East Germany Still Depressed

[Michael]

The wall came down some twenty years ago.

Born in the east, young Germans still forced to head west

HOYERSWERDA, Germany (CNN) -- For decades the Iron Curtain divided Germany because the socialist German Democratic Republic did not wish to continue losing its citizens and skilled workers to the "golden" West.

Today the young people in East Germany would prefer to stay at home. Many of them must leave, however, because there are hardly any prospects for them in many regions of the former East. That's the way it is in Hoyerswerda, a town near the Polish border where Sarah Stotzner will soon be packing her bags. She was born in 1989, the year the Wall fell.

Source (http://edition.cnn.com/2009/WORLD/europe/07/27/germany.hoyerswerda/index.html)

The article is hardly worth reading (CNN afterall) as it says pretty much nothing of any substance.

I'm only citing the article as a starting point. The Wall came down, East Germany was 'freed' and has subsequently joined West Germany to reform Germany. And twenty yeasrs later, the 'eastern half' of Germany is just as much a backwater as it was twenty years ago.

I strongly believe that the 'eastern half' of Germany will carry the scars of authoritarian socialism for decades to come.

But I don't believe that 'the former' East Germany is unique at all here. Geography seems to have enduring impact on prosperity. The western half of Germany has been richer and more productive than the eastern half for hundreds of years.

England has the same effect (rich south, poor north). US has always had a 'rich north' and 'poor south' (at least since the 19th century). Canada has the maritime provinces that have relentlessly maintained a relative status of poverty despite sucking up countless billions in subsidies and government re-development funds over the last half dozen decades.

Seems to me that geography (or culture) is remarkably sticky.

In other words, it looks like a fool's game to pour money into depressed geographic places. All the money going in doesn't seem to have any effect at all and these places remain depressed for decades and even centuries.

I find this topic very interesting and I consider the topic far more expansive than just the case of East Germany. Every country on the planet has a part of that country that is backwards/undeveloped/depressed and these regions tend to say that way no matter what.

I'm curious about why that might be. Any thoughts?

[Sucre]

I definitely do not agree with your analysis - Not to deny that the Eastern part lags behind the Western part - after all I live in Berlin and this is basic knowledge about present Germany. But this situation has strictly nothing to do with geography or the "the scars of authoritarian socialism" :rolleyes:.

Which scars ? Can you be specific please ?

Lets put it this way : the economic backwardness of former Eastern Germany is due not to failed socialism - but to failed capitalism.

To start with this is not true that the western part has always been richer than the eastern part - Not only were Berlin, Leipzig, Dresden the center of German cultural/ scientific life etc. but also centers of growth and flourishing regions since at least the early 18th century. The GDR had an excellent educational system and the labour force was/is experienced, educated, qualified. Geographically, it is the center of Europe, the perfect gateway to the new "markets" of Eastern Europe, Russia and to Asia etc.

It was sold this way in 1990 to the investors from Western Europe and the US. It is still sold this way 20 years later.

The main problem is competitiveness in international markets. After the Reunification 20 years ago, eastern companies in western hands had to compete on markets occupied by competion in the East of Europe and in Asia (of which they were supposed to be the gateway to - so The Economist). Costs in general but labour costs in particular were higher and they had no chance. Followed closings of the factories, unemployment (20% in Brandenburg against 5% in Bavaria ...), emigration to the west not balanced by immigration to the east as Eastern Germany had the reputation, should I say "has " the reputation, of an unfriendly environment - and there were no jobs anyway.

Unfortunately in 20 years the Invisible Hand has still not been able to make up for this imbalance :shrug:

[Greendruid]

I'm going to suggest the argument that topography, vegetative density, arability, climate and weather have a huge role to play in the particular examples of our own country.

You could probably draw a map of Canada's population density without knowing any other factors than soil arability and you'd end up with a pretty accurate map of the current population distribution. There seems to be very few areas of Canada that have been left unpopulated despite good growing conditions and very few areas of Canada that have become over-populated despite poor arability of surrounding soils. The major cities of Toronto, Vancouver and Montréal might be a bit hard to assess in this manner these days but I know that what is now metro Toronto was a very good place to farm in the 18th century. Cape Breton Island and Newfoundland on the other hand, not so much. The fisheries made up for this shortfall in the 18th and 19th centuries but no longer with the moratoria that have been (necessarily) imposed.

