On India and dribbling off into an EI rant

Thanks to the person who put me on to UChannel. I am back up to 2-3 podcasts a day. I forgo watching the Biden/Palen, oops I mean Harper/Dion debate to listen to this podcast about Kamal Nath, Minister of Commerce and Industry, Government of India.

Nath is an interesting bloke. He talked about how early on India wanted to take a different path of economic development. They didn’t want the socialism of the Russian system, they didn’t want the boom/bust of the Latin American economies and they didn’t want the highly capitalistic model of the USA. So they crafted an Indian model and see that as the underpinning of the success they have had today.

I can’t remember all the interesting points he made but one stuck in my head. He said they tried to force economic interdependencies between the the Provinces. He used the example of building a coal fired power plant 1,200 kilometres from the source of the coal so that two provinces could benefit. He didn’t explain in detail but I think he was advocating this approach.

I think in the long term governments would be better off focusing on investing in infrastructure, education and other structures that make provinces attractive for investment and then promoting the heck out of the region for new business investment.

It sounds good at a superficial level but what happens when the environment changes and governments pull the plug (think federal shipping subsidies for Atl. Canadian manufacturers until the early 1990s when Cretien pulled the plug). I don’t think the government should build up these faux economies -whether they are built on shipping subsidies or subsidies directly to companies or massive income supplementation through evermore lucrative EI. I know I get hammered for saying that (here and when I go to the ‘Chi) but look at the population trend in Northumberland County – Miramichi – it peaks about the time EI was getting firmly entrenched in that area.

1951 – 42,994
1956 – 47,223
1961 – 50,035
1966 – 51,711
1971 – 51,560
1976 – 53,894
1981 – 54,130
1986 – 52,981
1991 – 52,983
1996 – 52,153
2001 – 50,817
2006 – 48,868

Obviously there is more going on here than just EI but it seems increasingly clear to me that the more bandaids the government puts on underlying economic problems, the more disinterested they are about fixing the underlying problems.

Let me tell you what I think. There are around 100,000 seasonal workers in New Brunswick that collect EI each year. The government (at least the Liberals) wants to make it even ‘easier’ for these folks to collect EI (total EI payouts have gone up something like 25% just since Stephen Harper made it ‘easier’ to collect EI a couple of years ago). They say this is a natural recognition of the seasonal nature of the workforce and government should support these workers.

I don’t agree. Even if 50,000 of those workers could be switched to year round work you would massively improve the economic potential of the province and many rural communities. You would also see a significant decrease in black market work. I’m not even saying scrap the seasonal work. I am saying that the time is right to look at going back to a time when guys had differnet jobs in the winter and in the summer. My father remembers a time in the Miramichi when men worked three and four different, seasonal jobs – cutting lumber, guiding sports, plowing snow, etc. Imagine now when those jobs actually pay good money.

Done. Sorry for the rant.

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One Response to On India and dribbling off into an EI rant

  1. mikel says:

    That really WAS a rant. I thought I was reading NBT’s blog there for a second. It may have been coincidental with my last post, but let us get this straight, not only are you ‘against’ Maine’s economy and the US federal government protecting shipbuilding there, but you are also against EI. But in the long term you think ‘investing in infrastructure and education’ is the way to go? (the same education that leads to qualified people leaving?)

    Actually, if you think about it that makes sense-and it leaves one very glaring economic model-Richard Florida’s. First though, is the inherent problem you have in explaining that IF government investment in, say, shipping, is inherently unstable, then of course Foreign Direct Investment, with its control in international investors, is FAR more unstable.

    But let’s look at the data-they say unemployment ‘doesn’t exist’ if it is 2.5% of the population. New Brunswick, of course, is divided into three EI regions. The Fredericton, Saint John and Moncton region has an unemployment rate of 6% currently. If you count in the ‘fact’ that at least SOME of that is people from other regions coming and looking for work, that essentially ends the problem-that’s almost literally NO unemployment. So we’re done with the three cities-there is no more reason for ANY more investment in ANYTHING. That’s unless you want to admit that the PURPOSE of your economic development is to empty out the other regions.

    That’s a very specific kind of economic development, very much akin to Richard Florida’s focus on big cities. So what the focus of the blog should be is investment in the other two regions, particularly the north and west, where unemployment is in double digits, often 15%.

    Even ‘outmigration’ is most likely in that same vein. The last I heard the populations of the three main cities were increasing, not decreasing.

    SO, that SHOULD give a new perspective. HOW do you increase infrastructure and education in the marginal economies of the province? OH OH, I know, I know, how about for starters you actually provide them with at least equal opportunities? By the same reasoning you mention equal investment in New Brunswick as Ontario and Alberta (even admitting that it must be ‘tailored’ to the specific region), then we should admit that rural parts of NB -which have much lower salaries, need different types of investment.

    SO, the question becomes, WHAT type of ‘infrastructure’ and ‘educational’ investments are we talking about? That’s where the debate opens up, and I suggest the first thing to do is ASK them. So, for example you can see the frequent complaint that high speed internet costs roughly TWICE what it costs in the city-but let’s recall that the bureaucrats in downtown Fredericton get it for free.

    So one thought is making the entire province a free wi fi zone-particularly the rural areas-and provide training to get users ‘up to speed’. I agree with the other poster that there is no real need to, say, build yet another university-there are lots of buildings there and satellite branches are quite enough.

    So for education, the other problem is cost. This is an issue all across Canada, but it IS provincial jurisdiction. So to focus on education, the best thing to do is once again get government involved and provide free training-which is essentially what EI does.

    The problem then becomes ‘what about jobs’? Again, this is where EVERY theory falls into that ’cause and effect’ loop. You want the jobs, but need the education and infrastructure, you want the education and infrastructure, but need the jobs first.

    There is ONE suggestion at least thats been put out there quite regularly that is usually ignored even here-and that is McAdams plan for community forestry. This is big especially out in BC, but McAdam has gone so far as to even get bank investment and support for their plan, which the government won’t even look at.

    Which means, of course, that once again the cheif problem is NOT ‘economics stupid’, but POLITICS. How do you get it so that these regions can actually get a voice in a government that has ignored the north and west every bit as much as New Brunswick is ignored in Ottawa?

    Sorry for that rant, but wasn’t it better than a big long critique about what poor science that is- making the ‘correlation’ that EI is ‘coincidentally’ “firmly entrenched” in the same year that population was highest?:) Ya didn’t use that same line of thinking when criticizing Richard Florida’s data did ya?:)

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