We’re not alone

Sometimes it is comforting to know that other countries face similar economic challenges. Consider the UK for one. A new study published about regional economic development in the UK sounds frightenly like Canada. Here are some highlights with my comments:

A new report today documents a profound economic imbalance between the UK regions, with wealth creation, enterprise and growth concentrated in London and the South East of England and high welfare dependency and large public sectors in Wales, the North-East and Northern Ireland in particular.

Substitute Toronto, Calgary/Edmonton and Vancouver for London and the South East of England and that sounds a bit like Canada.

…heavy public spending increases of this decade have not helped the challenged regions; in fact they may have increased their dependence on Southern taxpayers and further reduced their attractiveness to talented young people.

.nuff said. I think this goes without debate in the context of New Brunswick and Canada.

Population and migration. Between 1991 and 2004, London grew by 8.8 per cent, more than twice the rate for the UK as a whole. Scotland, the North East and the North West actually shrank. London and the South East are net attractors of young people.

Hey, sounds familiar as well. Calgary grew by over 20%, Toronto 15%, Vancouver 14%, etc. While New Brunswick, Nova Scotia, Newfoundland and Saskatchewan actually shrank.

Growth. If all regions had the same rate of growth as the South East over those ten years, UK output would be over £61 billion higher in 2004 (an increase of 6 per cent).

I have never seen this type of analysis in Canada. Not from AIMS, APEC, Fraser, Competitiveness & Prosperity, CD Howe, none of them. I don’t even think we even have contemplated the economic potential of getting places like Atl. Canada back online economically. But even at a conceptual level, it is not hard to realize that if Atlantic Canada was pumping on all economic sectors, the positive economic benefits to Canada as a whole would be in the billions of dollars annually.

Educational attainment. 26 per cent of London’s workforce has degree standard qualifications compared to 12.4 per cent in the North East.

While the differential in Canada is not as stark, it is quite high. There are three times as many post-graduate degreed people in Ontario than New Brunswick.

Regional differences have become much more accentuated as a result of the recent unprecedented increases in public spending. Certain regions are, in effect, becoming client areas dependent on state employment and state funding:In the North East, North West and Northern Ireland, nearly one in four households contain one or more members in receipt of incapacity benefit.

Amen to this statement. And rather than this being a potentially negative, Bernard Lord has been the #1 champion of more public spending. And the ratios here are about the same. Almost one in four NB families has a person on EI during the year (100k on EI over a workforce of 350).

London, the South East and the East have a third of the UK population, receive a third of public spending yet pay nearly a half of personal taxation.

This is exactly the reason why Alberta and Ontario should be first out of the gate supporting a plan to revitalize the Atl. Canada economy. They are the ones getting hit for the bill for Atl. Canada’s economic malaise. But you will never hear Ralph or Daulton calling for massive investment in Atl. Canada economic development. Go figure.

The ratio of public spending-to-economic output is 61 per cent in Northern Ireland, around 54 per cent in Wales and the North East and 47 per cent in Scotland. It is around 29 per cent in the South East and East and 34 per cent in London.

Touche. And not in the Apple vs. PC way (requires Quicktime).

The danger is that a vicious circle of economic activity will be created. As more and more people become dependent on the state for their jobs and incomes, there are fewer opportunities for small businesses to start up and employ workers; talented young people and modern industries – which are the lifeblood of future economic progress – will move from northern regions into London and the South East; further government resources will be redistributed into the northern regions, continuing the dependency cycle.

The grand finale. Sounds like Savoie, Bruce, Meek, Campbell, etc. found their way over to the UK.

This is good food for thought going into a provincial election, don’t you think?

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0 Responses to We’re not alone

  1. Anonymous says:

    There are two major issues that you didnt’ cover and one feeds into the other. What is of interest is WHY these things are occurring-unlike our friend from AIMS likes to assert, there is nothing ‘natural’ in robbing one area of resources to feed another.

