My position on urbanity

I got my fingers rapped a bit in a meeting last week after making my soapbox speech about the need for dominant, strong and successful urban areas in New Brunswick. I was provided with the usual commentary about ‘Moncton getting everything’ or ‘Saint John will get everything now’ (presumably because of the six Cabinet members).

So, for the record, here’s my position on the issue.

1. Concentration of economic activity
Almost all forms of economic life are based on concentration. For every 500 people, you need a convenience store. For every 2,000 people you need a gas station. For every 5,000 people you need a pharmacy. For every 500,000 people you need a good airport. For every million people you need a patent lawyer. For every two million people you need an NHL team and for every 20 million, you need a hedge fund industry. (#s are approximate)

In any political context (municipality, province, country), similar things hold. If you don’t have concentration of population enough to support a specific economic activity, that economic activity will be supported outside the local market. For example, there are thousands of people working in the GTA supported by the economic activity in New Brunswick. This ranges from bank head offices to retail/wholesale warehouses to specialized legal and financial services.

I have never seen any good input/output models on this but I would suspect that at least 30% of the economic activity generated by New Brunswick is supported outside the province – mostly in large urban centres. If you add in the billions in pension and retirement funds generated in New Brunswick and spent on companies outside New Brunswick (just about all of our dough), that number would likely rise.

So, that is one of the main reasons why we need strong and dominant urban centres. Because there is economic activity that can only exist in urban areas and if we have no real urban areas to speak of, it will be done elsewhere.

New Brunswick is the only province in Canada to not have an urban area of at least 25% of the provincial population (Saint John and Moncton metro areas are both hovering at around 17%).

Everyone talks about ‘buying local’ now. It’s the new rage in local economic development. I have a little different take. Instead of buying a bushel of apples from your local farmer (as one example of buying local) how about having your hedge fund managed locally. Or how about the animated series your kids watch on TV produced locally. Sure, those activities require national and even international markets but they could be done here. Why not?

2. Intraprovincial ‘Equalization’
The reality is that you need successful and strong urban economies to provide the tax base for province-wide economic and social programs. The lack of urbanity in New Brunswick is a direct cause – in my opinion – of the province wide problems we have generating the tax base required to hold the line or reduce our dependence on national Equalization programs. In a nutshell, we need strong urban centres to have the funds to support successful rural development. This is the point that most people completely disagree with me on but I hold firm.

3. Urban/Rural Linkages
I have read and reported on this issue to many clients and on this blog. There is an overwhelming body of evidence now to suggest that the stronger the urban/rural linkages (social, economic and political) the better the economic outcomes for all. The more ‘orphaned’ an economy is from a dominant urban centre, there is a direct correlation with its inability to have a strong economy. For the most part, a dominant urban centre can have significant economic spinoff effects up to one hour to 1.5 hours commute. In New Brunswick, that would mean almost the entire population. That would also mean the need for a strong urban anchor in the north.

4. Conclusion
The Census population numbers will be published this morning. They will confirm what I have said all along. No need to repeat here (I’ll blog later on this). The reality is there are two potential futures for New Brunswick (in general terms) as it relates to economy and population.

A. Current Trend
New Brunswick’s population continues to decline at an increasing rate. We went from relatively strong growth in the 1970s to weak growth in the 1990s to decline (population) now in the 2000s. Following a similar pattern, here is what we will look like in 30 years.

Population:
New Brunswick +/- 600,000
Moncton Metro +/- 200,000
Saint John Metro +/- 150,000
Fredericton Metro ?? – less than 100,000*
All other areas of New Brunswick 150,000

*I think within 10-15 years without a significant positive change in economic realities, the Federal government will convene some kind of royal commission which will call for Maritime Union and I think that Fredericton could be the biggest loser here as the government would centralize in Halifax.

Of course, this scenario is definitely macabre. With a 600k population (and escalating government spending +38% under Lord), government programs would be drastically cut back. Hospitals would be all but centralized in urban centres. All that would be left in rural NB would be the absolute minimum economic activity (a mine, convenience store and maybe a small school). And you would have the desired 75% urban/25% rural split (desired by many thinkers these days).

