Sprinkling money

I’m fairly new to the writing for a wide public audience.  Seasoned writers know how to use works to conjure up the right images in the mind to make the point.  The TJ editorial today used the phrase:

Sprinkling money on pet projects might be politically expedient, but it won’t stop the exodus of the most industrious young people from the north looking for better jobs.

I admit this is a rhetorical statement but that term “sprinkling money” actually provides us with an important economic development learning. 

When you step back and ask if government giving money to businesses is having the right effect, in a global sense you have to say it doesn’t look like it – at least if your goal is a growing population and generating enough private business investment to extract enough tax revenue to limit our reliance on federal transfer payments.

So it seems to me that this term “sprinkling money” is a good one to study.  Are we spending the public money wisely by sprinkling money around on hundreds of small projects – some without any incremental employment?  Or are we wiser to take a step back and see if concentrating our money in a few tightly defined areas is a better way (even though the short term political ramifactions would be negative)?

Maybe this component manufacturing strategy put forward by ROC could actually work.  Maybe we could attract companies and grow existing ones through sub-contracts in this area.  Maybe this could be an excellent bridge economic development strategy for the north to fill in for the next 20-30 years.

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17 Responses to Sprinkling money

  1. Anonymous says:

    If any substantial ED progress is to be made, we absolutely have to focus. As suggested, sprinkling funds has little impact and ends up in pet political projects.

    PEI focused on aerospace and built a nice export business. Now they are focused on biotech. Montreal focused on aerospace. Ontario focused on automotive. Hell, look what happened when NB focused on the contact center industry.

    We need to identify a niche where we have some sort of competitive advantage and focus funding, policy and resources to build on it. There are success stories locally, regionally, nationally and globally with this strategy. If we return to this strategy which worked for us 20 years ago, we can expect better results.

  2. Frederic S. Gionet says:

    I love dreamy, societal ED projects as much as everyone, and believe there are a few key industries in which our country could benefit to be the world leader, but our history is also peppered with ‘white elephants’ that failed to propel the targeted economic segments.

    At the other extreme, is the fundamental belief that government should encourage the free market to breathe in the stimulus fairy dust and intuitively figure out the best way to put this to optimal use.

    I don’t believe we quite know where the ‘right’ answer lies outside the political spheres of influence, but this may end up being a global game where we cannot win big without putting some chips on that roulette table.

    One thing is sure, our country and our industries must to excel at whatever journey they undertake. The globalisation v3.0 event currently under way, with all its tribulations, will leave no room to weak players.

  3. mikel says:

    If you look at the ‘sprinkling’, there isn’t much doubt that those ARE the ‘tightly knit’ industries. Go to ACOA and its not like some lady making ceramic dishes in her basement is getting cash to grow (even though that’s how Ben and Jerry’s got started). Keep in mind that other provinces do plenty of ‘sprinkling’, its not like PEI ONLY gives money to Aerospace companies. Remember about six years ago when the province got fleeced by an ‘investor’ who claimed there was natural gas wells all over the province? They bought into that BIG time.

    But I’ll again posit a question that never got answered before. If you (or anybody reading the blog) were going to spend the provinces money, say on a ‘target’, what would you pick and how would you allot the money (not in detail)? Say you were writing legislation and could pick this ‘specific’ industry for a 50 or 100 million boost-what would it be? (not allowed using animation-that’s been done). Last time I mentioned it I got no answers, which feeds into that ‘negativity’ aspect mentioned below. It’s one thing to be critical, its another to not have any other options (ironically its usually what critics deride protestors for-even though they at least HAVE alternatives).

    I don’t like being critical of what David does, because its probably the most valuable blog in the province, even more valuable than most of the media (which is a good reason to be critical). But apart from spending lots of money on a crack marketing team (we don’t actually know that they DON”T have that), we see very few alternatives here on what the province SHOULD do. We know David’s view is that the province needs more FDI, but its the HOW that’s the issue.

  4. Anonymous says:

    The Province is getting nothing and going nowhere.
    Does this have to be repeated in BOTH offical languages?

