We don’t like to compare to other provinces….

There’s a great story in the TJ today about a new report on the State of Maine and its economic development efforts. Someone posted much of it in a comment to a previous post here but I like to limit my cutting and pasting.    The full report is here.  What is interesting is the addition of Nova Scotia and New Brunswick as benchmarks when comparing to Maine.   It is difficult to truly compare U.S. and Canadian jurisdictions because of a) currency issues and b) differing methodologies around the calculation of job creation, unemployment rates, university graduates, etc.  But it is helpful nevertheless as long as you view the numbers with caution.  For example, the consultant looks at personal income per capita over a seven year period and concludes New Brunswick is last among the peer group.  That is correct – technically – but again how much of that is due to currency fluctuations versus underlying economic strength?   They used 86 cent dollars.  Just a couple of years ago we were at par which would have pushed NB’s per capita income to just under the median.

Other points of interest:

1.  The report cost $150,000.  Where do I sign up?  It’s good work if you can get it :-)

2. I firmly believe that ED agencies should go through a thorough benchmarking exercise at least once every five years.  This should be done by an external consultant that is unbiased.  It should look at results versus effort but also more broadly at incentive tools, marketing efforts, etc.  A few years ago I did this type of review and found that most of the successful jursidictions – even smaller ones like NB – have international offices for trade and investment promotion.  New Brunswick still does not.

3. The report compared new business start up data and found New Brunswick looked strong in this area.  But that is not a good measurement.  It is a good measurement when correlated to specific efforts of an ED agency (i.e. how many companies were brought in) but not economy-wide.  The number of businesses have actually declined in New Brunswick from 2003 to 2008 – down strongly something like 3.9% according to Statistics Canada data.  So start ups need to be shown against business exits to be relevant.

At the end of the day economic development has two measurements: 1) the success or failure of specific ED agencies and 2) the overall success in the economy.  You can theoretically have an ED agency meet its objectives but the economy overall continue to struggle and you have have a lame duck ED agency but the economy boom anyway.  It’s important not to blur the lines here. 

Let’s take ACOA for a minute.  It’s roundly criticized  by folks but the people I have worked with in the past are professional and motivated.  Not that long ago the agency published its 5 year report to parliament and it was filled with great data – tens of thousands of jobs created, hundreds of millions in exports supported, GDP growth all as a result of ACOA.

But the region – all four province’s combined – can’t even generate enough jobs to keep the population we have let alone grow the population.  So is ACOA working?  Maybe it is but if its mandate is to support an economic transformation in the region it is not working prima facie.  Maybe it’s time to rethink the role of a regional ED agency because we are not seeing the kind of transformation that was envisioned (I assume) when it was set up back in the 1980s.

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26 Responses to We don’t like to compare to other provinces….

  1. richard says:

    Traveling thru Maine, its hard to get the impression that most people are better off economically than most in NB. Until you get to the southern part of the state; i.e. well south of Bangor. Portand and surrounding communities, where the Maine economy seems more robust, are not that far from Boston. Is that the more likely explanation for the supposed superior performance in Maine? I am sure that there are some self-satisfied ED people in the Portland area who think they are doing a great job, but I expect that being a short drive from Boston has had the most impact on that part of Maine. I reckon my analysis is worth 150K, so David, please forward to the responsible agency for payment. I’ll split it with you.

  2. anonymous says:

    Often hear the view that, while driving thru Maine, it looks “poorer” than NB / Atlantic Canada. I have two comments to that;

    1) We have seen our own “poverty” so often that we are desensitized to it. Going somewhere you haven’t been for a while has much more of a visual impact. As an example, if you haven’t driven on the “old” TCH for a while, take that route sometime soon – like me, you will be surprised at how “poor” everything looks (as compared to when you used to drive it every day and the poverty never really registered.).

    2) Maine is much more self-sufficient than NB Maine does not have the benefit of any transfer payments from Washington that even approach what we get from Ottawa (equalization, etc.) and they (like most states) work under a State mandated balanced budget processes (no $800 million deficits there). Take those two items away from NB for 5 years and then drive thru the two jurisdictions and I will guarantee you that Maine will look pretty “rich” compared to NB.

  3. richard says:

    I agree that if you take away the transfer payments, NB is much worse off than Maine. However, 1) a large proportion of those transfer payments are for health care (nominally a provincial responsibility but its really the feds that fund it; reductions in transfer payments would likely be designed to avoid too much damage to medicare), and 2) local jurisdictions in Maine and elsewhere do have direct access to federal dollars, something NB municipalities do not have. Not sure about your comments re ‘visual impact'; given where I live I see quite a few signs of poverty right here. Central and northern Maine has few if any signs of prosperity.

    My ‘main’ point about Maine is that the average economic performance of Maine might have more to do with its location (at least the location of the southern tip of Maine) vis a vis Boston than anything any ED agency has ever done.

  4. mikel says:

    Maine’s largest industries are forestry, mining and agriculture, much like New Brunswick. More study of those industries would be interesting, because as the private woodlot owners note, New Brunswick has the lowest forestry work force per capita and relative to woodland size in Canada. In agriculture, NB’s workforce per capita is much lower than other provinces, PEI is a standout. As farmland commercialized and centralized, and as technology increased, fewer farms were ‘necessary’ and fewer workers as well.

