Changing embedded notions

This is an excerpt from a letter to the editor in the TJ today. I think in many ways she is reflecting what many people have said to me over the years. Have a read:

In particular, I strongly disagree with Reality #5, which states, “Export growth must drive overall economic growth.” This will create prosperity.? This “reality” is in direct contradiction to the definition of self-sufficiency. By increasingly relying on external markets for our prosperity, we are willingly putting the fate of New Brunswickers in the hands of forces beyond our control.

In my view, an assessment of self-sufficiency in New Brunswick should start by looking at our extensive natural and human resources, and all recommendations should build on these resources.

The government of a self-sufficient New Brunswick has a mandate to manage our natural resources in a way that benefits as many New Brunswickers as possible. After all, these resources belong to the citizens of New Brunswick.

This does not mean giving control of our natural resources to large corporations, whose goal is to extract them for their own profit, but rather it means fostering small, locally-owned and operated, community-level businesses that are able to harness human resources and manage natural resources in ways that benefit the entire community, both now and into the future.

The reality is this. You could tell this woman that the most successful economies in the world are the ones that are highly interdependent on the global economy with large amounts of investment and trade flowing in and out – but it wouldn’t matter. You could further tell her that the only examples we have of economies such as New Brunswick revitalizing themselves do so by gaining access to more business investment and trade – but it wouldn’t matter. You could tell this woman that the provincial and federal governments in New Brunswick have been biased* towards small business for 30 years and things have only gotten worse – but it wouldn’t matter.

It just sounds too darn good. ‘Local control’, ‘community-level’, ‘evil global corporations’. You get chills just thinking about it, admit it.

But the truth is actually quite simple. If this lady wants local business to thrive, we will have to ramp up both business investment attraction and value-added exports.

That, my friends, is the paradox. The riddle that we can’t get our heads around. We need to give up some control to get some control.

In other words, if the Miramichi had 10 large employers in diverse industries, the closure of one pulp mill would hurt but would not be devastating. Building economies with one or two large multinational firms employing thousands and supporting hundreds of small businesses is, in fact, a recipe for disaster. We need the 10 or 20 multinational firms, and the resulting hundreds of small, local businesses that support those industries.

*I still remember Francis McGuire’s powerpoint presentation showing that 75% of all economic development funding went into small businesses when he was trying to defend himself against calls that ED&T was too externally focused.

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0 Responses to Changing embedded notions

  1. Eugene says:

    You say embedded notions, I say ignorance. What exactly would she propose? That we simply trade the same dollars back and forth within the province?

  2. Anonymous says:

    Sorry buddy, but plainly and simply you are wrong wrong wrong wrong wrong. YOUR version of economic development is tied to those things, that doesn’t mean everybody’s is. To quote a phrase “not everybody is the same”.

    In fact, virtually the opposite is true. Take a look at the rampant poverty that now pervades Ireland, look at the social inequity that now are part and parcel of China, as well as the massive problems that now face RUssia now that they’ve ‘modernized’. In the past the poor of these areas could ‘make do’, while technological advances increasingly spared them the main problem-crop failure. Of course opening markets doesn’t NECESSARILY mean you have to kick all the poor off their land, but it usually does.

    What this woman is talking about is quite true, and if you don’t believe her and want PROOF, all you have to do is look at South America. Venezuela, Bolivia, and increasingly Columbia have all elected governments whose mandate has been taking control of resources. Norway controls its oil resources and has a bank account with trillions in it for when the oil runs dry.

    That’s reality, so you shouldn’t be painting this woman as being unreasonable when in fact she is quite correct.

    Take a look at Vermont, the exports of Vermont aren’t even close to New Brunswick. In fact YOU have often made this womans case for her, New Brunswick has MASSIVE exports, namely oil, and with a new refinery that will double. However, it will only add maybe 1000 jobs. The LNG terminal will provide 8-10. How exactly has increased oil exports helped New Brunswick thrive? Essentially that’s your ‘energy hub’ all done and paid for all for 1008 jobs, 3008 total. That’s a ‘backbone’??

    Take a look at forestry, this is where its most clear as there is a clear cut example in India where much of the industry is state owned. Just imagine how much better off NB would be if New Brunswickers, in the form of local Co-ops, hell even as a provincial bureaucracy, owned all the sawmills and controlled the land. It would CREATE jobs and get rid of the idiot notion of ‘wood supply guarantees’ which is the WORST idea to sprout in NB in a long time.

    In fact there are TWO ways towards self sufficiency. Take the home as an analogy. You live on an off the grid home that supplies its own power. Now, its true you need SOME money coming from elsewhere to pay your bills, however, you can look for stuff to sell, but of course there is that other way, known as ‘protectionism’ which protects markets so that you control your own resources.

    It’s been growing even faster than global markets, the US are masters of it, with the Jones Act that doesn’t let anybody but amerian ships with american crews into ports, softwood lumber, mad cow, etc.

    This woman probably doesn’t have a masters degree, but that doesn’t mean she’s not right. You may have just been a little too indoctrinated by those free market Virginians. Keep in mind of course that that’s all it was was propaganda, the US economy is almost literallly run by the state, it certainly is paid for by the state as well as providing guarantees whenever they are in trouble and protecting their markets.

    That doesn’t mean that this woman would gripe at UPS coming to a small town and creating jobs, it just means life is not an ‘either or’ proposition. There is one little tidbit that I’d add to that to really hammer the point home, but I’m saving it. If you don’t believe this woman, just go to southern ontario and check out some mennonite communities, where control of resources, and self sufficiency have created one of the most stable communities around.

