Lovell: Seeing DSM in London
London. It’s Europe’s financial heart as well as its most populous city. Surprisingly, it has several elements in common with Des Moines, including population growth, competition and Starbucks coffeehouses, which I discovered during a recent two-week trip there.
First and foremost are efforts to make sure that London remains strong, sometimes at the expense of outlying and smaller communities. While this is a sore spot with non-Londoners, residents of the United Kingdom badly need London to succeed. It accounts for 25 percent of the country’s gross domestic product.
The situation is the same in Iowa. Though residents (and in particular politicians) in Sioux City or Waterloo may complain that Des Moines receives the lion’s share of the state’s money and attention, they would be wrong to undermine Des Moines. A strong and stable state capital is in their best interests.
More specifically, there is a great deal of effort to make sure that The City, which can be loosely characterized as London’s equivalent to New York’s Wall Street, remains the dominant financial center of Europe. The City, just like Des Moines, is driven by the insurance and finance industries.
Along those lines, one of the biggest debates now in London, and indeed across the United Kingdom, is whether the country ought to adopt the European Union’s common currency, the euro. Economists are divided.
One of the driving factors is strong competition from neighbors, particularly Frankfurt. Des Moines (and Iowa) faces plenty of pressure to maintain a favorable regulatory and tax climate to make sure that the insurers and financial services firms stay here.
This was reflected in last year’s decision by Gov. Tom Vilsack to cut taxes on insurance premiums. As economic boundaries continue to collapse, more concessions will have to be made if Des Moines wants to maintain a vibrant financial services industry.
There are also lessons in London’s experiences for Des Moines’ leaders. Most notable is the city’s Millennium Dome, the world’s biggest, which was built for the Year 2000 celebrations. City leaders banked on the dome boosting London’s exhibition industry and it has since become an expensive embarrassment.
The government spent roughly $1.3 billion to build it and is now spending about $400,000 a month to maintain it, according to newspaper accounts. There are myriad plans to make it profitable, including adding stadium seating for sporting events and more restaurants.
It remains to be seen whether the Iowa Events Center lives up to expectations. There are reasons to be optimistic, but London’s experience is sobering.
Starbucks Coffee Co. has exploded with growth since first arriving in London in 1998. The company owns about 200 coffeehouses in London, including two in Harrod’s, the famed department store.
It is making similar moves here, though on an understandably smaller scale. A third Starbucks location (not including the kiosk at Borders) is expected to open soon on Des Moines’ Northwest side, just nine months after Starbucks opened its first coffeehouse here.
Finally, there is healthcare. Britain offers far more generous benefits than anywhere in the United States, but there are dramatic problems. Wait times are measured in months, if not years, for elective treatments. Doctors are paid far less. United Kingdom hospitals would appear to Americans as relics of the 1950s.
The U.K. health care system costs so much that if the country adopts the euro, benefits will likely have to be scrapped in order to maintain the budget discipline required by euro membership. As Americans increasingly clamor for more benefits, they should consider the United Kingdom’s travails.