Stimulation

The New Brunswick government was estatic this month when it was reported that the province would lead the country in GDP growth this year with a 0.9% increase.   The latest labour force survey shows the government is a key factor in keeping the recession at bay.

Construction sector employment is up by over 20% (5000 people) July 2009 vs. July 2008.  We know from other data sources that housing starts and commercial development is tepid so this increase is likely due entirely to government spending.

The public sector is up by almost 2,000 employees over last year.

The education sector (which is primarily government) is up by 20%  (5,000 people).

That’s something like 12,000 jobs directly attributable to government spending – 7,000 of them on the government payroll.

Health care employment is actually down by 3,700 – I don’t know why.

That $750 million deficit is showing up in these numbers.   Most, not all, economists approve of stimulative spending by government during a recession.

But we must get the focus back on private sector employment and investment. We have lost thousands of manufacturing and forestry jobs and you can’t replace them with public sector workers (admin, health and education).

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13 Responses to Stimulation

  1. “We have lost thousands of manufacturing and forestry jobs and you can’t replace them with public sector workers (admin, health and education).”

    Oh no?

    When the taxpayers are on the hook for just about every corporate job created in the picture province – either implicitly (bailouts, loan guarantees) or explicitly (forgivable loans, zero-interest financing, useless government projects) – what difference does it really make?

    The only private individuals with money to spend around NB are happy to soak up government largess while they stash their profits in offshore tax havens.

  2. richard says:

    “When the taxpayers are on the hook for just about every corporate job created in the picture province ”

    Not sure what you mean by being on the hook, but there is a big difference between a loan or a grant to an industry and paying the hourly wage of every employee in that industry, plus paying the operating costs. You cannot replace those lost jobs with public sector jobs; the tax burden would be immense and unsustainable.

  3. Construction is probably not all public sector work, since real estate sales in Moncton are back up to levels they were in July 2008 and July 2007. http://tinyurl.com/me5vqr

    Looking more broadly, the goods producing sector is up 3 percent over last year, which is excellent news. This reflects not only the construction jobs, but also a 20 percent increase in agriculture, and despite an almost 10 percent drop in the never-reliable Irving-style (Forestry, fishing, mining, oil and gas) industries.

    In the services sector, financial services are looking strong (employment up 8.2 percent). Scientific, professional and administrative services are strong as well. These offset more Irving-style job losses (Transportation and warehousing, down 13 percent) and weakness in tourism.

    That said…

    “But we must get the focus back on private sector employment and investment.” yes and no. We could dramatically shift the focus simply by privatizing health and education, but that would wreck our economy and reduce those services to shattered ruins. Nobody (except perhaps the more neo of conservatives) wants that. So it’s not simply about focusing on the private sector.

    Indeed, the remark reflects the fallacious belief that all private sector economic activity is wealth producing, while all public sector activity is wealth draining. This is simply not the case. A wide variety of public sector activities can directly drive revenue into the province (for example, sales of energy by a crown corporation) while others can drive it indirectly (for example, tourism marketing and promotion). Meanwhile, private sector activity can be nothing more than an unproductive drain on society.

    What we in fact want is net employment income stabilization and growth. What I mean by that is that we want a combination of:
    – employment stabilization and growth, so people in NB have the opportunity to find work and realize their ambitions, and
    – personal income stabilization and growth, so people can pay their debts and save for the things they want, and
    – public accounts stabilization and growth, which means earning sufficient public sector revenues (from direct sales and from taxes) to balance the budget and pay down the debt, while maintaining adequate reserves and credit to make new investments in public enterprises

    In the face of this more adult set of priorities, it should be clear that simple talk about shrinking the public sector and focusing on the private sector is either partisan or uninformed. No?

    With that in mind, what should we _really_ be doing to emerge from the recession in a stronger position than we entered it? Let’s take stock:

    – no more fooling ourselves. Extraction-based resource industries (forestry, fishing, mining, oil and gas) are unlikely to offer long-term prosperity. We should not be expending much more public money chasing after these falling stars. Any investment, especially a major investment (such as large-scale public funding for oil refineries) is long-term investment in (very) short-term employment.

    – there _is_ potential in New Brunswick agriculture. We are not blessed with prime agricultural land, true. But as the Cranberry farm in Rogersville shows, we can look at other shorts of agriculture. We should be investigating different forms of livestock. We should be considering fish farming (especially freshwater fish farming).

    – New Brunswick has significant tourism potential, but it is poorly marketed and not adapting to a changing environment. What tourism exists now depends on car traffic, mostly from the U.S. and central Canada. This is the kind of tourism that gets wiped out by high gas prices (even the threat of higher prices was sufficient to drive it down this year). We need to be developing capacity as a destination, not a drive-to (or drive-through) province. This means better rail support, ports and marinas, facilities and spectacles and attractions.