    In other words, I’d suggest that one main reason for lower incomes and lower employment lies in public policy. NB allows more ‘free reign’ to large corporations to reduce their workforce, even provides subsidies and grants to help them do so. So ‘exports’ may be of similar size, but the effect on the economy is much lower because most of the cash goes to one companies profits rather than multiple companies workers-the ‘Irving-McCain’ effect.

    So even though New Brunswicks ‘economy’ has grown faster than Maine’s, as David frequently points out, that is often due to more exports of oil, which really doesn’t translate to a ‘bigger economy’, just more cash for Irvings.

    It’s interesting to note that only 35% of Maine’s ‘international exports’ are to Canada. I suspect New Brunswick’s international exports going to the US is MUCH higher. That puts a little more economic security on Maine.

    As for federal aide, we can’t forget that the US is BIG on supplying its own major growth industry-the pentagon and military. I remember one time doing a study on the naval construction shipyard in Maine and its effect on the financial well being of the state, and the numbers actually came pretty close to Canada’s EI system. In other words, NB would enjoy a similar income status if Canada had a similar sized military and invested in its own shipyards. I probably don’t need to refresh people’s memory, but during the reign of Canada’s shipping magnate, the NB port was closed and ships were being bought cut rate from Great Britain’s castoffs.

    The biggest and most interesting contrasts though are political, not economic. The tax system and electoral systems are VERY different. The one example I often use is the LNG terminal. There was some short lived construction work, but then the property tax was frozen at 500 grand and it can run with as few as 8 people. In Maine, they had to have referenda, and the final effect was that the town (or reserve) that finally approved it, did so on the basis of 60 permanent jobs paying 60 grand apiece, with a property tax bill of 8 million per year, and profit sharing. That MAY be an isolated example, but says alot about how economic decisions are made in the political arena. As mentioned about the two wind farms, apart from some property tax and few ‘putting up towers’ work, NBers will see little benefit from the wind farms in St. George and Grand Manan, however, it would be impossible to get such a deal in Maine where town’s and the government all have citizen decision making through direct democracy at both the local and state level. People are less likely to approve deals that don’t benefit them than a ‘responsible’ government is.

  5. Anonymous says:

    Maine turbine project to expand by 17

    NEWTON – First Wind has received approval from Maine regulators to build a 17-turbine expansion of its Stetson Wind project near Danforth, Maine. The project – a 38-turbine, 57 megawatt wind farm – became operational in January. The wind farm is First Wind’s second wind farm in Maine, and is the largest in New England. With the expansion, the wind farm will have the capacity to generate as much as 82.5 megawatts.

  6. mikel says:

    Maine is also further ahead in tidal power research. When the northeast first became concerned with high energy prices, the first thing they did was increase their investment in research in energy alternatives and renewable energy sources. In Vermont, agriculture created a ‘spinoff industry’ by generating its methane into the gas grid, providing farmers with more income.
    Wind Power is a perfect example of the different political environment. There are at least three different regulatory bodies new initiatives have to go through, one of them being federal. In comparison, we haven’t seen any review of the wind farms proposals (at least in media), and there still hasn’t been any sort of review of the second refinery which is already being constructed. It was ironic that New Brunswickers actually had more say in the Maine construction of a Natural Gas Terminal than they did of the construction in their own province.

    Within municipal boundaries, political decisions are decided by town referenda. In Maine, it’s been forty years since the state created its “Maine Land Use Regulation Commission”. Like Vermont these are FAR more rigourous than New Brunswick or much of Canada (though PEI and Nova Scotia have similar laws). Here, “new developments must “fit harmoniously into the existing natural environment.”” For that reason one wind farm was rejected two years ago because it was located too close to the appalachian trail, a popular hiking spot.

    The MLURC is a seven member board which is appointed by the governor, but like most appointed bodies in the US, must be approved by the legislature, which includes independants, republicans and democrats. On specific developments the board votes, and these decisions are based on extensive public hearings. To bring up a point made here awhile ago, these members also must have an expertise in areas of the board’s jurisdiction.

    Compare that to New Brunswick, again, the best ‘evidence’ is go to your library and watch “Forbidden Forest”. These decisions in New Brunswick are made way up a chain of command with little to no accountability. If you disagree with a single aspect of the forestry ‘plan’, the only option is to attempt to replace the entire government (even though in natural resources the two parties are virtually identical).

    The economic point here is that every single instance of economic development brings about a benefit that can vary highly based on specific decisions. When a town is voting, or when there is a highly transparant political decision making process (and a functioning media), companies have to make their ‘pitch’ as good as possible. And that means environmental considerations, job opportunities, economic spinoffs, etc. If all you have to do is go to a politician and say “we’ll give you some jobs in riding X so you’ll win the next election” then you essentially get what you pay for.

  7. Anonymous says:

    Economic development in New Brunswick has evolved (or deteriorated) to taxpayer-funded political career enhancement.

    We throw $80 million at a yarn factory and think nothing of the loss because it has become widely accepted that you recklessly throw money at the north to win seats.

