Why Berlin is like a teenager: European capitals, and their effect on GDP per capita

Alexanderplatz, Berlin. Image: Getty.

Cities are real money spinners, the economic power houses of the world.

That’s all the more true when you look at capital cities. As well as national governments, they often house a country’s business elite as well. Many also have a panoply of history and culture for the tourists to come snap at, too. Throw in the fact they often have larger populations, and you’ll find that many capitals provide a significant share of their country’s GDP.

But how far do capitals dominate, economically? In an age where secessionists are getting uppity and despots are itching to start firing missiles, what would happen to countries if their respective capitals disappeared?

A study, conducted by the Cologne Institute for German Business (IWD), calculated the impact various countries would see on their GDP per capita if their capital cities and their inhabitants were suddenly removed. It found that the most severely affected – and therefore the most capital-centric – economies were Greece and Slovakia. If Athens and Bratislava suddenly eloped together, those states would be 19.8 per cent and 18.9 per cent poorer respectively.

At the other end of the scale lies Germany. If, perhaps inspired by the efforts of Scotland or Catalonia, Berlin were to secede, then German GDP per capita would actually increase by 0.2 per cent. Berlin is basically a teenager of a capital city, lacking the financial responsibility of supporting its neighbours.

The data in chart form. Image: Statista.

There are a number of reasons for the capital’s lack of productivity. One is the country’s federal system, which means Germany has many different economic centres. What’s more, Berlin was split in two until less than thirty years ago, by the Cold War and a big wall. Despite having come leaps and bounds since reunification (thanks in part to the burgeoning start-up scene fueled by Club Mate), it still has further to go.

Rome is close behind Berlin in the capitals-not-pulling-their-weight race: taking away the city’s economic contribution would leave Italians with 1.6 per cent less GDP per capita. The richest cities in Italy are its northern economic powerhouses, such as Turin and Milan.

London falls in the middle of IWD’s rankings. If the Brexit jitters got too much for the City and the bankers led cosmopolitan London into forming a city state, then the remaining Brits would suffer an 11.1 per cent hit in GDP per capita.

This is perhaps surprising, given the gulf between London and the UK’s other major cities. In Greater Manchester, Birmingham, Glasgow and Liverpool, GDP per inhabitant falls below the national average. London has considerable higher standards of living than all of those.

Given that, it’s perhaps little wonder that the otherness of London and Londoners has started to enter the political discourse, with phrases like “metropolitan elite” getting bandied about by politicians and populists alike. A number of attempts to correct the London/everywhere else imbalance have been made, through initiatives such as the Northern Powerhouse Project, but the progress is slow, to say the least.

Perhaps being less financially less responsible for the country is preferable. Ah Berlin, to be a teenager again.

You can read more about the study here, provided that you speak German.


What is to be done? Some modest suggestions on solving the NIMBY problem

Lovely, lovely houses. Image: Getty.

The thing about NIMBYism, right, is that there’s no downside to it. If you already own a decent size house, then the fact a city isn’t building enough homes to go round is probably no skin off your nose. Quite the opposite, in fact: you’ll actively benefit from higher house prices.

So it’s little wonder that campaigning against property development is a popular leisure activity among those looking forward to a long retirement (don’t Google it, it’ll only depress you). It’s sociable, it’s profitable, it only takes a few hours a week, and, best of all, it makes you feel righteous, like you’re doing something good. In those circumstances, who wouldn’t be a NIMBY?

To fight the scourge of NIMBYism, then, what we need to do is to rebalance the risks and rewards that its participants face. By increasing the costs of opposing new housebuilding, we can make sure that people only do it when said development is genuinely a horror worth fighting – rather than, say, something less than perfect that pops up a Tuesday afternoon when they don’t have much else on.

Here are some reasonable and sensible ideas for policies to make that happen.

A NIMBY licence, priced at, say, £150 a month. Anyone found practicing NIMBYism without a licence faces a fine of £5,000. Excellent revenue raiser for the Treasury.

Prison sentences for NIMBYs. Not all of them, obviously – we’re not barbarians – but if the planning process concludes that a development will be good for the community, then those who tried to prevent it should be seen as anti-social elements and treated accordingly.

A NIMBY lottery. All homeowners wishing to oppose a new development must enter their details into an official government lottery scheme. If their number comes up, then their house gets CPOed and redeveloped as flats. Turns NIMBYism into a form of Russian roulette, but with compulsory purchase orders instead of bullets.

This one is actually a huge range of different policies depending on what you make the odds. At one end of the scale, losing your house is pretty unlikely: you’d think twice, but you’re probably fine. At the other, basically everyone who opposes a scheme will lose their entire worldly wealth the moment it gets planning approval, so you’d have to be very, very sure it was bad before you even thought about sticking your head above the parapet. So the question is: do you feel lucky?

NIMBY shaming. There are tribal cultures where, when a member does something terrible, they never see them again. Never talk to them, never look at them, never acknowledge them in any way. To the tribe, this person is dead.

I’m just saying, it’s an option.

A NIMBY-specific bedroom tax. Oppose new housing development to your heart’s content, but be prepared to pay for any space you don’t need. I can’t think of any jokes here, now I’ve written it down I think this one’s genuinely quite sensible.

Capital punishment for NIMBYs. This one’s a bit on the extreme side, so to keep things reasonable it would only apply to those NIMBYs who believe in capital punishment for other sorts of crime. Fair’s far.

Pushing snails through their letter boxes. This probably won’t stop them, but it’d make me feel better. The snails, not so much.

Reformed property taxes, which tax increases in house prices, so discourage homeowners from treating them as effectively free money.

Sorry, I’m just being silly now, aren’t I?

Jonn Elledge is the editor of CityMetric. He is on Twitter as @jonnelledge and also has a Facebook page now for some reason.

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