The battle for the soul of capitalism

The debate about capitalism has been continuous since the days of Adam Smith but every few decades it comes to a head.  In the late 19th Century, capitalists like Carnegie argued they needed protection from British companies to create home grown national champions which lead to the emergence of the Robber Barons.   In the 1930s, FDR took a run at the billionaires and when told he was a traitor to his class he responded he was all that was standing between them and the masses (Communism was en vogue).  In the 1960s and 1970s, there arose an outcry over the sclerotic capitalism controlled by megafirms, unions and special interests.  Everyone was comfy and there was a move to break this by reducing regulation, freeing trade, breaking up state monopolies and therefore unleashing the creative potential of the economy.

Now we are back in one of these cycles.  The talk of breaking up big tech monopolies, curtailing finance, taxing the rich at much higher rates and injecting more state control over the direction of the economy is gaining traction.

The Economist covered Elizabeth Warren’s version in its latest edition and their broad conclusion invoked a rebuke from Mariana Mazzucato, an economist leader of this new movement.  I have attached her tweet below for your viewing pleasure.  I am quite sympathetic to Mazzucato’s views but the idea that she is being ‘objective’ while The Economist is being ‘ideological’ is kind of fun.  She is a main driver of a massive ideological shift but to her it is just objectivity.  I would suspect the Economist believes it is being objective too.

I’m sitting in New Brunswick trying to figure out how to attract more immigrant farmers, determine what is the right role for government to foster resources development, and engaging in the conversation about urban development.  All small potatoes, of course, in the big picture.

But it strikes me that small places like New Brunswick are mostly innovation takers and not innovation makers. What I mean by this is that global trends related to finance, trade and industrial policy will impact us but we have little say.  Technology trends such as AI and robotics will come here but we are not making it (leading it), we will have to take it for good and bad.  This is not to say we can’t be innovation makers in areas where we have some leadership such as forestry development, fisheries, etc. but for the most part the big thinkers and their output will impact us whether we like it or not.

My main view on this is that we can’t get focused too much on these big battles.  They are interesting but we have to focus on what we can control.  In 20 years there may be no need for drivers for our trucks, taxis, etc.  But we can’t just wait and hope that is the way to alleviate the driver shortage.  AI might eliminate the need for customer service representatives but right now, we need hundreds and hundreds more each year just to keep that $1.5 billion industry thriving.

As for the potential shift in the interaction between the state and capitalism, again we can look for some made in New Brunswick solutions but we are mostly subject to broader forces and we will need to steer into the skid.

So focus on the main thing and the main thing right now in New Brunswick, Atlantic Canada, etc. is ensuring strong economic foundation so we can maintain high quality and sustainable public services. This will mean a 15-20 year push to attract migrants, efforts to encourage a new generation of entrepreneurship and investment in sectors where there is (or could be) a strong value proposition.

As for the rest of it?  Winter is coming.

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Planting the seeds of economic development

There is an excellent article in the Economist this week about the forestry industry in Finland.  It includes interesting stories about the use of technology in the sector (driverless harvesting machines managed by mobile-phone apps), sustainability (they plant 20% more wood than than is harvested each year), business model – 100,000 small owners of woodlots combined own the largest pulp mill, and innovative products such as using the byproduct lignin to help with concrete production.

Despite changes in the sector, only British Columbia relies as much on forestry as a share of GDP as does New Brunswick.  It still employs thousands and thousands of workers directly in the forest, the mills and the supply chain and it is the second most important industry as a driver of export revenue for the province.

And, now, everyone seems to love the forest products industry.  Not only is it an important economic engine, it is going to help solve global warming and other thorny issues such as the proliferation of plastics.

This should be right in our wheelhouse.

Australia recently announced it would be planting billions of new trees each year as part of its plan to address global warming.  The trees will be thinned periodically and ultimately harvested created a long term economic industry for the country.  PM Trudeau recently talked about planting billions of more trees in Canada as part of his plan to get to ‘net’ zero carbon emissions by 2050.

I am intrigued by the idea of small woodlot owners becoming owners of a large pulp mill.  Right  now the relationship between the forest product mills and woodlot owners is not a particularly healthy one.  If the woodlot owners had ‘skin in the game’ and shared in the risk/reward that comes from investing in the sector, they might be better off in the long run.

I love the idea of planting more trees for eventual harvesting.  This creates a sustainable, long term advantage based on a core strength of the province.  I have talked about all the fallow agriculture land around the province.  Ideally this would be used for agriculture but maybe some of it could be used for tree planting.

I hope that we are investing in R&D alongside the the industry related to higher value products. New Brunswick should be at the leading edge of this revolution of replacing plastic-based products with wood-based products.  We were among the first to use wood pulp to make clothing.