  5. Tristan says:

    Just a few suggestions for strategic investment in the maritimes. One, green technology, I can’t see it doing anything but grow in the next decade, and two, agriculture. I just read an article in the TJ that states that farmers (other than dairy) haven’t been supported for years and their numbers have been decreasing for 75 years. In a rural province such as ours, especially one focused on self sufficiency, I think a little food production is not a bad idea. Feel free to pick apart my ideas, economics is not my strong point.

  6. Anonymous says:

    Mikel, you are missing the point that there are hundreds of employees and millions of dollars already being spent to do things like identify and vet such targets. If you can arrange to allocate some of those resources to me, I’ll get a full report back to you.

    In the meantime, an excellent example is presented above. Green technology has enourmous market potential. There is substantial funding (private and public) available. Looking internal, we have a high concentration of enginneers, specifically environmental engineering with international experience in technolgies like wastewater treatment, emmisions scrubbers, composting and landfills. This would certainly be an area worth allocating some resources to explore ramping up as an ED focus.

    There are others such as energy related technologies or perhaps biotech derrivities from forestry. David often mentions data warehousing. There might be military opportunities since the largest base in the commonwealth is located at Gagetown. These are the things that need research and investigation.I know you are anxious for people to put forward suggestions so you can systematically shoot them down but the successes other ED efforts have enjoyed did not happen by accident; they involved research and planning then targeted action.

  7. mikel says:

    Actually that’s WAY off base. Any long time readers will know my point has always been to try to get passed the ‘griping’ stage to the actually doing something stage. First, again, readers have to realize their government’s priorities. They are the Atlantica gateway concept and energy in St. John. They’ve said that. With yesterday’s announcement it should be crystal clear to NBers that in forestry bio tech and green technologies are NOT priorities.

    For Green technologies, we can look at examples. Among the greenest is wind, and the province is among the slowest at adopting this technology. In Boston, a wind generator paid back its investment in FIVE years. Virtually NO other energy infrastructure can make that claim.

    So, how do you get those priorities into the Legislature? You form an organization. That’s how EVERY policy issue gets challenged. For green technologies you can also join the conservation council-whether you like them or not, because its primarily environmental groups pushing that.

    For agriculture there is NO other industry with more organizations than farming.

    Data warehousing is different, but we’re making the assumption here that BNB is for some reason avoiding such an industry. It’s simple reality that there are only X number of such companies expanding. A good way to get involved there though is through municipal politics since they often own the buildings and land.

    So absolutely, you can have the view that its BNB’s job for its hundreds of workers and thats it and all people can do is sit at the sidelines and criticize. Or, we can come up with some solid policy proposals and actually try to get something positive accomplished.

  8. richard says:

    A major problem with ACOA and related agencies is that they are often used to buy votes, not create sustainable high-paying jobs. A couple of weeks ago, it was announced (and discussed here) that funding was to be provided to a number of small companies (a number were in the Shediac region I believe); these were in the main tourism outfits that will provide minimum wage jobs. That sure sounds like sprinkling to me. If ACOA, for example, was really interested in being of benefit to the Maritimes, then it would be interested in selecting a few quality job sectors and concentrating on them.

    I see zero strategy from the current NB government; apart of course from a plan to get re-elected. That, to them, means construction jobs. Now, they could develop plans and invest funds in green technologies, wood biomass conversion, research labs, etc. Those would also create contruction jobs, but that would mean having a plan to develop the province (now that would be an actual energy focus) rather than a plan to get re-elected. Much easier to hitch a ride with the Irvings, who happen to have a few plans in their pockets.

    David Coon, bless his heart, isn’t going to change anything. He’s just talking to himself. What’s needed is a political leader with a vision to move the province forward. We sure don’t have one now; perhaps we could pool our funds and re-incarnate LJ Robichaud – he’d know what to do. Without the right leadership, no amount of policy proposals will achieve anything.

  9. Anonymous says:

    Well said Richard. It takes leadership and they need to have a genuine interest in ED strategy not preoccupation with political correctness.

    One thought on this; while we pay dearly for our elected leadership, if they are not providing it, perhaps some of it can come from the private sector. If there is some postive momentum with it, the politcians will be tripping over themselves to get involved to take credit and be in the photos. Since recent governments have not had a strong ED strategy, the way to win their support may be to get something started despite them and wait for them to beg to get involved. Anybody know of examples elsewhere where this strategy worked?