    Similarly, $60 million (okay, $30 million for a bail out and another $30 million in case it happens again)is given to the Shippigan Caisse to support the fraud and incompetence that went on there; no one led away in handcuffs, we just accept it because of where it is. (Although New Brusnwick taxpayers established the bank bail out trend.)

    $140 million is a lot of waste for this tiny province and a lot to spend mostly for selfish political gain. Worse yet, while the losses were questioned in the house, it was done for politcal benefit with little or no effort towards preventative or corrective action.

    It is time for accountable and effective economic development. We need businesses that can legitimately succeed. Forget supporting bad businesses because they are willing to locate in a strategic politcal riding. We need to seperate the political handouts from sound economic development. Maybe we need our economic development resources to be headed by an arm’s length agency accountable to the government so as to seperate them from the politics.

  8. Anonymous says:

    Part of the reason ACOA does not appear effective as an economic development agency is because a good portion of their resources are directed at municipal infrastructure, community halls, festivals etc that are remotely linked to economic development. ACOA has lost focus, become diluted and is underfunded.

    Our economic development efforts are terribly fragmented. We have ACOA, the enterprise agencies, Business New Brunswick, municipal efforts etc all working for economic development but are they coordinated? Are they accountable? Are they redundant?

  9. mikel says:

    The problem with businesses is that you don’t know which will succeed. The Caissie wasn’t simply money that disappeared, like the financial bailouts of the states, it was simply a case where the failure would be worse than the bailout. Keeping people solvent is far better than a bank failure with all its bankruptcies and increased welfare costs.
    And how do you decide between them? A couple posts ago we saw one poster championing the Potato Chip company, a company thats only been around a couple months and got a huge grant. Is that bad? Potato chips are a pretty competitive market, but sometimes the risk is worth it. The problem may well be that simply not enough entrepreneurial activity is out there, we don’t know. We don’t know who is getting rejected so can’t really say that the ONLY investment is ‘politically connected’ people. Were those people in Hartlant ‘politically connected’? Maybe so, but thats not relevant-IF they succeed. We cant’ really say ED is underfunded til we know who ISN”T getting funding. Although it could be argued that some things like rural high speed internet should be considered ‘economic development’.

  10. richard says:

    Mikel, while I don’t disagree that NE has clung to its democratic roots and that local municipalities have more independence than in NB (where citizens in e.g. LSDs have little say in what goes on), I would like to see some data showing that this has resulted in better more productive lives for Maine citizens vs NBers. All I see are anecdotes and average values (influenced heavily by the southern tip of Maine which is within the Boston sphere of influence). NB is in bad shape, but so is most of Maine.

  11. mikel says:

    I would also like to see the evidence, that’s why I say that more research should be done in those specific areas. I got a university library card so now I can get better access to more online journals. Economically, there are a lot of things to define first, but most economic data shows Maine being better off than New Brunswick. You can look that up, I can post it later but a study was done by, crap, now I forget, but its one of the first studies that come up.

    Part of the problem is admitted in many studies-Statistics Canada doesn’t make most of its best data publicly available. I can go dig up my study, but I’ll just make it a rhetorical question-which would you prefer, an EI system that props up the New Brunswick economy, or a government infrastructure program that builds ships in Canada. Isn’t that what David’s point always is? So there is really no need to compare apples and oranges. The province doesn’t need to adopt Maine’s rigid and lousy EI system, or its arguably less efficient health care system (at least less ‘fair’). It’s possible that polically it would be possible for the US to close its shipyard and buy its equipment elsewhere-IF the rest of the private market were up to scratch. But like NB it ISN”T, which means federally it makes bad policy to close the shipyard. And politically its more difficult to do when you have a more involved electorate.
    As for the specific points above, in Maine there is far more political opportunity for the public to influence government policy. Even WITHOUT economic well being I’d argue that that makes life ‘better and more productive’. People’s well being and productivity isn’t only measured by their jobs, in fact I’d agree its LESS defined by their jobs (depending on the job of course).

    For this blog, do you think WE would be ‘better’ or ‘more productive’ if the time spend on this blog were used, say, to craft an economic development program for Town X, or creating a citizens initiative for the province to vote on, rather than simply typing for a small audience? At least that way the discussion would be wider, and there at least would be a CHANCE that some ED policies get adopted. While that can’t be measured ‘economically’, I think it’s ‘better and more productive’-even without the data. But I admit its a big topic. However, if we look at governments that reflect their population better, their economies tend to do far better. Switzerland is the most democratic country in the world, and I remember reading that the height of the depression had their unemployment rate ‘rise’ to 6%. It’s already 8% here in ontario.

  12. Now this is a good debate. Point, counterpoint, example, supposition, rebuttal. I get goose bumps.

  13. mikel says:

    Well then, I’ll try better to address Richard’s concern, that was a bit glib above and I’m glad at least it doesn’t waste paper.

    The question is whether local power in the hands of citizens makes those citizens better off. To narrow it down we’ll even state that we simply want the answer in economic terms.

    Since people are familiar with it, let’s use the LNG example. Local referenda meant that Quoddy Bay LLC had to ‘spice up’ its offer, as gas terminals had failed to be accepted in town referenda up and down the coast. In New Brunswick, well, I’m sure everybody knows the story.

