Looking for the rumours of glory

I’m reading Bruce Cockburn’s biography this week so I have his music running through my head – hence the title of this blog.  Anyone of a certain age will know the song and its meaning.

I’ve been grappling with the concepts of optimism as a precursor to economic growth.  My old friend David Jonah tells the story of the “Greater Moncton: We’re Okay” campaign from the mid to late 1980s.  They had an acute awareness that in order for Moncton to turn itself around the people of the community needed to have an optimism about the future. If entrepreneurs were optimistic, they would invest. If people were optimistic they would stay and build their careers.  If governments were optimistic they would invest to support future private sector growth.

There is a lot of negativity in New Brunswick these days. It’s coded into social media and even mainstream media.  Yet at the same time we read that 99 percent of Riverviewians are satisfied with their quality of life in New Brunswick.

So there are at least two competing narratives here.

First, things have never been better in New Brunswick.  As the boomers head into retirement they have more money than any generation in history – less than their counterparts across Canada – but still more than the past.  The unemployment rate (and the employment rate) is low by historical standards and I would argue if you back out the seasonally unemployed (not the same as seasonally adjusted employment but I’ll save that for another day) the ‘real’ unemployment rate is much lower (i.e. the share of the adult population that is ready, willing and able to work at any given time).

The second narrative is that New Brunswick is on the verge of collapse.  People can’t sell their houses, young people are still leaving the province at a fast clip, the overall population is in decline, the public sector is in a large deficit heading towards a cliff and there is no hope for the future.

Long term readers of this blog will know of my aversion to dumbing things down to binary choices – something is either good, moral, righteous, etc. or bad, evil, toxic, etc.  That is where the paid and vested interests want to take public policy arguments but the rest of us just get caught in the vortex.

New Brunswick is not on verge of collapse but we are not in the nirvana that should drive a 99% happy with quality of life rating.   People need to understand that there are deep and structural trends that will fragment New Brunswick’s quality of life proposition in the future.  If we do not get our population growing again and if the economy doesn’t start to grow again at a moderate growth rate – it will ripple through our society.

And there are ways to address this.  Maybe there are rumours of glory. Maybe we could attract a lot more young immigrants.  Maybe we could attract a lot more foreign students as a pipeline for the future workforce.  Maybe we could develop our natural resources in a way that people would be comfortable with.  Maybe we could drive an urban growth agenda.  Maybe there are ways to expand our tourism sector.

Maybe.

 

Posted in Uncategorized | Leave a comment

Dispatches from the road – NYC editition: Notes on the NB brand

I’m in the Big Apple for a few days’ vacation and I stumbled across a few things of interest.  First, over the last 10 years there has been roughly $1.4 billion worth of international salmon exports from New Brunswick the vast majority to the United States.  Over that same period the total value of salmon exports from Nova Scotia has been $21 million.

Yet, three times yesterday I read on menus about Nova Scotia lox and salmon including at the market last evening.  In all likelihood 98% of the salmon from east coast Canada consumed in New York is from New Brunswick but it is branded as Nova Scotian.

Digby scallops, Maine lobster, PEI mussels, Nova Scotia halibut (yesterday at lunch) – nothing about New Brunswick seafood on any menu I can find here.

IMG_20150531_215012

The other interesting observation is this Poland Springs bottled water.  It’s everyone in New York City.  In fact it is by far the most dominant brand of bottled water and it is clearly identified as coming from Maine.  On the side of the bottle is a list of all the small communities in Maine where the water comes from.

IMG_20150530_131035

Now I understand we have lots of water in New Brunswick – we don’t know how much as I am told – but no firm is bottling it and branding it as NB water in Toronto or Montreal.  Should we be promoting water as an economic development opportunity?  The brand component comes as a side benefit.

New Brunswick is a small place – smaller than dozens of cities across North America.  But there are lots of small places that have branded themselves well particularly related to specific natural resources – food, wood, etc. Maybe we should give more thought to how we can modestly expand our brand using the products that come from here.

Posted in Uncategorized | 1 Comment

Don Draper gets his mojo back: Lessons for NB

I don’t know if you watched the Mad Men series but I thought the finale was quite interesting. From the very first episode we were led to believe that the life of a mad man was intense but ultimately terminal as the show opening every week shows the silhouette of (presumably Don) someone falling to their demise off a building as advertising images flicker in the background.