    – we should keep importing and building windmills. Because new Brunswick has a much smaller installed base of housing and industry, we are much more able to achieve energy self-sufficiency through wind than just about any other region. This allows us to consider becoming net energy exporters through nuclear energy or having energy in reserve for growth. That said – we’re not going to produce the huge amounts of energy needed for, say, Aluminum smelting. We need to know our limits here.

    – we can have a technology sector, but a decade of inaction has squandered whatever lead we had, which means our tech future is not a cakewalk. Right now, what the province lacks most is a skilled workforce, meaning that even if we have opportunities, we are not able to take advantage of them. We have to create not only the opportunity, but the _expectation_ that to be a New Brunswicker is to be a literate, skilled and highly educated citizen of the world. The tech sector will have to be based on a capacity (our experience in call centers should help here) and probably new products (we have sand – could we make silicon?)

    – we should be exploring _some_ sort of heavy industry. Could we revive boat-building with newer, smarter boats? Could we pioneer personal submarine production? Personal aircraft? There’s a fairly wide niche for new products made of new materials that a tech-savvy smart province could develop – we should be looking at alternatives here and (yes) risking some money. I know, I know, the Bricklin was a failure. It doesn’t mean everything we try will be a failure. Moncton is to the point where it could support a large industry, perhaps in the Scouduc region. We should be exploring this.

    That’s it for now. You get the idea. If you want to talk about economic development, great. But let’s talk in ideas, not slogans. Leave silly little slogan economics like “we must get the focus back on private sector employment and investment” to the partisan political players. Get serious with real-world proposals that actually address economic development. Up the level of discourse here. Become smart.

    (Can you tell I’m getting frustrated? Come on, enough with the sloganeering already, ok?)

  4. richard says:

    “But let’s talk in ideas, not slogans”

    To be fair, there have been plenty of good ideas offered by David and others on this blog. Just search the archives. You’ve provided a shopping list, akin to the McGuire report. I am not sure that’s very helpful.

    Seems to me the major problem is setting a proper political agenda, not a shortage of ideas. To set the proper political agenda, you need to change the current conversation, which currently revolves around tax cutting (as some sort of universal solution) and related issues. The real problem in NB from my perspective is how one goes about changing the conversation; i.e. getting major media talking about what should be the real issues.

  5. Downes disagrees with me the majority of the time but he is one of the smartest guys around and I appreciate his commentary here.

  6. Richard writes, “To set the proper political agenda, you need to change the current conversation, which currently revolves around tax cutting (as some sort of universal solution) and related issues. The real problem in NB from my perspective is how one goes about changing the conversation; i.e. getting major media talking about what should be the real issues.”

    Fair enough – while I’m not so eager to dismiss my thoughts as a “shopping list” I would be interested to hear what you mean by “setting the proper agenda” and “changing the conversation”.

    With regard to the latter, I think the objective of getting major media to talk about the major issues is a non-starter. Not because I agree with the way media are covering the economy in New Brunswick – far from it. But rather because I perceive the media here to be among the most partisan of voices in the debate, and hence very unlikely to change their tone for any reason. Consequently, if we are to change the conversation, I think we need to be looking at _alternatives_ to the major media, rather than attempting to get them to change their tune.

    With regard to the former, I certainly agree that the tax-cut mantra is not helpful and will not in any concrete way lead to economic development in the province. That isn’t to endorse some sort of tax-and-spend policy (which I suspect you think I am endorsing, from the “shopping list” remark) but rather the observation that tax cuts are contentless – they lead the economy in no particular direction, and tend to favour those who are already prosperous.

    But that said, where then is the concrete agenda. Agreed, I have only been reading this blog for six months or so, and therefore owe David a good browse through the archives. But commenting “read the archives” is a cop out. Let me see some flavour of the more concrete conversation. As I suggested before, give us more than slogans to cut our teeth on. If there should be an over-arching direction to the discussion, give us some indication of what that direction should be.

  7. Anonymous says:

    David, you’ve toured the Northern portion of New Brunswick when preparing your report (which I think is excellent. It’s both bold and innovative in the modular fabrication suggestion), but do you think that the North will actually revive at some point? I realize that it is never going to catch up with St John any time, but there has to be potential if the Wayerhauser property is sold and UMOE Solar actually puts its production plant in Miramichi. At this point I’m not convinced that they are any more than a scavenger company who will strip the former UPM property of any valuable equipment and sell it off. Moncton and St John have the foundation to continue to grow through private industry alone, but the North seems to need a healthy injection of public funds before any private industry would ever consider establishing themselves in an area that is in such dire straits.

  8. I think it is possible. In a global economy, there is no more reason why a place like Moncton or Saint John will be successful as Bathurst and Edmundston. As for the issue of public funds, we are already spending hundreds of millions per year in the North on seasonal EI payments to try and prop up the economy. I would rather that money be invested in serious economic development.