Then there is the passability of the landscape itself. If you can't traverse the landscape with relative ease, you're going to switch routes to get from A to B. Getting from A to B even today in places that have very good farmland, such as southern New Brunswick, is a difficult, hilly task.

I'd be interested to see what a similar analysis of East vs. West Germany might yield in this regard.

[Michael]

I definitely do not agree with your analysis - Not to deny that the Eastern part lags behind the Western part - after all I live in Berlin and this is basic knowledge about present Germany. But this situation has strictly nothing to do with geography or the "the scars of authoritarian socialism" :rolleyes:.
So, the situation of disparity between east and west Germany has nothing to do with culture and nothing to do with geography?

Okay, then why is there such a disparity?

Which scars ? Can you be specific please ?
Bemused giggles. :lol:

1. I don't think that picking at the scabs of defunct socialist utopianism is very productive, all that interesting or all that useful for analysis.

2. The phrase was used for rhetorical effect. Trolling if you prefer. People tend to ignore threads when I get all dry and technical. Colorful rhetoric seems to be so much better for drawing replies. ;)

Lets put it this way : the economic backwardness of former Eastern Germany is due not to failed socialism - but to failed capitalism.
Let me see if I understand your point correctly...

1. East Germany used to be richer than West Germany prior to the 20th century.

2. Then East Germany went authoritarian socialist under the empire of the USSR.

3. Now East Germany is poorer than West Germany and this is the fault of capitalism?

Clearly I'm missing something. The timeline suggests that the massive deterioration in the living standards of eastern Germany occured during the authoritarian socialist era. How is capitalism at fault for that?

I'd also add here that destruction of infrastructure in Germany during WW2 is relatively evenly spread - eastern and western Germany suffered equal amounts of physical destruction, so we can't use WW2 as an explanation for the differential.

To start with this is not true that the western part has always been richer than the eastern part - Not only were Berlin, Leipzig, Dresden the center of German cultural/ scientific life etc. but also centers of growth and flourishing regions since at least the early 18th century. The GDR had an excellent educational system and the labour force was/is experienced, educated, qualified. Geographically, it is the center of Europe, the perfect gateway to the new "markets" of Eastern Europe, Russia and to Asia etc.
Btw, the "gateway" to Asia from Europe is the seaports of the Netherlands.

As for eastern Germany's earlier relative wealth vis-a-vis western Germany is similar to the reversal in US and Canada on exactly the same issue.

18th century USA, the deep south was the wealthiest part of the USA. Likewise at the same time, the maritime region of Canada was the wealthiest part of Canada.

In the latter half of the 19th and early 20th century, these regions reversed themselves. Now the US deep south is the poorest region in USA and the maritimes are the poorest region in Canada.

This appears to be exactly the same phenomena as with east and west Germany (and the reason I cited these examples in the OP).

It is the of course the general trend that interests me here, not the particular case of East Germany.

Btw, I'd say that northern vs southern England is the one example here that doesn't fit since northern England has always been poorer than southern England for all of known history.

It was sold this way in 1990 to the investors from Western Europe and the US. It is still sold this way 20 years later.
The propaganda/advertising used to 'sell' something is never a very useful guide to reality.

The main problem is competitiveness in international markets. After the Reunification 20 years ago, eastern companies in western hands had to compete on markets occupied by competion in the East of Europe and in Asia (of which they were supposed to be the gateway to - so The Economist). Costs in general but labour costs in particular were higher and they had no chance. Followed closings of the factories, unemployment (20% in Brandenburg against 5% in Bavaria ...), emigration to the west not balanced by immigration to the east as Eastern Germany had the reputation, should I say "has " the reputation, of an unfriendly environment - and there were no jobs anyway.
You appear to be overlooking the fact that East Germany has significantly lower wages and lower costs of living. That's supposedly a 'comparative' economic advantage - yet twenty years on, eastern Germany still lags just as much behind the western half as they did twenty years ago - and despite MASSIVE levels of west German capital investment and government subsidies.

This is exactly the same phenomena that I've referenced in Canada's maritime region, the US deep south and Northern England. No amount of subsidies, no amount of government directed investment, no government policy seems to ever dent these differentials. If anything, the differentials appear to be getting wider over time.

Unfortunately in 20 years the Invisible Hand has still not been able to make up for this imbalance :shrug:
Indeed. That's the point of this thread.

I'd also aver that the 'invisible hand' isn't stupid. Capitalist development is neither a right nor an entitlement. Capitalism goes where the profits are and the fact of the matter is that western Germany is where the profits are, not eastern Germany.

