If the North wants to succeed it needs to place more value on enterprise than it does on government

Rather, the evidence shows that the strongest predictors of cross-national variation in entrepreneurial activity were normative, with social norms being the most strongly associated with entrepreneurialism and rates of organizational founding.

So if we want more start-ups then we need a more entrepreneurial culture. It's not about tax breaks or R&D or STEM education or finance, it's about having a society that values and celebrates enterprise and the ideas that lie behind it. For years I signed up to the 'pull this lever, press that button' approach to economic development and it seems I was wrong - the reason the North of England has fewer start-ups isn't about lack of investment, poor education or too few universities but rather that our social norms are less strongly associated with enterprise than elsewhere.

So what are the features of that enterprising society, the social norms we need? The authors of the article the quote above comes from point to three - gender equality, valuing and rewarding performance, and endorsing status privileges. This is essentially the bourgeois environment that embraces the idea of what Deirdre McCloskey called 'trade-enabled betterment' and something valuable and important.

McCloskey also warned us that government and many among the powerful reject this environment:

“For reasons I do not entirely understand, the clerisy after 1848 turned toward nationalism and socialism, and against liberalism, and came also to delight in an ever-expanding list of pessimisms about the way we live now in our approximately liberal societies, from the lack of temperance among the poor to an excess of carbon dioxide in the atmosphere. Antiliberal utopias believed to offset the pessimisms have been popular among the clerisy. Its pessimistic and utopian books have sold millions. But the twentieth-century experiments of nationalism and socialism, of syndicalism in factories and central planning for investment, of proliferating regulation for imagined but not factually documented imperfections in the market, did not work. And most of the pessimisms about how we live now have proven to be mistaken. It is a puzzle. Perhaps you yourself still believe in nationalism or socialism or proliferating regulation. And perhaps you are in the grip of pessimism about growth or consumerism or the environment or inequality. Please, for the good of the wretched of the earth, reconsider.”

"Capitalism is the problem" - how often do we hear this from people? Not from those who (some claim) are somehow the victims of capitalism but from its beneficiaries. And the North of England has more of these anti-capitalist doomsayers than most places. Such folk are comfortable in their public sector jobs, consultancies and tenured professorships, they are the elite in the North's society and they have convinced themselves that liberal capitalism has visited on society a catalogue of evils.

Not only this but they have created an entire ideology - 'inclusive growth' - to describe their chosen way of bettering the lives of Northerners. This isn't founded on enterprise, risk, innovation and capitalism but rather on the largess of 'anchor institutions' which can, in an act of protectionist self-harm, limit their procurement to the locality they occupy. To add to this, the advocates of this municipal growth model, then demand that the national taxpayer splurge billions on grand schemes, sponsors great fairs and funds elaborate arts projects. Where we might have had entrepreneurship, we get people and businesses clucking round the municipal great and good in the hope of consultancy work, project funding or a few quid to design a website.

To rediscover the enterprising society requires a fundamental shift in the way we view business, risk and choice. Look at the reporting on business, at the way in which the business person (usually the businessman) gets portrayed in drama and at the eternal warnings that businesses are just out to scam you. Consider how were told that it is somehow unfair that someone who created value for consumers should take some small part of that value (which could be millions even billions) for him- or herself. And look at the commonplace portrayal of a free market as dog-eat-dog rather than as a triumph of co-operation, collaboration and mutual benefit. If we want the North to boom we need to change these things, to see that enterprising people, businesses and risk-takers are the real heroes in our society and that they deserve their rewards and the status that reward gets them.

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Local protectionism is no way to raise economic growth in poor places - a critique of inclusive growth

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The RSA, that trendiest of slightly left wing think tanks, has launched a thing called the 'Inclusive Growth Commission':

Chaired by former BBC economics editor Stephanie Flanders and building on the success of the RSA’s City Growth Commission, the Commission will seek to devise new models for place-based growth, which enable the widest range of people to participate fully in, and benefit from, the growth of their local area.