  10. mikel says:

    Again, that’s stating the obvious. For Richard’s point, the problem isn’t the sprinkling, its the lack of other industries. I wonder if they cancelled all the ‘sprinkling’ whether that would have critics saying “well, at least they aren’t sprinkling” all while the few companies kept afloat by small investments go out of business. But there’s nothing wrong with ‘planning to get elected’, imagine being aghast that politicians are trying to get elected!

    But Louis Robichaud was notoriously bad on the economic file, go read some the history of his mining policies. But people here are still forgetting how politics is done. Irving doesn’t get his way by running blogs criticizing the government. Again, I don’t know if its that culture of defeat, but its ironic the poster above claims I”M just shooting down ideas.

    David Coon is not THE conservation council, far from it. But I hate to say it, but at some level people get the government they deserve. If being an armchair critic is all people are willing to do in the political arena, you can’t be surprised that the government doesn’t take such criticism’s seriously. Personally, I’m glad they don’t.

  11. richard says:

    “If being an armchair critic is all people are willing to do in the political arena”

    I guess you are referring to Coon, as you have no idea what other posters here are doing. Its obvious no one with any clout listens to Coon, so he may as well be sitting in an armchair.

    “But Louis Robichaud was notoriously bad on the economic file”

    That might be true, but he had the vision to push NB thru some revolutionary changes. That’s the point; he, unlike Graham, had vision and the guts to match. He tackled Irving head-on. Think Graham has the balls to do that?

    “But there’s nothing wrong with ‘planning to get elected’”

    Well, it is a problem if that’s their entire strategy. Ask Graham why he got into politics; it wasn’t just to get re-elected (at least that is what he said).

    “For Richard’s point, the problem isn’t the sprinkling, its the lack of other industries.”

    No, the problem is the lack of any interest on the part of GNB in producing a rational strategy that would produce a significant number of high-paying sustainable jobs.

    AS far as Irving and McCain are concerned, if you are upset about the way they get what they want, then the most likely way to reduce their influence is to have other opposing powers of influence. In this day and age, that is most likely to come from industries with other concerns. Lets say we had a large data services plant or three; for various reasons the owners of these companies might want green energy, community forestry, etc. When they came to the table (perhaps with little David Coon at their side) and asked GNB to do what they want, not what Irving wanted, do you think that GNB might just stick its collective finger in the air and see what political winds were blowing, rather than just roll-over for Irving?

    Supposing that some sort of grass-roots organization is going to force GNB to change, when there are no big industrial players to stand up with the ‘roots’, well that is incredibly naive. Not to mention being the opposite of constructive.

  12. nbt says:

    from the north? If normal economies had the problems which are occurring in the southern parts of the province, they would have pulled the “economic crisis” lever quite sometime ago.

    Unfortunately, you guys are married to the gerrymandering of monthly labour force statistics instead of tackling the real problem head on. I wonder if anybody has measured how such a damaging ethos/practice will effect the future prosperity of a region. in that, it prevent any healthy move forward.

  13. I am happy to have a wide discussion,NBT. If you want to clearly articulate how a pure free market model grafted onto Northern NB right now would lead to better economic outcomes – let’s have that discussion. You know my problem with that. It’s that whole goose/gander thing. You want NB to adopt strict free market economic development (whatever that is) while Ontario, Quebec, Alberta – is bailing out their industries in droves. I just heard a funny story yesterday. There was a fairly large and good quality customer contact centre project looking at Moncton. They decided against Moncton when Sudbury offered them five times as much money. They ended up in Windsor, Ontario for even more than Sudbury.

    I am just saying until we get an interprovincial agreement on the restriction of direct government incentives to industry, I don’t think New Brunswick should unilaterally disarm.

  14. mikel says:

    It’s not particularly naive. While I argued against it, and we don’t have all the evidence, David was making the claim that it was the Conservation Council that killed the investment deal to bring the luxury home development to the Sussex area. I highly doubt its true, but that shows some real clout.

