You know what I hate?

I hate it when economists try and boil everything down to a pie chart. The Globe & Mail is reporting this morning on a new report from The Centre for the Study of Living Standards called “The Impact of Interprovincial Migration on Aggregate Output and Labour Productivity in Canada, 1987-2006”. The report concludes:

The increase in interprovincial migration in Canada, and in particular the large net
in-migration to Alberta, has contributed to output growth. In 2006, it estimated that
interprovincial migration added nearly one billion dollars to the Canadian economy when
output is expressed in constant 1997 dollars, and nearly 2 billion when expressed in
current dollars.

Essentially, what they are trying to say is that taking 2,000 people a per year (net) out of New Brunswick (8,000 per year out of Ontario) and moving them to Alberta is really good for the national economy – to the tune of $2 billion per year in ‘output’ (all provinces combined).

Now, this same group a few years ago issued a report that recommended the federal government provide financial incentives to Atlantic Canadians on EI to move to Alberta.

OK, let’s think this through. The CSLS has this as its mandate:

[The CSLS] is a non-profit, national, independent organization that seeks to contribute to a better understanding of trends in and determinants of productivity, living standards and economic and social well-being through research.

Put aside productivity for a moment. How does the CSLS pushing public policy makers to empty out certain regions of the country to fuel the growth of other areas ‘contribute to a better understanding of the determinants of ‘living standards’ or ‘social well being’?

Make no mistake. There is very little ideologically neutral research. This report goes to great lengths to make the case for more mobility of people from poor to rich areas.

I have a little different view. Call me a contrarian.

The Globe’s headline reads:

Migration west adds $2-billion to national economy
My headline would read (if I could get published):

Migration west over time seriously eroding the social and economic fabric of whole regions of the Canadian economy…

..which could lead ultimately to serious social unrest.

You see most (or many) economists just look at numbers. They are not so good at the human side of the equation.

I have said before that the free flow of goods, services, capital, ideas and people within a country is healthy for a national economy. When one area overheats, another one should rise. When there is a surplus here, it should feed a deficit there. I, on an economic level, have no problem with that.

But my position assumes a two-way flow. That there will be ebbs and flows. A sustained one-way flow for years (now moving into decades – New Brunswick has exported more people to other provinces than imported for 14 straight years) leads to serious social and economic challenges.

Consider an analogy from the corporate world (I know, indulge me). If an automobile company starts to lose market share to another (say New Brunswick Auto Co. Inc. NBACI as the former and Alberta Auto Co. Inc. AACI as the latter), it will start to take increasingly serious measure to protect its market share. Eventually, market forces will dictate radical changes or the NBACI will either go bankrupt or be acquired.

Now, consider that the NBACI and the AACI are both partially owned by the Canadian Auto Co. Inc. CACI. The CACI may continue to cross-subsidize the NBACI with profits from the AACI (like GM has done for years with its brands) but eventually if the NBACI doesn’t become profitable, the CACI will shut it down.

Now, in the aggregate economic sense, maybe the CACI is better off with out the NBACI.

But we are talking about freakin’ cars here – not communities of people that have existed for hundreds of years.

So, all this to say that I think the CSLS is a front for the Alberta government. It’s not about social well-being at all because social-well-being is about community and while people may be better off financially by moving to Alberta – you can’t tell me that breaking up families, social networks and communities to the scale that is going right now is good for the social well being of Canada.

Again, I don’t blame Alberta. Giddy up. I blame public policy makers in the poor provinces and nationally who use studies like this to ease their consciences. No pain, no gain. They say.

I realize that the de facto public policy advocated both federally and provincially for at least the last 15 years was to slowly empty poor regions of ‘surplus’ people to areas of Canada that need them. This is obvious by the way governments’ are spending their money and writing their policy.

But I am not sure they haven’t replaced one problem with another. Communities with high unemployment and low productivity because of very high seasonal employment are a drag on public finances (directly and indirectly). That labour would be better used in Alberta (from a technical perspective). But what is the bigger goal here? What do you do to a country when you slowly erode whole regions to feed others?

I gotta go but I’ll make one last point because it is huge.

When you read this report, you will likely say ‘yikes’ when you see the Ontario out-migration figures. An average of 8,000 out per year since 2001.

Well, don’t lose your shorts.

Ontario receives more immigrants per year than Alberta, Manitoba, SK, NB, NS, PEI and NL combined.

Heck, Moncton has a positive in-migration from Ontario (the last time I looked was 2004). When you are bringing in hundreds of thousands of immigrants, losing a few people to Alberta is not that bad.

New Brunswick, however; and many other provinces, has the out-migration and virtually no immigration.

This is a massive difference.

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0 Responses to You know what I hate?

  1. mikel says:

    It doesn’t take a rocket scientist to figure out that if Alberta didn’t get more workers, it couldn’t get at as much oil.

    It ‘adds’ 2 billion to the economy, in other words, public policy designed to empty out regions, separate people from their families and communities and provide industrial workers contributes less than .01% of the size of the economy.

    To ‘canadians’, that size of the economy makes no difference, after all, the ‘size of the economy’ could simply be money that is going to american shareholders.

    We know EXACTLY what this largesse contributes to New Brunswick. Approximantely 1.65 billion, but of course thats money from the feds. That means that every other province has contributed to it, even New Brunswickers. So giving Alberta the benefit of the doubt, lets say $400,000, which would give them far more of the balance than other provinces.