And the topic of this thread is to ask the question as to why this is so?

[Michael]

I'm going to suggest the argument that topography, vegetative density, arability, climate and weather have a huge role to play in the particular examples of our own country.

You could probably draw a map of Canada's population density without knowing any other factors than soil arability and you'd end up with a pretty accurate map of the current population distribution. There seems to be very few areas of Canada that have been left unpopulated despite good growing conditions and very few areas of Canada that have become over-populated despite poor arability of surrounding soils. The major cities of Toronto, Vancouver and Montréal might be a bit hard to assess in this manner these days but I know that what is now metro Toronto was a very good place to farm in the 18th century. Cape Breton Island and Newfoundland on the other hand, not so much. The fisheries made up for this shortfall in the 18th and 19th centuries but no longer with the moratoria that have been (necessarily) imposed.

Then there is the passability of the landscape itself. If you can't traverse the landscape with relative ease, you're going to switch routes to get from A to B. Getting from A to B even today in places that have very good farmland, such as southern New Brunswick, is a difficult, hilly task.

I'd be interested to see what a similar analysis of East vs. West Germany might yield in this regard.

Yes, this is certainly one way of looking at the issue. It certainly explains the north/south issue in England (north England is desolate and poor land, south England is well blessed).

But I think the issue is slightly more complicated due to the passage of time and the change from an entirely 'rural agricultural' economy to a modern industrial economy.

To use the Canadian example, in the 18th century, the presense of coal and good seaports made the maritimes extremely prosperous. However, from a 20th century perspective, coal is ugly, nasty and cheap crap. Oil and hydro power are far, far more valuable to our modern economy.

To use the US example, the 18th century US deep south 'plantation economy' was the engine of prosperity and the backbone of an export driven economy (not to mention slavery!). 20th century prosperity isn't built on growing/exporting cotton any more. Cotton growing is a third world game now. 20th century is far more interested in 'grain tonnage' and that comes from the Great Plains, not the deep south.

My examples here are simplistic - meant to illustrate general trends. Clearly geography plays a big role in determining which regions prosper and which regions don't, but I think these same examples show that there is something more to the equation here. I suspect it is entirely cultural.

[Sucre]

So, the situation of disparity between east and west Germany has nothing to do with culture and nothing to do with geography?
Nothing. Absolutely nothing.

Firstly, there exists no major cultural differences between former western and former eastern Germany.

Secondly, geography, as explained further in the post, has always been presented as a major advantage of Eastern Germany, not a disadvantage : central location in Europe, good communication infrastructure, closeness to major industrial centers and opening to sea, etc.

The disparity has to do with economy, as explained further in the post, more specifically the uncompetitiveness on world markets due to :
- saturated world markets
- relatively higher labour costs hence costs in general


Bemused giggles. :lol:

1. I don't think that picking at the scabs of defunct socialist utopianism is very productive, all that interesting or all that useful for analysis.

2. The phrase was used for rhetorical effect. Trolling if you prefer. People tend to ignore threads when I get all dry and technical. Colorful rhetoric seems to be so much better for drawing replies. ;)

Giggle all you want but please answer my question. I will not get bored if you get dry and technical !

Can you please be more specific about the scars of Socialist GDR in the present new Länder.


Let me see if I understand your point correctly...

1. East Germany used to be richer than West Germany prior to the 20th century.

2. Then East Germany went authoritarian socialist under the empire of the USSR.

3. Now East Germany is poorer than West Germany and this is the fault of capitalism?

Clearly I'm missing something. The timeline suggests that the massive deterioration in the living standards of eastern Germany occured during the authoritarian socialist era. How is capitalism at fault for that?

No, you completely missed the point.

You put forward that westen Germany had always been richer than eastern Germany - some kind of explanation for its present relative backwardness.

I asserted your knowledge is partial.

The Eastern part of Germany was at least as rich as the western part - Saxony for example rivaled with Bavaria or the Hanse cities of the North for a long time ...

Therefore, if it had not been for the communist regime after WWII, it is safe to assume that the eastern part of Germany would presently be as rich, if not richer for some of its regions, as the western part.

What capitalism has failed to do, after Reunification, is to support former Germany's revival. It has, on the contrary, accentuated the imbalance, notably favourising emigration of the best workforce to the west.


I'd also add here that destruction of infrastructure in Germany during WW2 is relatively evenly spread - eastern and western Germany suffered equal amounts of physical destruction, so we can't use WW2 as an explanation for the differential.
No argument there.