    But to be critical, just because David Coon doesn’t get on the news doesn’t mean the conservation council is not effective. In NB they are almost literally the only place environmentalists can go, and there have been numerous programs they have pushed along. Just take a look at how ‘green’ our society is, or at least how much of an impact that has on society. That’s thanks to green organizations like the CC.

    But let’s pretend Richard is right in that IF the large industrial players with the political connections need a ‘balance’ and the only way to get that balance is with OTHER large industrial players with different needs, then logically its a pretty good bet as to WHY the government isn’t bringing in those other industries. So you have a government controlled by large industrial players who DON”T want other large industrial players.

    So first of all, you’ve just admitted that at least in large part its not so much the government as it is the industrialists. And second, HOW ELSE but from grassroots organization do you think that will change? Just take a look at what the grassroots organization on the mining file accomplished in just a few month. While it didnt’ ban it, it certainly got a new policy on the issue. And that was a proposal AGAINST economic development by those getting hurt by it. That’s from a group of disorganized people who got organized on Facebook.

    So imagine a group with a concrete plan FOR an economic development that makes sense. Graham IS making the ‘hard decisions’. Just the other day he stood up and basically handed over whats left of NB forests to the major industrialists. And YOU get to pay for it. That takes real balls to stand up to the demands of most NBers (who are voters) and hand over resources. But again, thats because of those large industrialists. The ONLY way a politician can stand up to that is with voter support-another word for grassroots. Keep in mind that everybody posting here is engaged somewhat in grassroots organizing. David has the blog, and people come here and read and post. If we all thought that it had NO effect it would be a real waste of time. If every kid in every class, or every adult actually read the blog then even THAT perhaps would make a difference. But that’s not going to happen, so again, if there ISN”T a grassroots movement to push an agenda, then of course it won’t happen. Nothing exists in vacuum. Nobody says its easy or that government would jump all over the ideas, but if there is no attempt to change government policies, obviously they won’t change. Naive or not, if it ISN”T done, well, just talk to Dave. What is this, three years and counting…and how many proposals have been adopted by EITHER government? Perhaps people simply get an enjoyment out of seeing things bad so they have something to criticize, but thats definitely a ‘culture of defeat’. Hopefully the next generation will be a bit more ‘naive’.

  15. richard says:

    ” I highly doubt its true, but that shows some real clout. ”

    Make up your mind. If they didn’t stop it, then it is hardly an example of clout.

    “logically its a pretty good bet as to WHY the government isn’t bringing in those other industries”

    That is just ridiculous. The civil service, the MLAs, etc are not that different from anyone else in NB wrt their views of e.g. the Irvings. They would love to have some balancing industries.

    “That takes real balls to stand up to the demands of most NBers (who are voters)”

    Do you have any evidence that Graham is standing up to the voters? You are confusing the UNB prof’s townhall meetings with a properly designed opinion poll. Opinion is divided, because quite a few rely on the forestry industry for jobs. So Graham doesn’t just have the Irvings, he also has quite a few of those who work for the Irvings.

    Again, no government will act against Irving in situations like this unless there is a balancing set of industries. Industries that pay their taxes, bring their own opinions to bear, and have their supporting employee-voters. The grassroots will have to work with them to get anywhere. Those are the political facts of life.

    If you are actually interested in getting something accomplished here, then we need to get NB growing first. Create some practical alternatives to the Irvings. The most straightforward way to do that is to do what David has recommended in terms of focus. I have not seen a practical suggestion from Mikel yet.

  16. nbt says:

    It’s a pretty sad day when countries from the former soviet union would look AT David’s comments and wince. I guess that’s why a lot of industries (including an over-subsidized paper mill in the centre of NB) are looking to flee North America. Just read Lee Iacocca’s LATEST book (circa the car industry). He too sees unions & subsidies as the problem not the solution. I guess that’s all NBers know. Sad.

  17. david says:

    Nbt, you can ramp up the rhetoric if you like but you still haven’t given me a straight answer. Should New Brunswick stop ‘subsidizing’ while everyone else is doing it? As for Iacocca, wasn’t he the guy that got the massive Chrysler bailout in the 1980s?

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