Rural Vs Urban Discontents Deconstructed

When I was a kid I read the story of “Town Mouse and Country Mouse”, in which cousins visit each other and much is made of their dining together, contrasting the fare on offer. Having initially been charmed by the distinctive features of country life and city life, but then realising the contrasting style of dining between simple and natural versus elaborate and fussy, they ultimately decide that they prefer their milieu. The country mouse feels unsafe in the big city, the town mouse realises he would miss the sophisticated food and entertainment of the big city. Having moved from the country to the city, I have often thought of this story, but the conversations I have with my friends and family at either end of the freeway express nothing like the contentment of the mice at the end of it. Thanks to work by the economist Philip Auerswald, I’m starting to understand why this might be the case.

Years after reading the story I learnt that it was one of Aesop’s fables, later quoted by the Roman Emperor Marcus Aurelius, popularised in Mediaeval times, and adapted by Beatrix Potter, which may have been the version I read.  The fable in my memory is fundamentally warm-hearted. Each mouse returns to his home, content, realising that ‘tastes differ’.

But in the countryside what we see the phenomenon of populism. An anti-elite expression of dissatisfaction with local socioeconomic outcomes, and a degree of resentment of the apparent concentration of wealth in the cities. For the very same elites, ‘populism’ is used as a term of disparagement, and all manner of moral deficiencies are trotted out. The IPA has challenged that later narrative with articles like In Defence of Populism and Populism is not a Dirty Word.

But in the city, where I live, the people I hang out with (and me and my family for that matter) don’t feel like elites living a life of opulence. They are struggling with the cost of living, the human cost of rapid population growth and consequent congestion, and (unless they’re older and debt free), either on the mortgage treadmill associated with exploding property prices or unable to get into the housing market at all. Living cheek by jowl with people from all over the world, they are tolerant of people from other cultures because it is both necessary and basic good manners, but they are perhaps a little too ready to attribute prejudice to those in more settled and homogenous rural communities.

Change in the Intensity of Republican / Democrat Voting

So, to Philip Auerswald, of George Mason University in the US, whose thesis on populism predates the seismic election that put Trump in the White House. On the way to the office today I was listening to him being interviewed by Russ Roberts on the wonderful Econtalk podcast (nearly as good as the IPA’s!). Auerswald essentially says that what we call populism is a response to a global phenomenon based on the tremendous growth in population in the cities in contrast to economic dislocation and depopulation in rural areas. This is the common element he sees behind Brexit, Trump, Erdogan’s support in Turkey and even Putin (who probably would win a fair vote in Russia). This is not to say that ideologies are the same, but that the rural support for the anti-elitist programs is the same in each case.

We should rightly be suspicious of any theory which reduces complex phenomena to one cause, but I wanted to reflect upon it in this because of the intrinsic appeal of a theory that simultaneously explains both rural AND urban discontents. I can quote from it to my friends in both the country and the city. My take-outs from the podcast are:

• Unemployment and depopulation in rural areas is actually a bad thing for the people who live there (who knew?). Acknowledgement of that fact by policy makers might be a good start.
• Absent sub-Saharan Africa, all of the population growth going on in the world is taking place in cities of more than 1 million people.
• The concentration of wealth in the cities is driven by the underlying economics of the knowledge economy, as it is organisational knowhow that drives competitiveness, and proximity allows for a learning curve in knowhow (the ‘water cooler effect’).
• Population flooding into the cities is, naturally, driving up land prices.
• This increase in land prices almost entirely accounts for the supposed shift in the share of wealth towards capital from labour identified by neo-Marxist economist Thomas Piketty (as shown by Matthew Rognlie, here), and therefore all Piketty’s causal explanations (and remedies) are wrong.

This is just a blog post so I won’t go too far in what this means for Australia other than to speculate:

• Unlike the US, we do not have the safety valve of growing cities with lower land prices, like Houston. The cities we do have that are affordable, are not growing, and those that are growing, like Melbourne and Sydney, are not affordable. Markets and innovation can drive growth in places like Adelaide, and attract population, provided the self-destructive policies of the command economy are no longer pursued. And the bigger cities can reduce the cost of housing by targeting land release and planning restrictions
• The rural/urban divide is masked in Victoria, where the major regional cities are within two hours travel of Melbourne and so there is a substantial economic spillover effect, and daily labour migration. The effect is the same in Sydney, but compared to Victoria a greater proportion of the State lies outside the capital city’s economic hinterland.
• Due to the historic very high concentration of population in the capital cities in Australia, populism in its classic form is likely to remain a minority position at the national level, unless it can form a bridge to the discontented in the cities (this brings to mind this article which suggests urbanist/real estate/housing concerns explain the incursion into urban areas by LePen in France)
• One Nation will do quite well in the Queensland election, outside of South-east Queensland, and the reasons for this will be systematically misunderstood by everyone in the SydMelberra triangle (except perhaps at the IPA!).

Finally, I would say that notwithstanding Auerswald’s finding of real economic and demographic phenomena behind the rural/urban divide, the specific values expressed in populism are not reducible to economics. If populism expresses a continuing adherence to the nation State and its symbols, historic ethical norms, and traditional notions of personal responsibility, then even urban elites must accord them the respect they deserve. After all, tastes differ.

Scott Hargreaves is Executive General Manager at the Institute of Public Affairs