    Economic Effects (Maine):
    60 jobs/$60,000 each
    $8 million per year in property tax
    profit sharing
    Buyouts for local lobster fishermen
    Percentage of proceeds going to environmental trust fund

    Economic Effects (New Brunswick):
    8-35 jobs/no salary minimum required
    $500,000 in property tax
    no profit sharing
    no buyouts
    no proceeds but required royalties to government

    In that case it seems clear. ‘Democracy’ provides the best return on investment. The counter argument would be ‘but all those other towns rejected it, that means they don’t get the economic benefit’. That’s very true.

    Most of the research in the area of direct democracy shows that at the very least, local initiative and referenda don’t make economic prospects WORSE.

    In the case above, I think its also clear that the state comes out ahead of the province. There is no easy way to ‘average’ that out though to come to a general conclusion. I WILL add a couple of points. It’s interesting to note that US and foreign companies were going up and down the state with town after town voting on the matter. In other words, the fact there was a referendum didn’t dissuade these companies in wanting to invest. In New Brunswick, there was no mention at any level of any such interest, even though New Brunswick has very lax standards.

    So that at least goes to show it doesn’t HURT to have local power. You can go to the Maine’s website and look at the various referenda items, many of them are about bond issues, such as X millions for technology research, and X millions for parks, and on and on. It’s interesting to note that almost all of those bond items were approved by voters.

    A good article on the subject is available as a pdf, do a search on “economic similarities between Maine and neighbouring canadian provinces”. Mainers, at least on average, earn more than NBers, and pay less tax. Economically that is ‘better’, but then equality of health care, education, pensions, etc., are things that should be considered as well.

  14. richard says:

    Just a quick point re the LNG terminal. If its true that there was reluctance on the part of the Maine community to host the terminal, was that because of the perceived lack of local benefits (in terms of jobs, tax revenue), or was it because a local entrepeneur or two saw the terminal as a threat to his/her business? Was the offer of increased benefits to the region an attempt by the terminal operators to develop more local support to balance off the opposition? What data do you have to claim that the local populace was, by and large, holding out for more, as opposed to a minority of locals (e.g. tourism operators) using their clout to block the terminal? I don’t see any evidence that a majority of the citizenry were at first opposed to the terminal, then brought on board by an increase in benefits.

    I agree that it can’t hurt to have local power; but in a province with a low pop density such as NB, what is ‘local’? IMHO, what this province needs is not so much more ‘local power’ but more transparency in decision-making and more analytical information on the pros and cons of various actions.

    You can argue the pros and cons of various plans to devolve power. Local bonds ARE often turned down, even when they are for needed improvements to schools, etc. California is a good example of what a mess some kinds of these initiatives can produce.

    “Mainers, at least on average, earn more than NBers, and pay less tax”

    “On average” is the key phrase there. Travelling thru central and northern Maine doesn’t give that impression. Most of that increased salary is, I suspect, confined to the Portland area, an area within the Boston sphere in influence. We don’t have a Boston nearby.

  15. mikel says:

    We’ll start last to first. On average is DEFINITELY the key phrase, and we should note that unlike the US Statistics Canada does not provide statistics on percentages of the population at various income levels. There is data on both those at the higher income scale and lower, but little to none on the middle class. So again, that brings us back to the poster above who pointed out ‘it depends where you look’. Keep in mind I know some pretty wealthy tuna and crab fishermen whose living conditions LOOK bad, but that means little about wealth. You can’t judge an income level by the number of beat up cars on the lawn. Anecdotal sitings are only worth so much.

    Just to flog my pet project, in working on http://www.tenantsact.org a reporter informed me that there are close to 30,000 roomers and boarders in New Brunswick, most of whom are NOT students. That’s almost 5% of the population who live in ‘abject’ poverty-don’t even have a home or apartment to look bad in. And that’s not even the homeless population, so we’re talking some pretty dirt poor people. At the next level up are the ‘working poor’, which poverty activists claim usually hovers around 20-25% of the population. Statistics Canada states that over 50% of those in downtown St. John live in poverty.

    California actually has a lot of REPORTING that says exactly the above, but thats from the corporate media, which absolutely despises democracy. In California you can look at things like the Enron, energy deregulation which almost bankrupted the state as having FAR more impact than most of the Bond initiatives. Again, thats a HUGE subject, and I can write far longer than usual on that topic. But like I said, the research generally shows that financially democratic tools are no worse than representative governments or ‘responsible governments’. But anybody wants to hear more about that and I’ll gladly oblige them.

    For the second paragraph, I’d suggest what is needed is BOTH those suggestions. Transparancy is certainly good, but just because people can see what a group is doing doesn’t mean they will make good decisions. For the NB government, we can ‘see’ what they are doing, but there are simply no political alternatives. As for what is local, EVERYTHING is local, even federal initiatives. Municipalities are local, and so are local whaddyercallthoserural things again? The fact is, none are democratic. An actual democracy would have local communities and rural groups deciding on what is needed and taking it to the next higher level to grant those requests (which certainly aren’t always financial). Again, in the US you can hit a ‘dry county’ and be thrown in jail and in the next drive with an open beer.