I would simply like to add that western Germany has heavily subsidized Eastern Germany since the Reunification : the general infrastrucure in general - railway, roads, new building - is better in the eastern part than in the western part.

If it weren't for this State support, the Eastern regions would be even worse off than they are now.


Btw, the "gateway" to Asia from Europe is the seaports of the Netherlands.
Maybe for Canadians but here in Europe, we usually travel through Berlin to the East ;).


You appear to be overlooking the fact that East Germany has significantly lower wages and lower costs of living. That's supposedly a 'comparative' economic advantage - yet twenty years on, eastern Germany still lags just as much behind the western half as they did twenty years ago - and despite MASSIVE levels of west German capital investment and government subsidies.
Relatively lower wages - 80% to 90% - and lower costs of living.

However, the neighbouring countries - Czech Republic, Poland, Hungary - offer even lower wages for the same level of qualification.

This fact annihilates the comparative economic advantage you were mentioning.


Capitalism goes where the profits are and the fact of the matter is that western Germany is where the profits are, not eastern Germany.

And the topic of this thread is to ask the question as to why this is so?
Yes, this is the topic of the thread and you answered your own question :).

Considering that capitalism always goes where the profits are - should I add : are already - the eastern part of Germany never got a chance to make up for its deficiencies. After Reunification, factories were closed, people laid off and since then little or not enough has happened.

[Daktoria]

England has the same effect (rich south, poor north). US has always had a 'rich north' and 'poor south' (at least since the 19th century). Canada has the maritime provinces that have relentlessly maintained a relative status of poverty despite sucking up countless billions in subsidies and government re-development funds over the last half dozen decades.

I don't know about Canadian history other than how slavery never took off there, but the the northern states surpassed the southern states more and more in the U.S. as industrial innovation and trade networks advanced such that the lag in southern human capital and backwards traditions lead to its economic collapse up to the civil war. When reconstruction happened, racism prevailed, and dependence upon northern financiers lead to a second collapse with the Panic of 1873 (ironic considering its synchronization with German unification's ejection of Austria and the Vienna stock exchange crash).

Blah, blah, blah, you look ahead 100 years, and the same problem remained - lag in human capital. It wasn't until a fundamental ideological and cultural shift took place that the south finally caught up to speed and acknowledged that flexibility and innovation were in order rather than stubbornness and bigotry....

...and the same thing seems to be going on in Germany: (http://www.ifw-members.ifw-kiel.de/publications/explaining-the-east-german-productivity-gap-2013-the-role-of-human-capital-1/kap1310.pdf)...But the question is if the labor force is really employed accordant to their educational achievements. If West Germany is taken as a yardstick, it can be shown that a considerable share of the East German human capital is not employed according to its formal level of education, which therefore reduces the reachable productivity level. This means that jobs for less qualified labor are more often given to better qualified labor in East Germany. This generally effects „average” skilled employees with a finished professional training. Compared to West Germany, 15% of all employees with a finished professional training are employed under their formal level of qualification in East Germany....

...The second cause for the deterioration of the human capital base is the (actual) educational attendance of the East German youth. A comparatively high number of pupils leave the school system without any graduation certificate. Additionally, many young people don’t find a regular vocational training position as a result of too small a number of training firms or even as a result of missing basic educational preconditions, leading to a refusal by the firms. And, finally, the quotas of people entering the tertiary education system is lower than in West Germany....
There's more to it in the article, but I just wanted a couple of highlights.

If anything, the dilapidation of eastern Germany is a result of capitalism's SUCCESS, not it's failure. As long as eastern Germans insist on a labor intense economy, they're going to remain behind. If they want to change their ways into more technical and advanced careers though, then they'll improve. If that involves migration, then so be it. Firms in eastern Germany should be forced to keep up a competitive pace else the region on a whole gets left further and further back for being a backwater wasteland...

...not that it should be recognized as a waste since reunification is something to celebrate for those with personal ties and because German prosperity has outperformed the rest of eastern Europe since the end of the Cold War. However, when it comes to markets, nobody is ever completely out of the woods, and if you want to stay on top, then you have to continue to beat out the next guy who wants to take your place just as much as you beat the guy who was there before you.

[Sucre]

Thank you for this Daktoria, I think this brings us forward in the discussion. Two comments, one question.