The core of the Commission's argument is:

Public services and welfare remain fragmented; economic and social policies often seem to pull in opposite directions. Although growth is happening and unemployment falling, large sections of the population are not benefiting. Big wealth gaps and large numbers of economically inactive people have negative impacts on local economies, life chances and social cohesion. Costs to the state remain high, growth is low and prosperity the privilege of a few.

It seems an entirely noble idea to look more closely at how, to borrow a phrase, the proceeds of growth can be shared. The focus - entirely right for a geographer like me - is place-based, stressing the uniqueness of a particular town or city and seeking development solutions that resonate with that locality. The problem is that the RSA, like many other such organisations, has taken as its text the idea that inequality is the cause of poverty in places like Manchester, Liverpool and Bradford.

The worry I have with this place-based model, especially when coming from a centrist, 'government is good' ideology, is that we fall easily into the ideas about resilience, the local multiplier and social models of business. Here's Neil McInroy from the Centre for Local Economic Studies (CLES):

Overall, the plans to build a more inclusive growth model faces a choice. On the one hand the commission can add a stronger social face to an economy which works for the few, not the many. In this, they will reveal some of the problems of growth and this will prompt some policy changes. However, will the commission’s recommendations alter the longstanding frame to local economic activity – where productivity and growth has a pre-eminent position and is viewed as having much higher importance than that of inequality and poverty?

McInroy sets out a 'critique' based on his organisation's position - alongside the New Economics Foundation, Transition Towns and the New Weather Institute - as advocates of what I call local protectionism. For McInroy there is a dominant regional growth model - agglomeration - that needs to be challenged if we are to get an inclusive economy. Essentially in the critique the place-based model means that growth has to be spread across a region rather than being focused on city centres and 'growth hubs'. McInroy will point to the success of Manchester city centre and then to the fact that, despite this success, the metropolitan area of Manchester still contains many of England's poorest places.

It also has losers – city region peripheries, smaller towns and the low skilled. We must look at areas beyond city centres to outer boroughs. We must focus much more on local supply chains and ensure investment to local small businesses is on an equal footing to global corporates and global investors.

In here we have the problem - that reference to 'local supply chains' will be familiar to anyone reading the output of CLES, NEF and NWI. It refers to the view that local supply chains keep more money within the community than supply chains based on the national economy. The idea of the local or regional multiplier is central to this assertion - NEF make a good living from plugging their LM3 model to all and sundry (despite it having no real theoretical basis or any robust empirical support). The problem is that the local multiplier is something of a myth - the impact of excluding national supply chains is, in effect, the same as any act of protectionism. So any gain from having the money circulate within the community for longer is lost in that community having to pay higher prices.

The second element here is the persistence of the view that welfare payments somehow contribute to a local economy. It's true that the very poor places in Manchester and Liverpool receive large amounts of the money we redistribute (giving the lie to those who say there is no dispersal, no 'trickle down') but it is also true that, however valid that welfare payment might be, it still carries an opportunity cost. If the money wasn't raised in taxes it would have been used in another way - perhaps on consumption, maybe invested.

No-one disputes the objective - we'd like more of those people dependent on benefits not to be dependent on benefits. I'm guessing that's what the RSA mean by inclusive growth. The issue is how we go about this - do we run the risk of a slower rate of growth by insisting that large sums are redistributed in some way. If we reject the idea of agglomeration as a driver of growth, then we have to put something in its place. The problem is that the alternatives on offer from the likes of McInroy will act only to futher damage local economies by raising prices and decoupling them from the more successful national economy.

In the end local economies thrive because government does not direct them - the vanity of the RSA position and the stupidity of the CLES outlook is that there is some magical role for local or regional government in delivering both economic growth and a less unequal society. For me the reduction of actual poverty is more important than endlessly fretting over measures of inequality (or 'relative poverty' as folk like to call it) and this is brought about by government not obstructing the drivers of growth. It implies lower taxes when often poorer places have high taxes. It demands less regulation and intervention when the preference of big city governments is to intervene more. And it requires that we connect poor places to the rich places making it possible for people to travel - economically and physically - from the former to the latter.

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