The real questions that need to be answered are these:
a) Why is Australia’s population so heavily concentrated in the state and territory capitals?
b) Why has this settlement pattern persisted (and intensified) over time despite the acknowledged high costs of the state and territory capitals and despite widely changing economic circumstances which might have been expected to see a move in the opposite direction?
c) why have towns like Newcastle, Townsville or Mackay – which serve prosperous hinterlands – never grown into major metropolises? People go on and on and on about releasing peri-capital land . . . as if that were the only land there is. But there’s a million square kilometres of land – much of it surrounding viable towns serving prosperous hinterlands – that doesn’t attract settlement. WHY?
d) why are similar patterns of capital city dominance seen in places like London, but not in the United States?
These question may be readily answered by considering the role of the political capitals as “positional goods”.
Under the Westminster system of “elective dictatorship” the Cabinet has a monopoly on executive and legislative power. Consequently, the Cabinet is the fountainhead of rents. Anyone aspiring to be a primary rent-seeker needs to live within “lunching distance” of the Cabinet. Secondary rent-seekers need to live within proximity of the primaries. Tertiary rent-seekers need to live within proximity of the secondaries.
And so it grows outwards like the layers of an onion centred on the Cabinet.
In the post-war era, Melbourne grew under the system of government-imposed tariff protection which taxed competitive industries and regions in order to subsidise the influential industries close to the (then politically dominant) Melbourne Establishment.
Likewise Sydney has grown and is currently sustained by the convoluted and needlessly expensive system of compulsory private superannuation which effectively acts as industry protection for the finance industry.
Brisbane and Perth have grown and are sustained by their ability to collect mining royalties from the internationally competitive territories which they govern. (At least until the Abbott government centralises mineral royalties in order to buy votes in the bigger voting blocs of Sydney and Melbourne.)
All of the capitals extract rents through such policies as fuel tax which act as a “distance tax” on those who live far from the metropolis. (Note how much lower fuel taxes are in the United States, where capital-city dominance is limited by constitutional separation of Legislature and Executive.)
On the other side of the ledger, spending is concentrated in the political capitals, not only in Australia, but in other Westminster system regimes.
For example London is the largest per capita recipient of government spending in the England, the second largest per capita recipient of government spending in the UK (after Northern Ireland), and the largest per capita recipient of spending (excluding social protection and agriculture) in the UK.
It is hardly surprisingly that the political capitals spend money predominantly on themselves.
I am not suggesting that Australian capital cities exist only as positional goods for those seeking access to government-directed rents.
But to the extent that capital cities are positional goods, attempts to increase the supply of access may ultimately prove futile. It is impossible to increase the supply of a positional good.
Especially around the quasi-national capital of Sydney, releasing peri-capital land may simply draw in more people from the other state and territory capitals as they seek to be closer to the rents which the Abbott/Hockey team are determined to pump into their home city.
The positional good theory suggests three quite different policies to address the problem, all of them aimed at reducing the underlying rent-seeking:
a) reducing the rent-seeking power of the Executive through the constitutional separation of Legislature and Executive;
b) reducing the rent-seeking power of Legislature and Executive through the introduction of Democracy (referred to by some as “direct democracy”); and
c) reducing the extent of rent-seeking power by government in general through devolution of political power, both from the central government to the states and through division of the states into smaller autonomous cantons.
Simple it is cheaper to run the system for the government. And we have never had a war that has seen our major cities bombed. So the more condensed our cities are the cheaper they are to run for the government. Peter :pop:
You already regaled us with this unattributed plagiarisation of Saul Eslake on 4th September.
How many more times are you going to do it? Every 4th day of the month until the end of time?
I think that unattributed copy/pastes should be deleted. Most people manage to include a link to the original and a line or two of commentary and that works well.
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