The finale pushed us in that direction. Near the very end we see Don calling Peggy from a payphone and decrying his life and the meaninglessness of it all. He had gone to a hippy commune to find himself but it only got worse. Peggy suggests he shouldn’t be alone right now and worries about Don’s life.

She tells him there is a lot to live for – doesn’t he want to come back and work on Coca-Cola? For a moment we are led to believe that not only is that idea not appealing to Don – in fact it is that idea that has led him to his demise.

Then in the second to last scene, Don is doing yoga with the hippies and the camera slowly zooms in on Don’s face. We see a big grin appear on his face and, then, the scene cuts to the most famous Coca-Cola advertising campaign of all time – “I’d like to buy the world a Coke” with a bunch of hippies holding bottles of the fizzy drink talking about peace, love and nirvana.

My wife thought it was a strange ending but I thought it was perfect.

Don’s real problem was never the women, drink, etc. In the context of the show, it was that he felt he lost his mojo. In the depths of despair and in the company of those strange hippies he got his creative inspiration back – another carousel moment – the x factor that made him the king of Madison Avenue. We are left to conclude – deliciously – that he goes back to McCann and creates the most successful and famous advertising campaign of all time.

I might be wrong about this and I purposely didn’t Google it because I want to believe that was the point. How do you generate creativity – inspiration – innovation – moments of great genius? Whether it is an inventor, artist or mad man – what is the alchemy that leads to breakthrough moments?

We need this in New Brunswick. That are so many good people and organizations doing interesting things but when we look at the big picture we are in need of a breakthrough – a Sputnik moment – a Don Draper Coca-Cola moment.

Our economy is flat. Our population is stagnant. If the demographic trend continues on its current course we are destined to lurch from crisis to crisis over the next 25-30 years.

We need to significantly boost our population – particularly the under 40 population to balance our demographic situation. We need to boost our GDP at least at a moderate level to ensure we can afford the public services and infrastructure we care about. We need more innovation, more high growth entrepreneurs – more optimism.

In 2006 the Self-Sufficiency agenda warned that we must increase our population by 100,000 by 2026. Nearly 10 years later there is less appetite for population growth now than back then. Economists and economic policy gurus were warning back then about the weak GDP growth and its long term impacts on our fiscal situation. Now we are in our seventh year with zero real GDP growth and while there continues to be some voices warning about this – there isn’t much urgency about it.

I have been writing and thinking about this stuff for years and I feel a little Draper-esque (without the side effects). I can’t seem to formulate that single, unifying concept that will bring light bulbs over the heads of those that need a light bulb moment.

Posted in Uncategorized | 1 Comment

Social capital in New Brunswick: Some good and some not so good news

Statistics Canada recently published its “Trends in Social Capital” report for Canada and the 10 provinces. It is based on a wide ranging survey of concepts meant to test social capital including number of friends, contact with neighbours, participation in community groups, etc.

Positive highlights:

The ethnic diversity of social contacts: The percentage of NBers  who in the past month were in contact with at least a few friends from a visibly different ethnic group from their own rose from 37 percent in 2003 to 42 percent in 2013.  I have a hunch that if every NB-born person that is nervous about immigration sat down and broke bread with an immigrant most would drop their concerns.

We still fare quite well on the “lost wallet” test. 55 percent of NBers say  it is very likely to have a lost wallet or purse returned if found by a neighbour.  that is down slightly from 2003 and ranks behind NL and PEI only.

 

Red flags: 

In 2013, Quebec (36%) and New Brunswick (46%) were the two provinces with the lowest rates of monthly participation in group activities. Among other provinces, the participation rate varied between 51% and 55%. Civic participation is a very important concept.  That less than half of us do not participate in group activities is a concern.

Quebec (36%), and to a lesser degree New Brunswick (51%), recorded the lowest levels of generalized trust.

Social contact with friends:  The percentage of NBers who saw their friends a few times or more a week dropped from 67 percent in 2003 to 51 percent in 2013.  People who contacted their friends a few times or more a week dropped from 64% to 53%.  This was not unique to NB – this trend was pretty consistent across Canada.

Social contact with relatives: The percentage of NBers who saw relatives a few times or more a week also dropped significantly from 55 percent in 2003 to 38 percent in 2013.

Linguistic diversity is not where it should be:  The percentage of NBers who in the past month were only in contact with people with the same mother tongue as their own was 59 percent.  In a province where 44 percent of the population speak a language other than English (Francophones, bilingual anglophones and other languages) you would think that percentage might be lower.