Some will say we have too many trees already and may even say this is part of our problem.  Too much reliance on trees.  In the longer run, they would say we should cut down more trees and promote larger scale agriculture or attract millions of people to populate expanding urban areas.  Some might say we should cut down less trees and turn the province into a vast wilderness for ecotourism with small urban outposts where you can by your protein bars and energy drinks.

I’m interested in sustainable, long term development in this province.  When I pass away I would like to think we have left a stronger economy to future generations.  But this is not a given.  After decades of moving forward, our economic growth has stagnated in recent years.  If allocating another 5-10% of the land mass to tree cultivation and development will help the economy, sequester more carbon and ultimately lead to more sustainable consumer products, I say giddy up.

I don’t see any conflict between this and urban development, tourism development or boosting agriculture output.

As I have said before many times, it should be all hands on deck.

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Economic Development: Seeking small but sweet opportunities

One of my main preoccupations these days is the need for communities and governments to ‘think small’ when it comes to economic development planning.  From proactively attracting tourism operators to developing language industries, I think we could have several hundred interesting economic development initiatives underway in every corner of New Brunswick engaging a mix of businesses, government and engaged volunteers in efforts to develop the economy.

The normal response to this is that we need to ‘focus’.  We can’t have people running off in all directions or we will fragment efforts and achieve nothing.  As I have argued many times it is not the size of the opportunity but the relative effort to get it done.  If it takes a couple of phone calls to attract an Amazon fulfillment centre – and a couple of hundred jobs – why would we snub our noses because we are too busy elsewhere?  This, BTW, may not be a good example as I suspect there are people working on this.

After my talk in Edmonton recently I chatted with a guy who was the only economic development officer in a large but sparsely populated region in a northern area in a western province.  He was frustrated because it was only him and he was being pulled in all directions and didn’t have time to work on ‘opportunities’.

After about a 20 minute conversation I had teased out of him over a half dozen interesting opportunities in tourism, agriculture and natural resources that could be developed in his area.  So, why not?  It might take another person, a few seed dollars and an effort to engage local business and community leaders but if your goal is economic development, why not?   You can wait a long time in the hope that your few large employers expand or you can take matters into your own hands.

Take maple syrup in New Brunswick.

When I was with the Jobs Board I was impressed with the success of the maple syrup industry in northwestern New Brunswick.  In a meeting I innocently asked department officials “were there not maple trees elsewhere in New Brunswick?   I was given a map showing a huge concentration of maple trees in Albert County.

The following chart shows where the maple syrup farms are located in New Brunswick by county.  The caveat is they have to be large enough to have formal employees – people paid to work.  There are a lot of hobby maple operations around the province but I am interested in those with the scale to produce enough product to make a living and hopefully sell into export markets.

As you can see, there are 53 operations in Restigouche and Madawaska and one in Albert County (this is taken from Canadian Business Patterns in 2018).

Now, let’s look at the operations that have at least five employees.  There are 22 in Restigouche and Madawaska and none in Albert County.

So, I have been in conversation with some folks who live in Albert County.  They are vehemently opposed to fracking, they dislike cutting down trees and they are uncomfortable with aquaculture.  Maple syrup?  That doesn’t seen to arouse any derision and even generates some interest.

I don’t know much about maple syrup.  I know that far more of the land in Albert County is not Crown Land so that changes the development dynamic.  However, why wouldn’t private land owners be interested?  Not just for a hobby but for something of scale that could generate significant income?

I have no idea the potential for maple syrup development in Albert County.  Across the province the value of sales rose to over $30 million in 2014 but seems to be slipping since.   Production was also down in 2018 from 551,000 gallons in 2017 to 361,000 in 2018.  That might be based on weather or something else.

If we could replicate the success in the northeast, maybe we get another $30 million industry.

I estimate there are something like 500 people working in the maple syrup industry in New Brunswick (excluding indirect and induced effects).  Pumping $30 million worth of economy activity into Albert County would be an important driver of new economic activity.

Now, before you send emails or comments suggesting that I don’t know what I am talking about, save your digital ink.  I agree.  All I am asking for is people that do know what they are talking about to give this idea (and many others) a serious look and then decide.

If we don’t have enough entrepreneurs in Albert County willing to take this on, why not encourage the northeastern firms to come down?  They can communicate in the international language of economic opportunity.