My proposed scenario is this:

Population*:
New Brunswick +/- 1.25 million
Moncton Metro +/- 375,000**
Saint John Metro +/- 325,000**
Fredericton Metro +/- 150,000**
All other areas of New Brunswick 350,000

*No political Maritime Union but very strong economic and political cooperation. No more fighting over the table scraps.

**The Greater Metro areas. Strong growth would be in the urban region. Hopefully we would get some good urban planning here.

It’s a funny thing. In my scenario you still have 73% urban but you have an actual increase in the population outside the three main urban centres.

You would have strong, dominant and growing urban centres. Yes, you would likely have more commuting in from peripheral rural regions (hopefully but smart buses or some other form of urban transit). But you also have successful, small towns based well calibrated to the needs of their local population but also with economic activity based in the 21st century not the 19th century.

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0 Responses to My position on urbanity

  1. mikel says:

    That’s a little faulty logic, based on common assumptions that are predetermined. For example, the REASON the ‘rural’ economies must be ‘attached’ to urban ones in your little experiment, is because rural areas do not possess the political means to control their resources.

    So the underlying assumption is that “you (meaning the rural area) are going to get *&^%ed over by our stronger political representation and economic development, therefore your best bet is to have your demographic linked to ours”.

    And it may well turn out to be the case, but only BECAUSE of the political control they lack.

    So lets talk about New Brunswick. Let’s talk specifically about St. Stephen. St. Stephen exists because of Ganong chocolates primarily, otherwise the town would have the minute population of other regional areas.

    But it’s not because Ganongs makes lots of money selling chocolates in St. Stephen, or even Saint John, or even New Brunswick!

    In an export economy, particularly one with a small local population, the idea of building an economy is POSSIBLE based on local purchases, in fact most start out that way, but not because of the immediate locality.

    Let’s take pumphouse. They started in Moncton, but could just as easily have started in Sussex as a Brewpub, in fact they may have been even more successful there. Then the expansion goes outwards to the rest of New Brunswick and the maritimes, and ontario.

    However, that’s not because they are located in Moncton. Transportation costs would still almost identical if they were in St.Albans selling to the rest of the maritimes.

    Take Sabian as another example, they are in a tiny village and provide good wages in that small population. For all the ‘Mathis Instruments’ out there, nobody ever talks about Sabian. With an international market available, there is absolutely nothing stopping a ‘sabian’ type of company starting up in virtually any industry, go to ebay and you can get an idea of just how many possibilities there are.

    Sabian doesn’t make money because of its proximity to Fredericton, it sells only .001% of its product there.

    The central problem is that in the academic study of economic development, the potential of people is discounted, its all numbers and theories. In theory, and in reality, all it takes is PEOPLE to start making products and exporting them to have an exporting economy. That is why the OECD talks about Canada’s need for research, and things are linked to education. Take a look at our Richard Harris interview, this poor guy simply didn’t have the education to be able to deal with government lawyers. Education contributes to the economy in more ways than can be measured by employment-this guy had a development in the works, now he has nothing.

    For THAT to happen you don’t need an urban area, hell, the airports in the province, and in most places, are not even IN the cities, they are closer to rural areas than they are to urban areas. The Fredericton Airport is closer to Oromocto than it is to Fredericton.

    The reason these things get centralized is because of political, not economic reasons. Go to virtually any small town in mainland europe and you will see this. These are populations that grow moderately, and have for centuries.

    That’s where logic falls down, and like I’ve said, it often borders on hypocritical simply because the argument for ‘clusters’ can be made in Canada as well-so NB doesn’t get the money because ‘its population is too small’.

    That introduces the Atlantica theory of development, that by simply having those means of transportation hooked up to larger areas, the maritimes will prosper. However, that has never been proven to be the case.

    That’s exactly why people protest at these things and why people should at least be more sympathetic to them. Because there is another equally viable economic development model based on distributing goods fairly and through co ops as the central means of concentration.

    In this theory you start out with the most marginalized and work with them first. So Campbellton and Edmunston get development so that they are not the ‘drain’ on the province they currently are. It’s not just an irony that this is virtually the same argument made at this blog about federal spending priorities. It’s all about ‘fairness’. Rural areas can easily compete with urban ones-if they have the tools and power. Third world countries are doing it all over the place, native reserves are doing it, and many states and even some provinces do it regularly.