  3. David Campbell says:

    I guess we will just have to agree to disagree. Here’s a quote from the Ireland Statistics Agency:

    The at risk of poverty rate in Ireland before pensions and social transfers
    declined from 42 per cent to 37 per cent during the period 1995-2000. This
    risk of poverty rate was lower than the relative risk in the EU of 40 per cent
    in 2000.

    As for your constant comparison between the third world of South America and the first world, I don’t think this makes any sense. I have visited South America 9 times and there is no comparison in economy, culture or political environment.

    And as you like to invoke Vermont in just about every post, you can check out this link to see the importance of exports and investment to that economy.

    As for Mennonite communities, I have studied this model somewhat and if you can attract Mennonites to New Brunswick, be my guest. That would be relevant, foreign investment attraction in my book.

    So, I am in your words ‘wrong, wrong, wrong’ but I happen to think I am ‘right, right, right’.

    But I appreciate the clash of ideas on this blog, so keep it up.

  4. Anonymous says:

    Note that it says “BEFORE pensions and social transfers”, that’s a big before.

    Vermont is the place I know the most about, but even Maine’s exports aren’t near New Brunswick, in fact New Hampshire”s probably isn’t either.

    To state that ‘third world countries’ simply can’t be compared is simply false, and the people there would tend to disagree. There are simply more people there. Brazil’s government is far more representative of their population than Canada’s, in fact so it Columbia’s and Venezuela’s which use a mixed member form or proportional representation.

    So politically it is Canada that is ‘politically repressed’, and these countries are far more advanced. Economically we are talking about control over resources, so there is no reason NOT to compare the two. Just because you’ve been to a country and it ‘looks different’ is no reason not to.

    Control over resources means exactly that, and it means it no matter where you live. Anybody that thinks New Brunswickers control their resources really has to back that up because there is virtually NO evidence of it.

    The Irvings provide ample evidenc e of that, that not only do they control the resources but virtually ALL legislation that impact resources. As i”ve mentioned before, NB is the only place around to do aerial spraying of herbicides..whose interest is that in? YOurs?

    As for Vermont I dind’t say exports weren’t important, Ben and Jerrys accounts for a lot (home grown though) and IBM has a huge factory that may close down and throw people out of work (away).

    But I couldn’t access that link because its cut off.

  5. Anonymous says:

    So for specifics, the evidence is mostly the other way. People always tout Ireland as an example simply because its ‘their type of example’. However, much of Dublin was built up by U2, a one group economic unit FROM Dublin.

    Likewise even in NB Irvings, McCains, Ganongs, and Sabian prove the case that building industry from within is far more practical and dependable than trying to find it without. Somebody who grew up in Campbellton and loves it there is far more likely to stay there than a corporation like Molson who comes in on the lowest bid. If you don’t believe that, go ask the people of Barrie who previously built up Molson, named almost everything in their city after them, all to see them close down and throw thousands out of work leaving only their name on buildings and some advertising.

    That doesn’t mean you don’t try to bring in outside investors, but it certainly doesn’t mean you dis local industry. A small local industry can become large, Ben and Jerry’s proved it, Irving proved it, Bill Gates proved it. Very little money was put into ED, and the VAST majority of it went to large corporations-Tembec, Molson, Irving. Only a miniscule percentage went to foster small companies.

    And small and growing companies have far different needs. In fact, the most innovative and hard working entrepreneur out there may be simply depressed right now on welfare. All the other factors are there, all they need is a moment’s respite from misery to capitalize on their idea to change an industry. Virtually all the big companies of note right now were started by some guy in his basement, again, look at Chilly Beach.

    In a community wealth can be passed around by one large employer, as you frequently state, but it can also be passed around by many small ones, or one or two medium ones, that’s just as likely.

  6. David Campbell says:

    I am not dissing local or small business. In fact, it’s the opposite. When a large international manufacturer sets up in a community, they tend to directly use between 5 and 20 local suppliers (small, local businesses). If you really want to support local business, you should get on the investment/trade train my friend. Otherwise, a shrinking local economy will result in many local and small businesses going under.

  7. Anonymous says:

    The point is that trade can come from local growing company’s as well as a foreign one, and is far more likely to stick around.

    Another quick example is to simply look at education. There are several programs in the educational department which are now being sold and consulted on worldwide. That requires even more people in a government department and provides a trade opportunity even within the government.

    So trade doesn’t necessarily need a large foreign company to move in, in fact in most cases they only move in to take over existing companies.

    That’s why this stuff needs debate because its so complicated. I tend to appreciate the US state model available in some states where locals look at an opportunity and vote on it. While the claim here is that people don’t support economic development, I think the opposite is true, in a place like NB virtually ALL thought is given to economic impact over all others.

    That’s why I’ve often advised you to lobby instead of blog, because politically its far more likely that people support GOOD investments, even foreign investments, than none at all.

    So I think the idea of 5% of the budget being used for economic development is a great one. In fact what should be done is a website just for that, and find an MLA to present that as a private members bill, and most importantly, start lobbying it. It is true that people will have different ideas on how that should be spent, with the internet I think the ideas you have about aggressive marketing and research could be done far cheaper than back in the early 90’s, hell, we do lots of research right here for nothing, and putting together presentations and videos can all be hosted for free at various places.

    The trouble is, in tax policy NB has always tried to ‘invest differently’ to avoid competing directly with Nova Scotia, that’s another issue itself, but once again I prefer the US or Swiss model where people get to vote on it, rather than the NB model where people don’t even KNOW about it.