  9. richard says:

    ““setting the proper agenda” and “changing the conversation”.”

    I’ve done that before, but if you really think that “… objective of getting major media to talk about the major issues is a non-starter” then there isn’t much else to say is there, except that I don’t agree?

    If you want know what I mean by ‘changing the conversation’, its that, if one reads the press in NB, there are two kinds of issues that get their attention. There are hot button issues like FI and ferries that they must report on because people are interested. Then there are the ‘larger’ issues such as taxation and ED. Most of the conversation in the mainstream media revolves around tax cuts as a way to stimulate growth. Why? Because that is what Fraser, AIMS et al have been feeding them for a decade or more, despite the fact that their arguments are full of holes and not supported by any reasonable data sets. Tax cut is the mantra now but it was not always so. The conversation needs to be changed back to what it was previously; i.e. the balanced use of tax policy and government investments to support growth and provide social support programs.

    You state that the mainstream media will not change and that ‘alternative’ media might be able to do this. Well IMHO change can only happen in one of two ways: we get some new mainstream media with a different perspective or ‘alternative’ media can try to pressure the existing players into providing the proper coverage of issues. Either way, the important thing is that the mainstream press changes. Alternative media can pressure but they will always be on the sidelines.

    There are really only two options insofar as I can see: 1) media are pressured one way or another to provide the public with useful data and analysis on these issues, or 2) a leader shows up who will push things in the right way. Otherwise, unless fortune falls from the sky, we’re screwed.

  10. Jon Doe says:

    @David Campbell

    I agree with you completely in regards to the issue of public funds being wasted on EI payments. In my comment, I was referring to the reality of the government backing these initiatives, not so much as the theoretic possibility of Bathurst and Miramichi being as successful as Moncton and St. John.

    The economic difference between Miramichi and Moncton is astonishing; more so when you consider the fact that they are only 140 km apart from one another.

  11. mikel says:

    Everything is motion-that’s from over two thousand years ago. When you talk about economic development its no different than anything else, you talk long term.

    Richard and I have had the pessimism debate before, thats a non starter. In fact, the whole blog is a non starter until it gets political. Irving actually isn’t that much worse than other media, and CBC often talks about other issues. But go to CBC, while there is lots of griping and its clear most commentors are now members of the conservative party, that says nothing about NBers. What is VERY obvious is people are VERY sick of the status quo. Unfortunately, there is really no alternatives-at least VIABLE alternatives, which has very strange political repercussions. I had a blog that talked ‘alternatives’ and I did more work in presenting them than most media, the result? Nobody was interested, just like few people are interested in Irving’s media, and few are here. People have lives and know that no matter how much information they have, its no good if they can’t DO anything with it.

    At the media there are already changes, if you don’t like that view of Irvings, you can post a comment right after. The paper generation is dying out, the question is whether the next generation can be made to be involved in politics at all.

    NBers are bad at organizing, but if all the guys blogging and posting were to say, join up with the new group creating a newspaper, then something could be accomplished. The next few months are critical, what with an election a year away. That’s when governments at least pretend to pay attention, and they pay a price when they break promises (although that doesn’t always stop them).

    It’s unfortunate but I’d almost say that IF Mr. Campbell were like Charles Leblanc, who got over 10,000 hits to his police video, and wasn’t married, lived on welfare but had the same interest in ED, there would be already be a huge difference in the province, but he can’t do that. However, although Richard likes to diminish the thought, the reality is that it takes VERY little grassroots motivation to make big changes. VERY little. That small group of abortion protestors have made sure the government breaks federal laws for years now, and they even get cabinet ministers to come out and support them-even though polls show the majority of NBers don’t support them.

    But again, what is lacking is NOT media changes or things like that. Irving wants lower taxes, they don’t need AIMS or Fraser to preach it, they do it themselves. What is needed is POLICY. Get a piece of policy, and lobby it. Gripes from the sidelines do nothing, in politics, if you aren’t in the game, you’re a spectator, and spectators don’t win games, no matter what they say about home ice advantage.

    On a positive note, I was in Thunder Bay for a wedding, and this stuff is NOT exclusive to northern NB or the maritimes. Thunder Bay is a complete dump, when you go downtown then fully 50% of the stores are closed and looking for renters. It looks FAR worse than even downtown St. John. So thats a FEDERAL problem as well, since certainly not all of ontario is sharing in that prosperity.

  12. richard says:

    “it takes VERY little grassroots motivation to make big changes.”

    If that’s the case, then why has NB changed so little? Its because these ‘grassroots’ campaigns are always focussed on hot button issues. That is not the route to the real change NB needs.