 

 

Posted in Uncategorized | Comments Off

The paradox: Population growth could limit outward population migration

One of the reasons most cited for not ramping up our immigration efforts is the out-migration of our young people.  Why do we need immigrants when many of our kids can’t find jobs?

As always, the answer is more nuanced.  Many of the kids that leave are professionals that have university education and are not aligned with many of the available jobs in manufacturing and front line services.

My working hypothesis is that more immigration will lead to more higher end professional jobs.  First, you have to realize that most of the professional career jobs in New Brunswick are directly related to the population living in the province.  In other words, the services they provide cater to the population.  If the population is not growing, the number of jobs will not grow either.

Specifically, for every 10,000 people living in New Brunswick, there are (using NHS data):

Over 470 people working in management occupations
66 auditors, accountants and investment professionals
13 insurance adjusters, underwriters and assessors
44 engineers and architects
111 registered nurses and 30 licensed practical nurses
24 physicians
Four dentists
Five optometrists and chiropractors
12 pharmacists
11 physiotherapists and occupational therapists
143 elementary and secondary school teachers
16 lawyers (sorry, it’s true)
54 psychologists, social workers and counsellors
79 police officers and firefighters
26 welders, 27 electricians and 63 carpenters

In fact, for every 10,000 people living in New Brunswick there are 4,800 people working of which more than 3,000 are employed to provide goods and services to New Brunswickers.

A flatlined population means these thousands of jobs will not exist.

In 2006 Shawn Graham set a goal of growing the population by 100,000 by 2026.  We are now in 2015.  If we had the 50,000 population growth, ceteris paribus, we would have at least 15,000 jobs of which thousands would be in professional occupations as described above.

If you want new pharmacists, dentists, electricians, lawyers (sorry, it’s true) to stay in New Brunswick, we need to grow the demand and the demand grows through population growth.

Posted in Uncategorized | 1 Comment

Losing out best and brightest, illiterate, over-taxed, bankrupt….. Folks, relax

A friend of mine used to call me “Dr. Doom” as on these pages I routinely expose some fairly challenging economic and demographic data.  A role I will continue to play.

But the reason I expose this data is not to mire folks in doom and gloom but to encourage us to rise up and address our challenges as communities and as a province.

The problem is that we can get lost in this negative narrative and this can lead to exaggeration and hyperbole.  So, following from some of the blogs and social media posts I have read just in the last few weeks,  here are a few ‘facts’ for you to digest:

“We are losing out best and brightest” – My research and that of Dr. Haan does confirm that those who move away have on average higher educational attainment levels than those who remain in New Brunswick.  But that doesn’t mean all our “best” and “brightest” have left.  A small province such as New Brunswick will have a fair amount of folks who want to leave for a variety of reasons.  Did you know there are only 15 geological engineers in New Brunswick?  25 denturists? 25 physicists and astronomers? 35 archivists? Only 25 actors and comedians? There are hundreds of occupations that you will likely have to move out of New Brunswick to pursue. That doesn’t mean all of our best leave and it should not stop us from trying to attract immigrants.

It is true that the net outward migration rate has been increasing in recent years and is concerning but over the past five years the annual net migration rate has been -0.23% of the population. The sky is not falling.

“We are illiterate” – Literacy is a challenge to be sure but when I hear people say 60% of NBers are illiterate, I cringe.  First of all, it is true that 51% of NBers aged 25-64 have only level 1 or level 2 literacy (data here) but that doesn’t mean 51% can’t read or write.  Only 17 percent have level 0 or 1 literacy which means they really struggle. In fact, Newfoundland and Labrador, Quebec, Saskatchewan, British Columbia and Manitoba all have 17% of their 25-64 population with 0/1 literacy.  In fact, we are close to both the Canadian and OECD averages for literacy scores.

Is it a serious social and economic challenge? Yes. Are we that much worse than the rest of Canada? No.

“We are over-taxed” – There is not much to say here except that as Richard Saillant has pointed out the average NBer pays less tax today than they did 10 years ago as a share of their income – mainly because of the federal cut in HST.  Our goal as a society should be to keep our tax levels similar to other jurisdictions in Canada.

“We are almost bankrupt” – Provincial government debt as a percentage of GDP is lower now than it was in the 1980s (and far lower than in the 1930s).  Again, it is a big challenge but we have surmounted it before and we can again if we can get the GDP growing again and keep public spending below or at par with GDP growth.