    For the first paragraph, re, Maine referenda, it highly depends on which town and referenda is being discussed. The thing about democracy is that its always different in every town because every town is different. One thing about Maine is you can look online and see TONS of media sources. When one town votes, other people in Maine know about it. It’s not like New Brunswick where the media talks about how nobody knows about an issue its about to vote on (because its never mentioned it).

    You are also positing a conclusion based on canadian experience. Since canadians have little experience in the practise of democracy, you assume people vote according to some special interest ‘using their clout’. The evidence, is that if you look at the referenda (just type Maine, natural gas, and referenda and start reading), the companies offered increasingly more ‘benefits’ to the constituents. That’s just basic. If you are a company, and a town votes against a proposal with people saying ‘its not worth it’, then what will you do at the next town? You offer more. Like I said above, in Levi they offered even MORE, the environmental considerations were just immense there, but they STILL lost the referenda.

    The first paragraph is a bit confusing. In a referenda the whole community votes, so a local entrepreneur or two would not have significant power to defeat a proposal. Locals are certainly not ‘holding out for more’, rarely will a company make a proposal, then come back after a no vote and try again. They try another town. The people vote no because they simply don’t want it. In Maine, on the coast, its no surprise, as stated here thats where most of the wealth is. It’s not coincidence that the place that finally voted yes was on an impoverished native reserve. In other communities people simply didn’t see the ‘value’ of the proposal as being worth the risk (which is not inconsequential).

  16. Richard says:

    “Since canadians have little experience in the practise of democracy”

    Hmm, not sure I’d agree with that. In any event, if you follow politics in cities like Boston (where I have a few family members) then you see exactly what I am saying. Fact is, most people most of the time do not get very involved in local political issues. Its only when an issue grabs the emotions, or affects them directly, that people pay attention. When it comes time to vote, people tend to either not vote (note the low turnouts in local elections and referenda all over NA – the ‘whole community’ rarely turns out) or be ‘guided’ by opinion makers. Often local business leaders can influence these votes vie the latter mechanism. I do not much evidence that referenda,etc improve the quality of life or the quality of jobs. In the LNG case, I suspect that the balance of forces was at play. Local tourism businesses feared a negative impact and propagandized against LNG; there was no opposing force, since the LNG was not up and operating. There have several cases here in NB where local opposition has stopped or stalled various proposals, even in the absence of referenda, even in the absence of a local government.

    Further on comments I made above re Portland. Turns out that the greater Portland area has about 1/4 of Maine’s population and a significantly higher average wage than the rest of Maine. So any differences between Maine and NB can be ascribed to Portland. And Portland is close enough to Boston to be a beneficiary of Boston’s growth. To me this says that the ‘average’ higher salary in Maine is very likely due proximity to Boston. Nothing to do with local democracy, innovation within Maine, or public policy.

    As to ‘transparency’, I certainly do not agree that we can see what GNB is doing. For example, we have seen a number of commissioned reports with various recommendations. Often those reports are shelved with no further discussion, yet decisions are made. In a transparent system, those reports would generate a public discussion and justification given for proceeding or not proceeding. The public after all paid for the report and has a right to know why or why not recommendations are being implemented. All we see are some of the decisions, not why they are made. That is not transparency. Transparency also requires an active and widely read media; something else we lack here.

  17. mikel says:

    Again, ‘anecdotes’ only go so far, and not very far, at explainging reality, the same with basic statistics. The impact of referenda vary widely-depending on the area, and depending on what is being voted on. Like I said, we can go vote by vote and go through the numbers, thats more than fine. Keep in mind that we are talking about THOUSANDS of votes. Even at the state level we are talking about close to a hundred state wide referenda, and there are FAR more local ones. So to say how ‘most people’ vote ‘most of the time’ is BAD analysis.

    Its pretty well established that proportional representation systems have ‘on average’ higher voter turnouts, and ‘on average’ direct democracy tools have even higher ones. However, like incomes ‘average’ can be misleading. On issues of great importance, far more people vote than on things SOME people care little about. Municipally FAR more people vote in the US than Canada, where a city is lucky to get 30% voter turnout. And like in Switzerland, votes on ‘representatives’ is a completely different issue. When people know that their fellow countrymen can override the legislation of representatives, its far less important to vote for a representative (but even so, Switzerland has far higher turnout than Canada).

    It also comes down to how people feel about their political system. International polls show that the swiss are EXTREMELY fond of their political system. In Canada, its very difficult to find anything but disgust. It isn’t simply ironic that although municipal voting gets the lowest turnout, it also gets the highest approval rating from voters. Thats partly because in Canada they have hardly any responsibilities, but in the US the same stats are true, and locally they have FAR more power. That shows just how little democracy Canada actually has (and your mention of ‘how little we know about GNB’ adds another factor).

    People can be ‘guided’ by any number of things, but it certainly isnt’ true that an LNG terminal would have no ‘corporate friends’ in town to combat local interests-far from it. If anything that creates a good balance, but people remain the final arbiters. Again, readers should read some of the media from the various referenda.

    In NB its POSSIBLE to stop development proposals, but very difficult and I’d like to see a list of what Richard is thinking of. Mark Darcy is suing Fredericton because the province is breaking its own laws in allowing development just for a stupid strip mall and endangering its water supply. There was considerable opposition for the LNG pipeline going through a park in St. John, but it had no effect. Locals in rural areas were adamantly opposed to the allowing of ‘Factory pig farms’, yet the province ignored them. I could go on and on, but like I said, I’d like to see some examples of the reverse.