Finally, I’ll make a point about scale.  Quebec is the largest producer by far and they have 28 firms with at least 20 employees, and three with more than 100 employees.  Across New Brunswick we have only one with between 20-49 employees and none larger (according to Stats Can).  Like so many other industries, we need to think about how to achieve scale – either through consolidation or some kind of joint effort.  We don’t necessarily need one large firm with 200 or more employees (although maybe this would be a good idea).  Scale brings better ability to market products, make capital investment, drive productivity (drones?), invest in employee training, recruit international workers for the harvest, etc.

Now, take this approach and apply it to the other 99 opportunities out there from Miscou Island to St. Stephen.

 

 

 

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Immigration: A fact-based conversation

After we presented the new immigration strategy to Moncton Council earlier this week I received several messages and emails from folks around the region and beyond.  Their questions revolved basically around three issues: 1) Why do we need more immigrants (my kids have moved to Toronto)? 2) Why should we spend so much taxpayer money trying to attract and retain immigrants and 3) Am I not worried about cultural compatibility?

Let me address the three in order:

1. Why do we need more immigrants?  Primarily because among those born in Canada there are now more people retiring each year than joining the labour market.  This is happening across Canada.  The difference is simple. Across Canada the born-in-Canada population participating in the labour market (working or looking for work) has dropped by around 65,000 between 2013 and 2018.  The immigrant population participating in the labour market has increased by nearly 800,000.  Across New Brunswick we have witnessed a rise in the number of immigrants joining the workforce but not nearly enough to offset those leaving it.

Why do we need to grow the workforce?  There is a high correlation between economic growth and workforce growth.  There may be a point in the future when this changes through technological innovation and productivity but for now if you want to grow your economy you need the horsepower (human power) to do it.

Why do we need economic growth? Shouldn’t we learn to live with it?  It’s certainly possible.  New Brunswick has lived with very weak economic growth for over a decade but tax rates have been increased and federal transfer payment growth has compensated.  Annual federal transfers have risen by $500 million in just the past four years.  I guess we could keep raising tax rates and expect the feds to pump in even more money (we are now at almost $13,000 per household in health and social transfers and Equalization).  Ideally we (New Brunswick) would have an economy growing at 2-3% per year and that would help foster a strong fiscal foundation for the provision of high quality public services and infrastructure.

So maybe you buy my argument that we need more young people to grow the workforce and boost the economy leading to organic tax revenue growth so that we don’t have to soak existing taxpayers for even more tax revenue (currently provincial government spending is running at around 26% relative to GDP).

But you wonder about the prickly issue of our kids leaving the region? Why do we need immigrants when our young people continue to leave?

First of all, I feel your pain.  Two of my kids have left and are living in Ontario (one in Fredericton).  But I take comfort in the data (lol).  As shown in the chart below the Moncton CMA loses on average around 4,700 people to outward migration within Canada (elsewhere in the province or other provinces) – every year.  That is a non-trivial three percent of the population gone every single year.  We don’t have great data on who is leaving but it includes recent high school graduates leaving to attend university, people getting promoted out of the region (an historical challenge for the Moncton CMA and many smaller urban areas, and immigrants leaving expecting greener pastures elsewhere.

We do know where they are moving to, at least to the large urban areas.  The top CMA for outbound migrants from the Moncton CMA over the past six years has been Halifax. In an average year 330 Greater Monctonians move to Halifax.  Toronto is the second main destination (225 per year) followed by Saint John (212),  Ottawa (177) and Edmonton (173).

It is important to point out that as immigrant numbers have been rising in recent years the total number leaving the Moncton CMA has been going down, not up.

Why am I not panicking? Because this migration is normal.  The mobility of labour is considered one of Canada’s strengths.  Toronto the Great has a negative migration rate every year but it makes up for it by attracting 90,000 immigrants or so.

There are many reasons why people would want to leave a community – the key it so make sure for every one that leaves you have more than one moving in. And that is exactly what is happening in the Moncton CMA.

Oh, BTW, you also want your community to be an excellent place to live – if people leave because they didn’t like the community at all – rather than for economic or other reasons – that is a fail.

In the past six years the Moncton CMA has attracted an average of over 5,300 per year from elsewhere in Canada, and this excludes immigration – which is on the rise.  Where are they coming from?  Saint John is the top source with an average of 292 per year – yes lots of folks move between Saint John and Moncton (both ways). Halifax, Toronto and Montreal are the other top sources of inward population migration.

So, on a net basis, from migration within Canada the Moncton CMA population has risen by 600 per year going back to 2012, again excluding immigration which has been rising too.

In conclusion, don’t fret too much about people leaving.  I expect at least one, maybe two of my kids to move back some day just like the thousands moving here each year.