...and the same thing seems to be going on in Germany: (http://www.ifw-members.ifw-kiel.de/publications/explaining-the-east-german-productivity-gap-2013-the-role-of-human-capital-1/kap1310.pdf)
...But the question is if the labor force is really employed accordant to their educational achievements. If West Germany is taken as a yardstick, it can be shown that a considerable share of the East German human capital is not employed according to its formal level of education, which therefore reduces the reachable productivity level. This means that jobs for less qualified labor are more often given to better qualified labor in East Germany. This generally effects „average” skilled employees with a finished professional training. Compared to West Germany, 15% of all employees with a finished professional training are employed under their formal level of qualification in East Germany....

This quote is probably true for all Germany, not only eastern Germany.

From an economic perspective, it sounds nice to read that this situation affects the level of productivity, yer it does not answer the question why all these qualified people do not find a job suited to their qualification.

...The second cause for the deterioration of the human capital base is the (actual) educational attendance of the East German youth. A comparatively high number of pupils leave the school system without any graduation certificate. Additionally, many young people don’t find a regular vocational training position as a result of too small a number of training firms or even as a result of missing basic educational preconditions, leading to a refusal by the firms. And, finally, the quotas of people entering the tertiary education system is lower than in West Germany...

This parapraph about vocational training probably refers to the situation about "Ausbildungsplätze" provided to youth by firms from hair dresser to Siemens or Opel - well noted the lowest achievable level of qualification in Germany, yet historically very successful and effective, providing both theory and practice and a high degree of qualification.

Yet, German companies provide less and less such positions, simply because they have been cutting in their workforce in the last 20 years, precisely in order to remain more competitive or, for the larger companies following the stake holder value principles which have been fashionable since the beginning of the 1990s, to please their stakeholders.

If these companies were producing more, they would be in a position to provide placement for vocational training, however they are not. Why ? I believe because of the saturation of world markets.

If anything, the dilapidation of eastern Germany is a result of capitalism's SUCCESS, not it's failure. As long as eastern Germans insist on a labor intense economy, they're going to remain behind. If they want to change their ways into more technical and advanced careers though, then they'll improve. If that involves migration, then so be it. Firms in eastern Germany should be forced to keep up a competitive pace else the region on a whole gets left further and further back for being a backwater wasteland...
.
I don't see how putting people out of work can be considered a success.

This hapenned a lot in eastern Germany and that's why people are emigrating and the economy is still lagging behind.

I call a successful economy an economy which provides enough work and good working conditions to the majority according to their qualification. These working people also "serve" the economy as consumers. In any case, economy should be at the service of human beings and not human resources at the service of economy.

[Daktoria]

This quote is probably true for all Germany, not only eastern Germany.

From an economic perspective, it sounds nice to read that this situation affects the level of productivity, yer it does not answer the question why all these qualified people do not find a job suited to their qualification.

Well Mike hit the subsidy nail on the head:More interesting are the reasons for the specific industry structure in the New Laender; normally transformation-specific effects and the structural effects of high transfer payments are mentioned. Additionally, initial productivity lags were more pronounced in sectors that normally inhibit a high productivity as the isolation of the GDR prevented the firms in these industries from applying the newest technologies. And some authors (Klodt 1999, Snower 2006) even conclude that the due to strong subsidization in East Germany partially unprofitable productions could survive, leading to the high share of those typically lowproductive sectors.
Beyond this, the article provides multiple explanations for why the demand for capital intense activity remains so low on pages 5-7 (and I'd quote it here, but it's too long for comfort). In general though, it can be recognized that endogenous entrepreneurial growth is discouraged by a lack of effective research and development due to the decentralized, unorganized, and small structure of east German firms. Labor intense construction and manufacturing are dominant in eastern Germany, and while they can be useful for stimulating transition into a developed economy, manufacturing and construction cannot function effectively forever without establishing a circular and cannibalistic cycle.

This parapraph about vocational training probably refers to the situation about "Ausbildungsplätze" provided to youth by firms from hair dresser to Siemens or Opel - well noted the lowest achievable level of qualification in Germany, yet historically very successful and effective, providing both theory and practice and a high degree of qualification.

Yet, German companies provide less and less such positions, simply because they have been cutting in their workforce in the last 20 years, precisely in order to remain more competitive or, for the larger companies following the stake holder value principles which have been fashionable since the beginning of the 1990s, to please their stakeholders.

If these companies were producing more, they would be in a position to provide placement for vocational training, however they are not. Why ? I believe because of the saturation of world markets.Hmm.

