Playing the cataclysm card

Driving home yesterday I heard about Canada’s record home sales last quarter.  I have been reading in the New Brunswick paper for weeks about record low unemployment, population growth, strong home starts.  Yesterday we were told that all the growth was spread around New Brunswick.

Is it just me or were the politicians – provincial and federal – just a few months ago talking about the worst recession since the Great Depression?  Didn’t the Graham government turn a surplus into an $800 million deficit to stimulate the economy to ward off this Great Depression?

I’ve read a lot about the Great Depression.  The thousands of suicides. The bread lines with 50,000 people lined up in NYC just to get food.  My dad talking about how his dad went months without paying work but was too proud to go on the dole so they lived exclusively off what they could grow, fish or hunt.

The biggest recession since the Great Depression.

I think that politicians (and maybe society as a whole) jumps to the cataclysmic card too fast these days. 

“Without action on [fill in the blank] we are facing an unprecedented problem.”

“Unless we addres this now [fill in the blank] we will pass [an overused] tipping point and may never make it back.”

The problem is a bit like the kid who kept calling wolf.  The more the politicians play this card the more desensitized we will be to it.

In the provincial context, as the government is forced to cut deeply to get out of this deficit used to pave every single highway in New Brunswick – trust me I have been on the majority of primary and secondary highways in New Brunswick logging some 15,000 kms for work in the past six months – maybe they will have second thoughts about the political consequences of propping down the unemployment rate by a point or two.

New Brunswick has serious challenges.  It’s population is stagnant.  It’s economy chronically doesn’t produce enough business investment.  It’s government spending is rising at three times the rate of inflation.  Health care costs will bankrupt the government – not in 30 or 4 years  but in the next 5-10 if growth rates remain the same.

But we’ve lost the urgency card because we play it too much.

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9 Responses to Playing the cataclysm card

  1. Peter Lindfield says:

    You are absolutely correct about having worn out the urgency message.

    The problem remains however that, at the root of NB’s challenges is the fact that our economy is increasingly uncompetitive. The reason is manifold and well documented: low productivity, poor integration into the global value chain, etc., etc. Because we don’t see the global supply chain train hurtling headlong towards us, we don’t know that we are on the tracks.

    The poor performance of our economy has reduced job prospects with the consequence that our graduates in addition to our experienced workers tend to migrate to better employment elsewhere. Attracting immigrants to an underperforming economy is not impossible but it is not so easy either. Our demographic challenge is directly related to our economic

    Low productivity firms and those that tend to be export-adverse are not superior investment opportunities. Government fiscal challenges are closely correlated to the underperformance of the private sector.

    And the Chicken Little routine is easy to perform if you are not really aware of the implications of the sky falling.

  2. Anonymous says:

    Uncompetitive right! Why? Who bought out Baxters, and how? Can an unknown suddenly own everything in sight, even in New England, putting many out of work, producing poor quality! Today we hear! Tax Havens. Pays NO taxes. Irving and Couche Tard? Same thing. Quebec is the one to disclose this information. No it wasn’t disclosed by graham, lol
    Honest people need not apply. Been obvious for years.

  3. Anonymous says:

    The urgency card needs to be played in a much different way. The gap in NB’s economic performance and those in other more successful provinces has been widening. We are more dependant on transfer payments and we know those are about to tighten up. Our answer? Pave every road and build more hockey rinks and community halls. Oh, and bailout struggling and mismanaged companies where there is political capital to gain or preserve.

    We need a sense of urgency in creating, resourcing and executing a focused and meaningful economic development strategy. It is time to be proactive rather than reactive.

  4. Anonymous says:

    “I think that politicians (and maybe society as a whole) jumps to the cataclysmic card too fast these days.”
    >> I think that it is actually the opposite. A lot of people are jumping to the optimistic card too fast. There is without doubt another bubble forming (how else can anybody reasonably explain the Dow Jones at 10,000 points?). The only question is: how long will it take for another adjustment to take place? A few months? A few years? The underlying problems that brought about the financial crisis and ensuing recession are still out there and nobody seems to care about it…

  5. Anonymous says:

    Peter’s comments about the noncompetitiveness of NB business have a lot of truth. However, a portion of the blame needs to rest with government rewarding bad behavihour.

    When a poorly managed company gets into trouble, if they fly the right political flag, they get bailed out. When venture capital is difficult to attract, in many cases because the business case and plan is poorly conceived, we create government VC. When companies are inefficient and become nonprofitable because of the dollar’s parity, government runs to their rescue. When NB energy costs begin to creep towards world prices, we subsidize rates. I could go on but you get the idea.

    Global business is not for the faint of heart; it is ruthlessly competitive and not always fair. Government meddling to artificily prolong the lives of poor businesses might be good politics but it is bad business. The hard lessons of the business world make us better prepared to succeed in the future. The government needs to reward the winners and administer some tough love to the losers.

  6. Peter Lindfield says:

    Brian Mulroney said penetratingly about Harper’s recent reduction of the GST rate that it was “good politics but bad public policy.”

    A whole volume could be written about the application of this principle, not only in New Brunswick. And, to support the contentions of Anonymous 13:39, this is less challenging for some than “good pubic policy but bad politics.”

  7. Anonymous says:

    Never used to be like this! Wonder what happened? I could tell you!

    Nearly 40 per cent of people in the bluenose province are functionally illiterate, he said.

    “We’ve got thousands of knowledge-related jobs coming to Halifax,” Lund said. “If we don’t have the people ready for those jobs than the companies won’t stick around.”

    But literacy rates are even grimmer in New Brunswick. A report released this month by the Canadian Council on Learning suggests New Brunswickers are more likely to struggle with reading and writing than other Canadians.

    The data tracked literacy rates in more than 50,000 Canadian communities using 2003 literacy figures and 2006 Census results from Statistics Canada. Almost 50 per cent of Canadians had an adult literacy rate at or below Level 2, which is defined as having the capacity to only deal with simple material involving uncomplicated tasks.

    In New Brunswick, there were regions where the percentage of people struggling with literacy jumped as high as 70 per cent.

    http://nbbusinessjournal.canadaeast.com/journal/article/804370

  8. Anonymous says:

    @Anonymous
    Exactly. And no NB Business Inc. will ever be able to change that. What NB needs is a real Department of Economic Development and an economic development mandate for all the other departments.

  9. Peter Lindfield says:

    Anonymous 11:38, I’m curious about your view of what a “real Department of Economic Development” would look like. Can you explain?

    And you are recommending a economic development function for each of the remaining government departments — who would coordinate and under what plan would they operate?

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