    For Portland, first, my quick search showed the median income in portland to be $35,000, which is actually LESS than the Maine average. Second, simply because a city is close to Boston means nothing. The entire northeast is ‘close to boston’. And its not like there aren’t other places close to boston, so that actually isn’t an explanation of anything. It’s actually interesting to go do a search on maine’s largest employers, and few are located in Portland-except the shipbuilding. However, there’s no doubt the economic situation is more easily compared to Nova Scotia which has one large metropolitan area, which is why I find Vermont to be a better comparison for NB.

    Finally, “in a transparant system those reports would gnerate a public discussion” actually helps make my point. Transparancy does NOT guarantee discussion-a more democratic political system WOULD. But YOU know about the report, you can read them and post online about them. They aren’t hidden, they are ‘transparant’. And in virtually every case the government SAYS why they are doing what they are doing. Lamrock gave talk after talk about why he was making the policy decisions he did. They are simply inconsequential because the population can do nothing about them. They can’t affect policy, which means the media has little reason to talk about them. You are putting the cart before the horse.

    Lets say NB was like Maine. And each year there were about four different things that ALL NBers were voting on. It would actually be IMPOSSIBLE for the Irving media to ignore them. THey COULD, but it was actually only help the competition start up because people have generally gone to great lengths to try to find information on things they are actually voting for. The 1992 canadian referendum saw the government continuously running out of information packages people got so involved.

  18. richard says:

    “For Portland, first, my quick search showed the median income in portland to be $35,000, which is actually LESS than the Maine average. Second, simply because a city is close to Boston means nothing. The entire northeast is ‘close to boston’.”

    Check again. And its ‘greater Portland’ not just Portland itself, which is quite small. As this area is 1/4 of Maine’s population, its hard to see how the average salary in greater Portland can be less than the Maine average. I also suggest that if you examine the area around Boston, you will see a large well-developed set of economies that feed off of Boston, much like the golden horseshoe around the south end of Lake ON. The greater Portland area is clearly within Boston’s sphere, and there are plenty of other NE cities that also benefit from being close to Boston. I am equally sure that every one of those cities has an ED community that claims credit when the credit is really due to proximity to Boston. As you get further into Maine, distances from Boston become too great. It makes more sense to credit the relative strength of the southern tip of Maine to Boston than to a particular political system.

    Regarding transparency, please go back and read my post. The reports are public, but the rationale for the decisions that follow them is not. This has little to do with what type of political system one has in place, but has to do with people being held to account.

    “Lamrock gave talk after talk about why he was making the policy decisions he did.”

    He was forced to; one of the few occasions where that has occurred. Exactly my point about being held to account. He was forced to modify his approach after being vigrously debated whenever he spoke on the issue. That occurred in NB, not Maine. As did the debate over tolls on the T-Can. So the political system was not relevant, it was the fact that Lamrock was held to account. There is no reason why that cannot happen for other issues; that is partly a responsibility of the press, but it is also something that should be built in to policy decision-making. Yes there are weaknesses in NB’s political system, but the lack of referenda is not one of them.

  19. richard says:

    “For Portland, first, my quick search showed the median income in portland to be $35,000,”

    Median does not equal average.

  20. mikel says:

    Median is actually BETTER than using ‘average’, since we don’t get the same problems mentioned above. However, a more detailed search shows at least in 99, Portland was at 35 grand and Bangor at 29, so it is higher. But again, simple proximity to a large city doesn’t explain things.

  21. richard says:

    “simple proximity to a large city doesn’t explain things.”

    Well, it explains quite a bit. Proximity to Boston means you have a greater chance of attracting industries that want to service Boston but want the lower cost of business that you might be able to supply. Greater Portland advertises that proximity in its marketing pitches. Any examination of any large urban centre will show the same effect.

    If the southern tip of Maine does, as I believe, provide the incomes to generate Maine’s ‘higher than NB’ average salary, then that proximity is, by far, the simplest and most likely explanation for Maine’s superior performance economically.

  22. mikel says:

    Occam’s razor is actually not that beneficial to analysis simply because the ‘simplest explanation’ often ISN”T the best one. There are lots of cities in New Hampshire closer to Boston than Maine, why would Portland be better off? For environmental considerations, its FAR cheaper for gas companies to go to NB, where its dirt cheap for gas lines, and not much further than Portland, so that doesn’t really explain it. Northern New Brunswick has FAR less wealth than southern NB, so by the above definition it must be because southern NB is closer to Boston. But of course northern NB is closer to Montreal, so why wouldn’t IT be better off?

    So simple proximity doesn’t really explain much, and its explanation isn’t really helpful. So based on glib analysis the best ED would be for NBers to annex New Hampshire because its proximity to urban centres that makes a difference. But then of course David can jump in here and talk about how most of the recent ED efforts have largely been RURAL, NOT in places close to urban centres.