    First, these are not ‘free market economies’, in fact they aren’t even close. Look at all the largest companies in the world and they are heavily dependant on government for subsidies or protection. A 2001 study of the Fortune 100 showed that every single one had benefitted from some government largesse, while a full 20% were saved from outright bankruptcy. If that’s ‘free market’, then I’m Stephen Harper.

    So there is no reason whatsoever that a government can’t control where that investment goes. In the past, before Thatcher, Reagon and Mulroney, governments had at least some say in this. Basically you can call the transition one of central government to central industry. Now industry calls the shots and dictates policy to governments.

    That leads to the question of WHY . Obviously big and small businesses want to go where the customers are to lower costs.

    So, again, ‘its politics stupid’. It simply comes down to representation. As every economist has said since the birth of Canada, without adequate representation, rural areas, and smaller provinces will get screwed.

    Keep in mind that ‘equalization’ means simply being able to provide the same service as a wealthier province. So those increases in public spending are a result of other governments beefing up their spending.

    Quite simply, the problem arises, in good measure,from our system of representation. Its no surprise that the problems mentioned above are endemic to countries with a single member plurality system of government-namely the US, Canada, and the UK.

    While proportional representation at least addresses this, it isn’t until the system is full blown with representation from those of all social strands that investment doesn’t simply ‘flow to clusters’.

    This is true at all levels of government. Northern New Brunswick is to southern NB what NB is to Canada. YOu’ll even see it municipally to an extent, some areas get left behind, others get investment.

    You don’t find nearly the levels of outmigration in places like France, Germany and Italy. As ‘free markets’, meaning large corporations, govern, these problems become worse.

    So to bring it around to an election, I think it behooves Monctonians, Frederictonians, and St.Johners to start talking about more investment in northern new brunswick, since the same situation exists. If WE can’t do it provincially, why would anybody expect it to be done federally?

    Investment can mean a lot of things though, like policies that let the people who live near the land control it. The people want long term jobs, not short term handouts to foreign investors who will be gone as soon as the last tree drops.

    So during the election perhaps some real focus by the south on the north would show that people can actually practise what they preach.

  2. David Campbell says:

    Hey, you should read my blog sometime. From a post on July 30, 2006.

    I have offered my simplistic solutions. Take a page from North Carolina and put auto plants and other large industry 1 to 1.5 hours from the urban centres (in NB’s case that would be Miramichi, Nackawic, St. Andrews, Tracadie, etc.). This would shore up rural economies and feed into the urban areas (like Michelin in Nova Scotia – three large rural plants). Also, other developments like the recently mentioned large housing development 45 minutes outside Moncton. I realize that many of you think this is stupid and not practical but I readily put on my dunce cap – because I have seen this at play in many other regions – just not NB. Cripes, even Slemon Park on PEI is an hour from Charlottetown.

  3. Anonymous says:

    I don’t always direct comments at you David, you’re ideas are well presented, but not everybody reads the blog every day and the political aspect of that study was missing so I thought I’d add it.

    The essential trouble is, how do you get an auto plant to go there? Industry is now calling the shots, and there are relatively few of these mammoth corporations. Most of them are already centred in one area, and usually get the concessions they need there.

    It’s not like you flick a switch and its there. That’s quite a gamble to build an auto plant in a rural area and hope somebody comes and fills it.

    The competition is pretty stiff, and when you have few dollars, its that much tougher. Although Irving claims they were unhappy about losing shipbuilding contracts, they certainly shouldn’t have taken millions to close it down. Now, lo and behold we have a federal government that wants ships, but now there is no infrastructure to build them!

    That is a real gamble to sink massive funds into a single industry. What happens if it goes belly up or is sold? There may or may not be validity to the idea, personally, I think New Brunswickers should be deciding that. The ‘smart car’ market is one idea, there are lots of others.

    Or, for far less money you can simply ASK the people of the area. Again, there are ideas on the paper for just about every industrial park in the province. Yet they can’t get a measly amount of money, yet Irving and others get concessions handed to them.