Folks, relax.  The point is the sky is not falling.  We live in one of the most successful countries in the world and across a full range of economic indicators we are better off (as a province) than most countries in the OECD.

Four of the biggest challenges facing the province are: the shrinking under 40 labour force; the globalization of the economy; natural resources development and technological change. These four are among the biggest stressers that are creating our current economic realities.

A hundred tweets about our problems won’t get us to solutions.  If we can crack these challenges – the shrinking labour force, our position in a globalized economy, etc.  We will start to see the data start to turn around to the positive.  And then we can start complaining about the problems that come with growth for a change.

 

Posted in Uncategorized | Comments Off

Homebody redux: The ties that bind

I really enjoyed the HOMEbody symposium in Fredericton this week.  The average age in the room was likely 25 and they were talking about pretty important things.  I realize that this cohort may not like what Richard Saillant has to say and there is no obligation for them to believe it but they should hear it and take the time to deliberate.

In a world where we are crumbling under the weight of our tweets, we are making snap judgments on big issues faster than ever.  Even those in their 20s should listen and discuss his message on demographics, fiscal realities and natural resources.

The best part, however; was the storytelling.  20+ youngish NB leaders telling their stories about how they crafted very successful careers in the Drive-Through province.

For many years I have had a hunch that New Brunswickers don’t feel as attached to their province as many others do (with the notable exception of Acadians).  I don’t have any hard data to back this up but my experience over the years is that we are not as tied to our communities and province.  Once a Newfoundlander always a Newfoundlander.  Folks from PEI seem to be attached to their land.  Quebeckers are fighting the good fight.

New Brunswickers?  I’m not sure.  A while ago I had a good conversation with a guy who moved from here to Saskatchewan.  He told me as soon as the airplane touched down on the Prairies he became a Saskatchewaner.  I had another friend from high school who removed the fact he had lived most of his early life in New Brunswick from his bio because it wasn’t a positive thing for his political career out west.

What binds us to this land? To our communities? To the province? Who are our cultural icons?  Sports, music and art icons?  Do we know?  Do we celebrate them?

Part of the problem may be a lack of organizing event or concept.  A big struggle or cause can bind people together but New Brunswick hasn’t had much of that.  We have just stumbled along as a province over the decades – not big crises – no big growth events – not much excitement – ho hum.

Which brings me back to the storytelling.  Those 20+ NBers told fascinating stories of travelling the world and finding their way back to NB.  Of moving here from far and wide and building successful careers here.  Of overcoming challenges to win the big prize from little old New Brunswick.

They are dynamic, successful people in their fields from all walks of life – and doing it right here, yes, in the Drive-Through province.  All the demographic and economic data I can spew forth will not inspire people as well as these stories.  It’s a good lesson for me, too.

Posted in Uncategorized | Comments Off

The case for public investment in economic development

I am sensitive to those that are wary of government spending on economic development.  I share some of their concerns but there are a number of reasons why there should be a role for government in support of economic development.

For example there are cases where something is clearly in the public interest but where there is no easily discernable private market solution.  Take the example of promoting your community or province far and wide as a good place to do business.  We know the competition for business investment is more vigorous today than ever before but it is hard to see how the private sector would pony up the cash to pay to market a community or province.  There are many examples of the private sector stumping up some cash (think the Moncton strategic partnership) but that is more philanthropic and not tied to a direct business case for the investment. It is in the public interest to promote the community but there is no easily discernable private market (profit motive) solution.

Think about investments in R&D.  Governments around the world pour substantial sums into R&D – if we say no – we put ourselves at a competitive disadvantage.  We still have to seek value for money but there does seem to be a public interest.

Then if you think about slightly more controversial government spending such as “lender of last resort”, investments in intermediaries (industry development groups, incubators, etc.), targeted investment in infrastructure that is public in nature but supports private sector activity (i.e. airports), the philosophy is the same even though we will disagree on specifics.  There could be a distinct public interest (i.e. we need a strong economy) but no easily discernable private market solution.

This is an important distinction.  Where there is a discernable private market solution the government should be wary of intervening as it ends up displacing and distorting markets.  For example, if a project could be funded by private market sources but the proponent asks for government funding because it is easier money – that doesn’t really lead to economic development – just public funding crowding out private funding.  This is not as simple a calculus as you might think because of the competition. If jurisdiction X is prepared to provide company Y with $1 million to set up there and NB says no – even though the province would get $5 million in new tax revenue  – that is a harder thing for me to justify.