    But perhaps we’re beating a dead horse. Economically, Richard is stating that simple proximity to Boston is what explains Maine’s economic performance. I am stating that it is federal investment in the shipyards there, specifically Bath Iron and Works, a sub contractor which is one of the state’s largest employers. People can choose one, or take part of each, or even better, do some research to come up with a better answer (or evidence). One final point, a food manufacturer could ‘supply’ boston, but the reason it would set up in Maine is that its wages and costs would be lower, which would mean that those high Portland salaries certainly wouldn’t come from THAT. In Vermont, however, I remember reading how much manufacturing is actually trade WITHIN just that little state. That explains a lot.

  23. richard says:

    “Occam’s razor is actually not that beneficial to analysis simply because the ’simplest explanation’ often ISN”T the best one.”

    Occam’s razor is in fact the best way to start with finding an answer. Its popular because it is often correct.

    “I am stating that it is federal investment in the shipyards there, specifically Bath Iron and Works”

    No, you are not. You have been claiming that referenda and local democratic action are responsible for Maine’s ‘superior’ performance.

    “high Portland salaries”

    Now you are really stretching. First, food industries are not the main drivers in greater Portland; second, ‘high’ wages are only relative to the rest of Maine, Boston. They are almost certainly lower than wages for comparable jobs in Boston.

    “But of course northern NB is closer to Montreal, so why wouldn’t IT be better off?”

    1) The drive from Montreal to northern NB is much longer than the drive from greater Portland to Boston.
    2) There are many intervening regions between Montreal and northern NB that are more attractive to Montreal industries because of distance and land availability
    3) Montreal does not compare well with Boston in terms of economic growth over the past 3-4 decades. The urban area around Boston is much, much larger than around Montreal.

    “New Hampshire closer to Boston than Maine”

    We are talking about the southern tip of Maine. Drive from Boston to Portland; first you pass through a narrow section of NH (which certainly does benefit from proximity to Boston – many NHers commute to the Boston area to work; I never said that Maine was getting more Boston business than NH), then you hit greater Portland.

    “so by the above definition it must be because southern NB is closer to Boston”

    Huh??? Try driving from Boston to southern NB. Proximity is not just distance, its driving time. Portland is on the I95.

    You can do better, Mikel.

  24. mikel says:

    Stating something doesn’t make it true. Occams razor is typically used by people simply to avoid doing any research to come with anything other than what seems simplest (usually ‘simplest’ also agrees with that persons opinion). Why is the sky blue? Well, because God painted it that colour. Simple right? Certainly far simpler than our eyes have evolved so that the cones and rods in our eyes conceive a colour spectrum in a certain way which involves analysis of the light spectrum and the composition of the atmosphere. That’s VERY complex, it also happens to be far more true than ‘god painted it’.

    Please don’t put words in my mouth. If a reader has difficulty understanding me, then reread or simply ask. As is noticeable I’m not shy. I NEVER said that Maine’s economic performance was due to its political system. If there is anything close to that, print it here and I’ll explain what I meant. I said numerous times that direct democracy certainly doesn’t result in WORSE economic performance, and then I used examples to show cases where it has shown a direct economic benefit. I said numerous times that the south coast of Maine benefits from federal shipbuilding, and said I even did a study on that years ago-which is WHY I am saying it.

    I said that more study needs to be done to show whether or not the direct democracy of Maine has made the economy ‘superior’. The fact is that most studies STATE that it is superior in most years, and the fact is that Maine does have that system of direct democracy-has for almost a century.

    The mention about southern NB being closer to Boston was being facetious, I thought obviously so. It is obviously ludicrous, I’m amazed somebody would take that as being an attempt at an argument, but here you have it, I’ll make sure to put smiley faces around for our slower customers.:)

    So let’s look at Portland and do our own economic analysis. For a guy who distrusts economists Richard certainly makes his assumptions in the same way as a bad economist. Stating a hypothesis and then believing it without ANY research is far worse than any bad economist.

    So here goes, here is the industry in Portland:

    Size of nonagricultural labor force: 193,900

    construction and mining: 10,600
    manufacturing: 15,800
    trade, transportation and utilities: 42,000
    information: 4,700
    financial activities: 15,900
    professional and business services: 21,600
    educational and health services: 32,900
    leisure and hospitality: 19,500
    other services: 6,000
    government: 25,000

    Average hourly earnings of production workers employed in manufacturing: $13.88

    Tourism is big in Portland, but we should add that that is not just a benefit of being close to Boston, but being ‘sort of’ close to New York, New Jersey, etc.

    Retail is helped by being close to the main facility for LL Bean, which sees over a million customers yearly.

    Portland is the largest deep water port, that has nothing to do with being close to Boston. Likewise, its airport is a central shipping distrubution location for UPS. Again, nothing to do with Boston.

    More than 30 interstate trucking companies have headquarters there, and it has a significant rail terminal. Again, nothing to do with Boston. All this business has meant that per capita it supposedly has more lawyers than any other city. MAYBE that has something to do with Boston, we don’t know, but I don’t see how.

    For Boston, its significant that Amtrak now has a fast rail line, that is very substantial, and no doubt means a lot for tourism. But that is more a transportation issue than a proximity to Boston issue. I have no doubt that a high speed rail line that could get Montrealers to the NB coast in four or five hours would be a huge benefit to tourism-that has not so much to do with ‘proximity to Montreal’ but simply with the types of services available.

