work on Local double dividend: securing social and economic success and A manifesto for local economies.