But the core principle remains intact.

An intelligent economic development model can discern between the two – when there is a public interest but no discernable private market solution versus initiatives where there is a discernable private market solution but the proponent (s) think that government money is a easier source.

Posted in Uncategorized | Comments Off

Gladwell, the underground economy and NB’s fiscal gap

I recently heard Malcolm Gladwell ruminating on why the Americas are so good at paying their taxes.  According to him, they have the highest tax paying rate (least cheating) among advanced economies and one of the most lax enforcement systems.  He only mentioned Canada in passing but we are apparently well behind the Americans.

His conclusion is that Americans pay their taxes because they believe in the value of public services – that they are getting value for their taxes.  He didn’t base it on some kind of morality (at least int he conversation I heard).

Anyway, I thought about that conversation when I read today that New Brunswick has one of the largest underground economy in Canada – estimated at $816 million per year – heavily influenced by residential construction.  The last study I saw on this back in the 1990s speculated that the EI system was a major influence on the underground economy.

But I come back to Gladwell.  Why would people in New Brunswick want to brazenly flout the law and avoid paying their fair share of taxes?

As we look to cut hundreds of millions from public spending, we could use the $100+ million in tax revenue…..

 

Posted in Uncategorized | 1 Comment

Fracturing debate: Natural gas and aquaculture

The Economist magazine this week has an interesting story about an entrepreneur who has developed a technology that uses methane and bacteria to create low cost food for farmed salmon.  All of the testing they have done shows the fish like the food and it provides all the nutritional value needed.   The article suggests that the low cost of natural gas brought on by hydraulic fracturing has brought the cost of this technology to a level where it is cheaper than other food alternatives.

So I went online to find the article – I couldn’t find it on www.economist.com so I googled the terms ‘fracking’ and ‘aquaculture’ and I stepped right into Armageddon.  Don’t get me wrong, few if any of the stories were about the intersection of fracking and aquaculture.  It’s just that these two toxic topics are featured interchangeably in so many blogs and alternative media sources that I plowed for 20 minutes and couldn’t find anything related to the topic I was looking for.   Interestingly a lot of the content was from bloggers in Nova Scotia and New Brunswick where these two issues are top of mind.

There is no doubt that someone coming cold to the debate about aquaculture or fracking if they decided to research on google they would be shocked and scared about both of these topics.   It’s not a question of degrees – online debate circa 2015 is more polarized than every and if you are unlucky enough to google ‘fracking’ and ‘aquaculture’ you will see one far end of the pole.

It actually doesn’t have to be this way.  There are a lot of common sense debates going on – they just rarely make it to the top of Google searches.  I wouldn’t call Stephen Downes, the NB-based blogger and learning technology expert, a right wing fanatic and even he laid down on these pages the five conditions that would need to be in place before he would support hydraulic fracturing.  You may agree or disagree with his list but that is far different that saying “fracking is going to destroy our water, turn our forests into an industrial wasteland and make New Brunswick uninhabitable.   One argument is based on debating facts (albeit there is legitimate debate about ‘facts’) the other is based on emotion – principally fear but if they induce anger, frustration, etc. that is a bonus.

New Brunswick has some of the thickest if not the thickest shale formation in North America. We don’t have a lot of unique comparative advantages but this could turn out to be one.  If that shale is hydrocarbon rich, if the gas can be extracted without serious negative impact on the environment and local communities maybe we should give it a try.

Will developing NB shale exacerbate global warming? This is way out of my sphere of expertise but from a straight economic perspective it is unlikely because stopping developing in one area doesn’t reduce demand.  If we don’t extract our gas, other jurisdictions will just increase production to meet the demand that our gas would have been used to fill.  Right now natural gas is being used to displace coal and to a lesser extent oil.  That trend will continue whether or not we develop our gas or not.

The counter argument is “we all need to do our part” and it’s not our concern if other areas don’t care about the environment.

I disagree with that sentiment.  If Canada took more deliberate steps to reduce its demand for carbon-based fuels that would be far more beneficial to the environment than efforts to curb supply.  A 30% reduction in the demand for fossil fuel-based energy would be a steep reduction in our emissions.  Stopping shale gas in New Brunswick would likely have no effect on global emissions and could raise them as the need to ship gas from far markets to the Maritimes is in itself an energy-intensive effort.

Let’s have a common sense debate.

 

Posted in Uncategorized | 1 Comment