    Its interesting to note that Maine companies have a lower failure rate and stronger sales growth rate than the national average. It has the most small businesses per capita of any metropolitan area of the US.

    “About one third of all Portland businesses are service related, while 20 percent are retail, 10 percent government, and less than 10 percent manufacturing; the remaining few are miscellaneous businesses.”

    There are other towns closer to Boston than Portland, including Kennebunkport, so the success of ANY industrial centre is more than simply location. I’m not suggesting it DOESN”T help being close to Boston, I’m trying to understand that IF its true, in what way is it true and how does that affect policy. Do we simply admit that, oh well, if you aren’t close to a large industrial centre then you are simply screwed? Then why are many midwest cities doing so well? Again, simply saying proximity doesn’t answer the question, it simply adds another variable.

  25. richard says:

    “I said numerous times that the south coast of Maine benefits from federal shipbuilding,”

    Mikel, you are being disingenuous at best. You stated several times that Maine’s approach to governance was related to the economic well-being of its citizens. I opined that the ‘average’ salary benefit when comparing Maine to NB was almost certainly due to the effect of the greater Portland area, where approx 1/4 of Maine citizens reside (wouldn’t surprise me to hear that a portion of the workers at the Bath shipyard live there as well). The Portland area has a higher average salary than the rest of Maine. Portland clearly has close connections to Boston; the Portland port deals in industrial materials that the port of Boston does not want. Most of the other ports along the coast are either tourism or fishing locations.

    Of course proximity is not the only reason for success or failure; but it sure as heck makes things a lot easier.

    This entire exchange was based on David’s observations re the Maine report. I think that much of their data are skewed because of the Boston effect. If they had separated out that part of Maine then there would be more to look at.

    As to ‘federal shipbuilding’, that is just another reason not to compare Maine data with NB data. The Bath shipyard is a consequence of Pentagon policy to build US Navy vessels in the US. Canada does much the same thing; our Navy is just a fraction of the size and not large enough to sustain a shipyard (at least not one outside of QC).

    I don’t see any data to suggest Maine has any economic development lessons for NB. Perhaps those midwestern cities have more to offer in those terms.

  26. mikel says:

    I hope this was interesting to readers because we both agree in at least the comments above. I DID say that Maine’s approach to governance and its economy are ‘related’. It is what ‘related’ means that is the question. Saudi Arabia has a very specific type of government, are you seriously going to say that that is not ‘related’ to the economic well being of its citizens?

    On the broad issues I agree with Richard, except for the very obvious last two paragraphs. Since Richard is repeating, so will I, while Canada doesn’t have as large a navy, it is a public policy question as to whether Canada should build its own ships, or buy them elsewhere. That is a HUGE public policy decision, not to get off track but EVERY industrial country has a ‘buy first’ local policy for government services. Only Canada does not. Immediately after closing the NB shipyard the canadian government bought several sub par ships from Great Britain, and NOW is in the process of once again building ships.

    The ‘lessons’ for New Brunswick are simply overwhelming. To suggest that economic developers simply ‘skip the fact that 50 million tax dollars was given to Irving to close down a shipyard’ and focus on midwestern states is what is disingenuous.

    But by those lessons we can say that ALL comparisons are useless. No point in comparing with Halifax, after all, they have a large central population with links to the carribbean and Bermuda to ‘skew’ the data.

    As for ports, we don’t KNOW that Portland deals with industrial materials the port of Boston does not want. I’m not positive even what that means, but lets see the data that industrial materials are being shipped into Portland and then delivered to Boston, rather than simply using the port of boston (that would at least be SOME indication).

    So lets do this like GOOD scientists and find more information. The Port is home to two large scale cruise lines and is a main port for three others. With an airport this means that the city is perfectly serviced for cruise goers anywhere in the country. It is perhaps EASIER for some Boston residents, you can take a high speed rail line to your cruise ship. But in the same amount of time you can also fly from virtually anyplace along the eastern seaboard.

    The port is also home to FOUR oil terminals. That’s pretty big traffic, and has little to do with Boston. Its interesting to note that since 1941 the ‘Portland-Montreal’ oil terminal has shipped oil from the coast to Montreal for refining, which then goes on to ontario.

    So actually there is quite a bit there of help in discussing public policy. The port of Portland has been helped by the competition of four oil terminals, some even shipping to Canada. In Canada, there isn’t even a national energy plan that develops an oil pipeline across the country. Irving keeps a monopoly on oil refineries in Canada, which ships primarily to the US.

    I think even MORE research in this area would be very forthcoming, and its worthwhile to note that the development process of the Portland Port had seven levels. Public inquiry workshops were at FIVE of those levels, while one was specifically designated as a “community development committee”. The New Brunswick terminal has had several developments in the last few years, guess how many ‘public input’ sessions were held?

    But like I said, you don’t need to go to the midwest, where things are radically different. Vermont has a largely decentralized population, with a heavy reliance on agriculture, with a shared Quebec border (different part though). So for apples-apples, its a good comparison. However, I’d suggest that there is little benefit in superficial economic analysis anyway, the kind that says “state X has better numbers than province Y, therefore the policies of X are better than Y”. That’s not particularly useful anyway. It’s not until you get down to the nitty gritty of specific policies that real differences become known.

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