2) Why should we spend so much taxpayer money trying to attract and retain immigrants?  This one has a fairly easy answer.  I don’t know the exact amount government spends to attract and settle newcomers from outside Canada but I do know that for economic migrants it represents only a few thousand dollars per year per person.  They will make this up in less than a year in the form of the taxes they pay – sales tax, income tax, property tax, etc.  The ROI on attracting immigrants into the workforce is very good.  Refugees cost  more tax dollars to integrate but we have a moral responsibility to help the global flow of refugees – we just shouldn’t conflate economic migrants with refugees.

3) Am I not worried about cultural compatibility?  This one doesn’t really have a data-focused response because I don’t know how you would define this.  I can’t even define ‘Canadian values’ and I suspect if you asked 100 Canadians you would get variations of 100 different answers.  I think tolerance has been a Canadian value – i.e. I may not agree with you but I agree you have the right to think the way you do and we shouldn’t discriminate against each other in public sphere because of different viewpoints.  This seems to be slipping a bit – tolerance for some seems to be equivalent to you must agree with me on every issue – which, of course, is the opposite of tolerance. The Economist had a good article not that long ago about the tricky line between liberalism and illiberalism.

I think volunteerism and support for related activities could be a core value (defining characteristic?).  If you have kids in minor sports, you feel an obligation to volunteer.  If you attend a church likewise, etc.  I think volunteerism is an important cultural attribute and it is not shared in all countries.  In some places when it comes to ‘third-sector’ activity, the view is “that is the role of government” and in other countries there just isn’t a culture of volunteerism.

Anyway, we want newcomers to buy-in to this project we call Canada.  In my experience, the immigrants I interact with not only buy-in, many of them are even more enthusiastic about it.  If you talk to newcomers I think you will find that one of the things that attracted them here was the culture.

In the end all I ask is that you think about this issue – immigration – from a fact-based perspective.   If we want strong communities, high quality public services, economic opportunities for our kids, etc.  I think the case is strong that attracting new population will be required.

 

 

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A chance to see Daniel Isenberg’s vision of a scale up world

In 2012 I took a course at Harvard University called Innovation and Economic Development.  A professor from Babson College named Daniel Isenberg came in and did a talk on what he was calling “scale-ups”.  He ended up found a bit of a movement around the world focused on what kinds of policies, infrastructure and support are needed to result in startups blowing up into full blown unicorns.

The dogged Dhirendra Shukla head of UNB’s TME program, who has been elevating TME to new heights, chased him down and he is involved with the TME and speaking next week at the Future of Innovation conference in Fredericton (Saturday, October 19th).  Anyone interested in the scale up conversation, it will be worth the price of admission just to hear Isenberg.  I’m out of the province or I would be there with bells on.

The scale up issue is particularly acute in New Brunswick.  We have witnessed a few firms over the past decade break out – but not that many.  As I have detailed on these pages in the, we have one of the worst ‘scale up’ records in Canada among the 10 provinces measured by the number of ICT firm that grow from under 10 employees to 50 or more (as one proxy for scaling).

Check it out.  If you get the chance shake hands with Dr. Shukla.  One of a handful of real change makers in this province.

 

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How do you say “lost opportunity” in French?

If you were to ask other Canadians what were the defining characteristics of New Brunswick they would probably say things like maple syrup, salmon, lots of trees, maybe lobsters.  One of the most unique attributes of New Brunswick, however – maybe the most – is our bilingualism (the share of the population that speaks French and English) and the commitment to bilingualism in general.  It would not be hard to argue that any other province was committed to bilingualism as is New Brunswick.  There are lots of bilingual folks in Quebec – but there is no commitment in that province to ensure government publications, signs, etc. are available in both languages.

One of the things that has concerned me for a long time – and I have written about it many times – is the relatively tiny language industries sector in the province.  Logically you would think that with the large demand within the province for translation and interpretation that we would require a relatively large workforce and, you would think, that we would be positioning this specialized workforce to export services across Canada and beyond to places that need French-English language services (i.e. a lot of documentation across Canada- public sector and private sector – is published in both English and French).

The facts are quite grim.  As shown in the chart below, we have fewer people working as translators, terminologists or interpreters (NOC 5125) than Manitoba.  Almost half as many as Alberta and just a tiny fraction of the number in Ontario and Quebec.  In fact, there are only 2.1% of all workers across Canada in this occupational group in New Brunswick – less than all sectors combined.  And now I see the data on age and 44% of all our translators et. al. are over the age of 55.  Not only do we have relatively few translators in New Brunswick nearly half of them will be retiring in the near future.  In Quebec only 33% are over the age of 55 and in Manitoba only 23%.  Manitoba has a younger and larger language industries workforce.