    Starting a newspaper is a good idea, but there are some large roadblocks, as we saw from the attempt to do just that in Woodstock.

    One simple method that can have an effect on current hard copy press would be to simply point out, via letters to the editor (not online comments that few read), the factual errors and logical inconsistencies in press editorials. Perhaps only a few of these will get printed, but they will be read by editorial staff and, if there are enough of them, by the managers. That is pressure that can lead to change in editorial approaches. Similarly, AIMS and Fraser BS gets printed because it is free content; orgs that supply good quality free content from another POV might get published. There must be staff at UNB, for example, that have data that can rebut AIMS; why don`t we see more of them producing copy for use by the press? And, yes, that is part of their job, IMHO.

    “What is needed is POLICY. Get a piece of policy, and lobby it.”

    There are already plenty of policy approaches and plenty of lobbying. Without a mainstram press presenting the case on a regular basis, the lobbying has no public presence. Lobbying only works when either money is behind it or there is a great deal of public support. Public support comes from press coverage.

    “Irving wants lower taxes, they don’t need AIMS or Fraser to preach it, they do it themselves.”

    Yes they do need AIMS; they help fund AIMS and for good reason. They need cover and sources to cite. AIMS and Fraser have helped make tax cuts the SOP in Canada. They have done this by flooding the press with their mantra and trying to drown out all alternative viewpoints. They have changed the conversation and we need to change it back.

    “IF Mr. Campbell were like Charles Leblanc, who got over 10,000 hits to his police video, ”

    Hits do not equal real influence. This is an example of a hot-button issue that grabs headlines but has minimal real impact on NB.

  13. mikel says:

    Because New Brunswick has never HAD any grassroots motivation. Thirty people at the legislature protesting abortion, or one guy protesting development is NOT a grassroots movement. It is VERY easy to start a new political party, but look at how much trouble the Green Party is having. The Atlantica Party went around the blogs trying to get some interest, but finally gave up.

    Point out to me ONE piece of legislation being ‘lobbied’. This blog has been here for years yet has never even put together a single letter to an MLA trying to get them to present that legislation even as a private members bill.

    The NS NDP got elected in large part because of the youth movement-they don’t read letters to the editor in the print newspaper. The only people who read print newspapers are over thirty and have never expressed any interest in becoming any more politically involved than they are.

    Public support can come from any number of places. I’ve already proved Richard wrong on that. Charles Leblanc blogged and knocked on doors for the liberal party during the st.john byelection talking about the residential tenants act. At that time the CBC was on strike, there was NO media coverage except for one line in a Telegraph article that took it out of context and never explained it. Then Ed Doherty presented a new residential tenants act on his FIRST day, it was said to be so important that the member presented it (not the premier). Lord said it would be changed in his speech from the throne.

    Thats with NO media coverage. Like I’ve said, you guys are in the economic group the government actually listens to, and preach a line that is hardly lacking in support. A newspaper OBVIOUSLY would be nice, but as we’ve seen, the real world doesn’t hand out newspapers to everybody.

    A grassroots movement uses ALL the tools available:facebook, twitter, letters to the editor, protest, press releases, knocking on doors. Most importantly, it involves politicians, going to see them, knocking on doors, starting new parties, growing marginalized parties. NONE of that has ever happened in NB since the Acadian Party, and even that was marginalized by official bilingualism. The COR party was ‘sort of’ that, but was mostly rats leaving a sinking PC ship, with some english anger thrown in-but it was certainly the closest example and they got to the point of being official opposition!.

    Irving doesn’t NEED AIMS, they are ‘useful’, but they don’t need to cite sources, they could make up crap if they wanted to or cite Fraser or any half crazed professor saying something similar. Very few people support ‘lower taxes’ because they heard that some researcher at AIMS said they should.

    As for influence, I’d pick Charles Leblanc over Mr. Campbell any day of the week. Charles knows almost every MLA personally and gets the kind of support daily that David can only DREAM of. If Charles weren’t so stubborn and such a malcontent, he’d be every politicians worst nightmare. If Richard thinks Charles has only had a ‘minimal real impact’ on NB then he is WAY out of the loop and needs to get out of the basement. There is a reason that the government has gone to such great lengths to attempt to ‘minimize’ his impact, including robbing him of his basic civil rights and having him repeatedly, and illegally arrested.

    Its when the government pays such attention to you that you know you are on to something, which is why it couldnt’ care less whether Mr. Campbell goes to his grave writing daily blogs dreaming of someday when things will be nice.

    However, as I told Mr. Campbell, there is a new media group starting up, but they can only afford occasional print publications, so keep your eyes peeled. But keep in mind that virtually all the big social changes began with very little coverage from the mainstream media, while Richard is entitled to an opinion, it must be pointed out that that specific opinion is just plain WRONG (as I’ve shown above).

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