I guess it depends on the perspective you want to take. For example, I could give the (however unpopular it might be) opinion that consumption and employment are not directly related as well as how pricing is a function of cultural evaluation of efficiency rather that efficiency itself (which would explain why market failures take place as a result of corruption and neglect). Even so, you might be right that stockholders are demanding too many dividends, but even if they demanded less, that doesn't mean that profits would be invested in research and development instead (especially if wages and job creation became alternative priorities). Without such redirection, markets would remain saturated as a result of weak innovation, so the expansion in the job market would be a temporary bubble for middleman (lowbrow) positions.

Not that there's anything wrong with vocational blue collar work, but it does become a problem when an economy becomes obsessed with it since workers are looking for an excuse to not work smart while they're still (at least appearing as though) working hard.

By the way, when you say "stakeholders" are you referring to just stockholders, or are you referring to consumers, suppliers, creditors, government, etc as well?

I don't see how putting people out of work can be considered a success.

This hapenned a lot in eastern Germany and that's why people are emigrating and the economy is still lagging behind.

I call a successful economy an economy which provides enough work and good working conditions to the majority according to their qualification. These working people also "serve" the economy as consumers. In any case, economy should be at the service of human beings and not human resources at the service of economy.Markets don't exist to employ. They exist in order to improve standard of living, and if certain individuals have no desire to contribute to improvement, then they shouldn't be provided for.

Socialism (of any variant) just wouldn't do any better at this since it would stagnate and petrify the economy for the sake of defensive preservation. Entrepreneurs wouldn't want to innovate unless there was some ulterior motive at stake or they were held hostage by some political blackmailer, and workers would panic more and more under the guise of populist mob rule.

Jobs come and go, and sometimes this happens with drastic volatility, but if we change the rules of the game just because something went wrong, then we'll only be treating the symptoms while refusing to cure the problems. The real problems are inefficiency and corruption, so while independent and cooperative efforts can be useful through the execution of consumer sovereignty and collective bargaining, political manipulation of markets only opens Pandora's box for more corruption instead.

Part of solving this problem is exposing markets to foreign free trade which is exactly what's happened to eastern Germany and is why qualified workers are emigrating. Regions themselves don't bear any intrinsic value, so the only reason they're appreciated is because of their perceived future potential (which might partially be accounted for by history through perceived reliability). Ergo, if a protectionist or populist policy was imposed instead, overqualified workers would be undervalued, so they wouldn't be able to optimally contribute to the economy anyway. At least by emigrating elsewhere, they're able to accumulate experience and wealth that can be invested back into their homeland later on, wealth redirection which isn't exactly an uncommon practice by migrant workers (for example, consider the Turks who just happen to be targeted by many xenophobic eastern Germans)!

The question that really has to be asked here is, "Does eastern Germany have the potential for development?" The answer is, "Yes, but only if the people are willing to open up and be competitive." If they insist on drudging along in their past, then so be it, but they shouldn't expect to become anymore prosperous. On the other hand, if they want to invest in education, research, development, and entrepreneurship, then something can happen just like innovation took place centuries before the Cold War (or even the World Wars) took place.

[Michael]

The thread is progressing exactly in the direction I hoped it would. I think high level subsidies are the root of the problem.

It seems that when governments use subsidies to maintain a standard of living that is not economically supported by market principles, the only thing they do is create an entitlement.

I've seen this many times - Maritimers here in Canada often show this pattern. They often have a good publicly provided education too. The problem is that they LIKE their place of birth and wish to stay there (understandable enough). Since they were previously able to do that with some heavily subsidized industry providing them with high wages, they have a very hard time dealing with the need to adapt to a changing economy.

These people seem to believe they have a 'right' to live where they want and they expect that it is either the government's or the market's responsibility to provide them with high-wage employment in the area THEY choose to live in. Any failure to achieve this result is held to be the failure of government or the market - not themselves. This seems to be the key factor in common for the various regions mentioned (Maritimes in Canada, Northern England, Eastern Germany and in lesser ways, US Deep South).

Of course, this problem tends to be self-reinforcing which is why this problem is particularly persistent. As many people refuse to move and demand the entitlement of a high-wage job where they choose to live - governments tend to offer the subsidies to make the high-wage jobs temporarily available and that just feeds the cycle of entitlement for people to expect high-wage jobs ought to come to them and any failure of high-wage jobs to come to them is not their fault. Governments and the capitalist economy are always held to blame for this.

I don't know how to resolve the problem, but I do think it is important to try and understand where the problem is coming from.