    So do an example, most students claim that it costs $180,000 to educate a worker. Well,NB doesn’t spend that much, so let’s cut it in half to $90,000. Divide those two numbers, and you come up with at most 5 workers. More than five workers and NB comes out ahead, who wants to put money that the number is a hell of a lot higher than five?

    PS I haven’t checked the study yet, but I’m always curious when ‘studies’ do strange things like use 1997 dollars.

    So once again, with NB handing so much money to Alberta, we can question why the government wants to give even MORE to Alberta’s economy by granting access to an Alberta company to set up wind turbines instead of partnering with so called ‘atlantica’ partner in the development of wind power.

  2. Anonymous says:

    Where has the term ‘development of wind power’ come from? Wind power is mature technology with very little development needed.

    Wind power involves selecting a proper site and buying the windmill technology (usually from Germany). It creates a few jobs for the site selection and windmill erection, and perhaps a few jobs to pick up the dead birds and properly dispose of the hazardous batteries.

    I see very little economic development upside to wind power; sure it is nice to supplement the power needs of a small community but it basically results in net outflow of money.

    Please explain what I am missing if I am wrong?

    Now, let’s talk about nuclear expertise, clean fossil fuel technology, tidal power etc. Here I can see R&D investments and export potential that will lead to positive economic development.

  3. mikel says:

    I hate to take up David’s space sine the issue isn’t really related, but I suppose people can just scroll over it.

    However, in the first place, the main emphasis on energy is of course research. Nobody would state that the nuclear industry is the same as it was forty years ago. And that’s because of research.

    Wind power is even more reliant on research. Like nuclear power we can, say, go to France and buy a nuclear plant. We don’t (or at least it is discussed). The assumption is that for whatever reason our government is involved in doing nuclear research and building up nuclear power.

    The only reason the same is not true of wind power is because of political decisions. That’s almost universal, when one ‘group’ gets powerful enough they always thwart anybody that may threaten their priveleged position.

    So there is no reason why a wind turbine HAS to be purchased from germany, any more than there is a reason that a nuclear reactor HAS to be bought from France. There are many canadian companies that are in production of wind turbines, Alberta doesn’t buy them from overseas, they simply import the know how.

    To talk about ‘hazardous batteries’ is of course silly when in the next sentence nuclear power is mentioned. For one thing, if a wind turbine is connected to the grid there is NO battery. It simply flows into use.

    In the second place, even electric batteries have about 1/1000000 the danger levels of nuclear waste, which is around for millions of years.

    Wind power is just getting started, you’ll notice that virtually the ONLY defense of nuclear power is ‘well, we really really need lots of power (we don’t, our ‘markets’ do), and ‘its more cost effective (but only so long as you don’t see storage and handling of hazardous waste as a long term cost).

    That is another benefit though, wind power would give rural areas a cost advantage in power, which is another reason why we won’t see it.

    So there are huge opportunities for wind power research, much of which is highly specific to NB, because wind is very different everywhere. Creating more energy from less resources is always the aim, and wind power has the added bonus of being a ‘new’ industry, and very viable to other markets, because wind power is getting set up all over the place.

    However, again, WE are not making these decisions so it has nothing to do with the kinds of things ‘we’ are talking about. It’s clear which way the government is going, and it’s pretty clear that there is no groundswell of support for other energy sources, which means its a foregone conclusion.

  4. Anonymous says:

    I agree. Windpower is not all its puffed up to be (pardon the pun). I read a report a while ago that basically nukes windpower as a viable alternative energy source. It stated that wind turbines were only 3% efficient because they only operate when the wind blows (obviously enough) whereas technology such as solar or UV panels take energy from the sun, clouds, daylight and moonlight.
    Wind energy has to be used straight away as it cant be stored successfully which is the direct opposite of solar and UV.
    Solar systems are becoming more and more advanced and this is an area that NB can excel if the right people were in place.
    The future is in developing solar, fuel cell, tidal power technology etc. The money (and the jobs) is too.

  5. NB taxpayer says:

    An above commentor raises a good point. However, weaning off our dependency on oil will take some serious getting used to, especially in our neck of the woods (North America). In other words, trying to compare the ethanol or wind power industry to past energy productivity under fossil fuels is, quite frankly, a ludicrous pursuit.

    It’s almost like trying to compare human capital with old traditional manufacturing industries. It can’t be done.

  6. Anonymous says:

    Actually, the opposite true. There’s a reason wind power is going like gangbusters all over the world. What, you think Germans and americans are all retards? Companies are putting wind towers out into the water, huge propositions, don’t beleive me, go research them. NB Taxpayer ought to know better as its ‘the market’ that is driving it, and these people don’t throw money at ideas that haven’t been thought out.

    Solar is also a huge resource, and the combination of solar and wind power could EASILY provide New Brunswick with energy. Meanwhile, the big industries are talking about being able to provide their own power (of course they already can, they just want the government to pay for it for them). Energy use for residential purposes has been dropping for decades. So for the NB market, nuclear is simply a crazy proposition. But it does something other industries don’t, which is provide easily justifiable taxpayer supported jobs.

  7. David Campbell says:

    This is almost a thread for my previous blog on clean tech, but I concur with the economic potential of developing a new energy sector in New Brunswick. As for nuclear, I don’t know enough about it but when Obama and Hillary both say that nuclear is likely ‘cost prohibitive’ and ‘takes too long’ I do have to wonder what would be different for New Brunswick.