  2. David Campbell says:

    I am not sure your point because I agree with some elements of it. My ‘theory’ is predecated on governments supporting smaller community economic development be it rural data centres, manufacturing or agrifood. In ‘my’ model, a lot of development now going into larger NB cities (because there’s nothing else) should be going into smaller communities. But there does need to be these linkages. And as for your comment about ‘political representation’ – NB has the second most rural province in Canada and likely in North America and that ‘political representation’ has gotten rural NB nowhere. Ultimately, I think we have an opportunity to make New Brunswick a testbed for a new urban/rural dynamic one in which stuff that should be in urban areas is and stuff that should be in rural areas is (to use bad grammer). I don’t buy into a win-lose model (i.e. urban-rural) for New Brunswick. I think that if you are sitting in Toronto – all of New Brunswick is ‘rural’ and should be urbanized into a larger urban centre (sorry Moncton no dice – just ask the influencial Conference Board). So we need to understand what urbanization ‘is’ and how we can successfully adapt it to a province like NB.

  3. Anonymous says:

    There’s a difference between urban and rural populations and representation. As you well know, that argument is made for the maritimes as well-that the maritimes are sparsely populated and have too much representation in Ottawa.

    As an example, Fairvote Canada mentions that maritimers put X number of liberals into power, whereas green party voters had higher numbers but didn’t elect a single MP.

    To say though that PEI or NB has benefitted out of ‘having more representation’ than their numbers warrant is a little off kilter.

    In NB, the ‘rural’ areas are primarily northern new brunswick. Rural areas in the south are at least marginally close to large urban centres.

    And representation is by area, not by ideology. So you vote for tory or liberal, you don’t vote for ‘the agricultural party’ or anything like that.

    Combine that with complete authority at the provincial government level and that’s what does in many municipalities. IF St. Quentin could say “well Irving has *&^^ed us over long enough, we’re adding timber royalties to our municipal tax base” then they’d have a hell of a lot more money to match ED in cities.

    They simply can’t do that, just like New Brunswick can’t say “we’re going to take the federal taxes people pay and put it toward ED”. It simply can’t happen.

    So to debate that point imagine this. Say half of all the representatives in legislation represented Edmunstun. Would economic development look like it does? Of course not. That’s why Ontario gets all the federal money-because thats where the people and the politicians are.

    In NB you have moncton with six politicians, no rural area has close to that. Most have one for a huge geographic area. So there is no WAY that rural areas have the same representation, not even close.

    And that has an effect. Look at what happened in Nackawic, just a short ride from Fredericton. They bend over to keep the mill going, yet in bathurst the answer is ‘well, thats the market’. Of course it could also be a liberal tory thing. However, Molson didn’t set up in Moncton on a whim, they could have gone just down the highway toward Nova Scotia.

    So my point is simply that currently nobody pays the least respect towards rural areas, they are simply a location to extract raw materials. If people REALLY want to help rural areas, listen to their needs, they are heard virtually every time there is a committee.

    There’s a reason they say ‘give a fisherman a fish and you feed him for a day…’. Essentially what that means is that IF you give people resources to control their own fate, they will do so, or at least are responsible if they don’t. Those two idiots in the self sufficiency panel at least recognize that, however, its doubtful that will have much effect, quite simply because where the representation is, is where policies go.

  4. Paulin says:

    “Go to virtually any small town in mainland europe and you will see this.”

    Yes, but like Campbell said, you need only to drive 1 to 1,5 hour to get to a major city in europe.

    I’ve never travel to europe but I always tough the concentration of people were a lot higher. City were more crowded.

    but maybe i’m wrong

  5. Wendy Waters says:

    David,

    How would you propose to achieve the population growths in the different cities? Government subsidies for certain corporations in each city? subsidies for residents?

    I agree that NB needs a strong urban centre to create the synergies that would result in more organic economic growth. But I’m not sure if this can be created with local policies, or local policies alone.

    If you believe the conference board in their MISSION POSSIBLE reports, strong growth in Halifax enough to put it on a global investment map might do the most for bringing investment and economic growth to NB cities.

    *****
    On the federal government forcing a maritime union…you may be right (as awkward politically as this would be).

    One the BC-Alberta economic union is complete, and if Saskatchewan and Manitoba join, taking down all inter-provincial trade barriers west of Ontario, it will further isolate the Maritimes unless the entire country takes down trade barriers. Quebec probably won’t go for this. Therefore the Atlantic Provinces best option would be to create one economic if not political entity suddenly it’s a more viable market for investment for local, national and global business.

  6. Anonymous says:

    It depends what you mean by ‘city’, and ‘concentrated’. That’s because the countries are much much smaller. More importantly, the political structures are far different, so even if a village is close to a city, it doesn’t exist as a ‘hub’ of that city just because its close to it.

    However, before heading for europe keep in mind that even north america has different political representations.

    Start with our Atlantica Partner in Vermont. Here is a state that is even more ‘rural’ than New Brunswick. Yet here the population is growing, just not particularly fast. More importantly, the largest city in the state is not even as large as Fredericton with only 45,000 people.

    Yet here there is quite extensive economic development, and is of course home of Ben and Jerry’s. Here we see an example of policies that actually FAVOUR agriculture, since that is the main rural staple. So here we see that although Vermont is a member of the Northeast Energy consortium, they are implementing policies whereby farmers can get extra income by providing natural methane which they get from biomass as well as their herds.

    And forget what you’ve heard from those AIMS idiots, in fact by studies by the taxpayer federation in the states, its’ been found that Vermont actually gets less federal aid than its right wing counterpart New Hampshire, and that’s even though the bottom half of NH is pretty much a suburb of Boston. Plus, Vermont has less state debt, and therefore smaller debt payments. They also have a higher minimum wage, by far, than New Hampshire.

    Not to labour that point now look at Ireland. Take a look at a place like Waterford, which also has a population smaller than fredericton but has become world renowned for its crystal. It didn’t get that way because it was two and a half hours to Cork or three hours to Dublin. Like ganong they know that to compete internationally, it makes no difference how large your local market is.

    Most of europe is more densily populated because it is much smaller. But cities and large towns are usually spread out, thats because each is a ‘master of its domain’ so to speak. In other words, there isn’t a larger political structure dictating how they should align their trade policies.

    So go to a village in Tuscany and you will literally find everything provided for you by local merchants. The accomodations are owned locally, the produce is grown locally, the meat and other food, wine and olive oil is all local. And the entertainment is local, and in many resorts you don’t even find televisions.

    This is why in France you see such huge protests over European Union dictates and agriculture. This is why there was such vehemence against genetically modified foods. They KNOW what that means, and they know it hurts their rural areas.

    In the US, they at least have the money that they simply throw cash at the few remaining farmers to tide them over til they die out, in canada, the entire industries are essentially run by corporate conglomerates now. That’s because local decision making is out of their hands, so even if the people knew what was in their best interests, they couldn’t do anything about it. Combine that with a media that simply ignores them, and you’ll see why the next census will probably have the number of farms in NB at its lowest point ever. Last time I checked I think the number of operating farms was about 2000 but could have been as low as 1200, I can’t remember.

    In europe or Vermont there is as many as that in a single district. But again, that’s because they have the political system, at the very least proportional representation, that lets them control their resources.

  7. David Campbell says:

    “How would you propose to achieve the population growths in the different cities? Government subsidies for certain corporations in each city? subsidies for residents? “

    I believe that government is and always will be an ‘actor’ in any economy. The government sector in Canada accounts for over 1/4 of the total GDP and influences much more than that through policy and legislation. Historically, governments have been very active in supporting specific industry growth in their countries, provinces and communities. Take ‘new media’ in BC, or aerospace in Quebec or auto in Ontario or oil & gas (probably the largest subsidy I have ever seen to get the oil sands going) or agriculture. I am categorically opposed to government subsidies for bad business models or to serve some short term political need. But I am a major proponent of strategically investing with the private sector in infrastructure, R&D, workforce training, etc. to leverage growth in specific industry sectors. What’s the alternative? Either we scrap our welfare state or we scrap our national funding formula (Equalization) or we try to be more deliberate about economic development. And as for the lack of urbanity in New Brunswick, I think we must realize this has been a major impediment to growth over the long term.

    And just to put a final point on it, I think we need less government intervention in the economy – not more. I would either scrap or severely downsize all these programs that let the banks off the hook by transfering financial risk to government (i.e business loan guarantees). We need to have a well-structured and well-function capital and debt market in Atl. Canada and we certainly don’t have that yet.