When I worked in government, I also found out the provincial government has to outsource some of its document translation work to other provinces because at peak times we don’t even have enough translators here to handle in-province demand.  Imagine that.  The only officially bilingual province and we don’t have enough translators to meet in-province demand.

I have argued before that one of the problems is a lack of firms in this industry with scale.  There are 60 registered firms (with CRA) that have no formal employment and only two with five or more employees (as of December 2018).  In fact, as shown in the chart, even Nova Scotia has more translation and interpretation services firms with five or more employees. Manitoba has six.  Quebec, 52.

Somebody should start to take this sector seriously.  Questions to be asked include:

Why are nearly half the workers in the sector over 55?  What is the plan to build up the younger workforce or are we destined to import even more of these services from other provinces?

Why are there almost no translation firms with scale?  The largest has between 50-99 employees (must be Lionbridge in Moncton?).  Can we do more to encourage tie ups?  Instead of focusing 100% of our efforts on tech startups can’t we carve a little time for other sectors?  We need a few ambitious entrepreneurs to step up and take advantage of the graduates coming out of UdeM, the research capacity, the in-province market for these services, etc. to build capacity and export these services across Canada and beyond.

In a way it’s a comfortable world for the translation sector.  There is too much demand for their services in New Brunswick so why even bother to think about exporting?

Unfortunately this means we are just not taking advantage of a natural attribute of the province.  It would be like if we only produced potatoes for local use or we only fished enough lobsters for local demand.  Why would we do this?

Let’s triple the number of translators graduating from PSE each year.  Let’s go out and try to find some ambitious entrepreneurs that want to buy up a few of the smaller firms and build one with the scale to take on national and international markets and let’s encourage ACOA, ONB and all the other many government agencies that are involved in export development to take this sector seriously.

For those with knowledge of the sector, you are going to tell me about new technologies, and margins being squeezed, and that we lose our bright you graduates because they can make more as translators for the federal government in Ottawa.  Yadda. Yadda. Yadda.

We haven’t really tried this, have we?   So why not try.  Canada’s only officially bilingual province should at least try to have a decently sized translation and interpretation industry.

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Efforts to address climate change have an Asbestos problem

The negative health effects arising from asbestos started to become known in the 1920s.  By the 1970s the dangers were widely known and its use was phased out – it was banned just about everywhere by the 1990s.

And yet, asbestos mining continued in Quebec for another 20 years.  The last mines were closed only eight years ago and even then, the Quebec government had offered a $58 million loan to keep asbestos mining going but the Parti Québécois promised in an election to stop it.

Asbestos, Quebec is a town with about 7,000 people or about 0.08 percent of the province’s population and, yet, the government continued to support the industry for decades after most of the world realized the product was toxic.

The Asbestos example is instructive.  To save a few hundred jobs in a small town, Quebec was prepared to defy the scientific consensus for decades.

Of course there is no equivalency between oil and gas and asbestos.  Oil and gas has been and continues to be the dominant source of energy that drives the global economy. Once identified as a problem, asbestos was easily substituted by other materials.

But asbestos in Quebec is one small example of the ‘skin in the game’ problem associated with the goal of reducing carbon emissions.  The jurisdictions fighting the hardest to reduce the use of fossil fuels tend to be those with no oil and gas industry and those most uncomfortable with it tend to be those with a relatively large domestic oil and gas industry. We can’t just ignore this.

With Asbestos in mind, imagine if Quebec had hundreds of thousands of high paying jobs in the oil and gas industry. Imagine if half of Montreal’s professional services and finance sector was related to oil and gas. Imagine if upwards of half of provincial government revenues were directly or indirectly related to the oil and gas industry.  I suspect the populace would be slightly more inclined to support oil pipelines.

I’m not singling out Quebec specifically, of course.  This applies to all jurisdictions around the world.

If you think Toronto has the highest share of people earning $150,000 or more you would be wrong. Again, with Asbestos, Quebec in mind, we can’t just remove this from our calculus.

To be honest, I don’t even like writing about this subject.  I have family, friends and social media connections across the spectrum from climate change skeptics – to those who believe it is a problem but that Canada is too small to make a difference – to those who believe we should cease all oil and gas production tomorrow even if it brings the economy to a grinding halt.  No matter what I write on this subject I will always offend at least someone.

Nevertheless, I will weigh in here with my thoughts on how to move forward with a plan to reduce carbon emissions that takes into account Canada’s role as a major oil and gas producing nation.

1. While the global economy continues to use oil and gas, we should ensure that Canada supplies ‘our share’ of the global demand for oil and gas.

There is a debate about how long the world will continue to use oil and gas.  Some say 20 years (virtually impossible), some say 30-40 years (maybe) and others say more.  Regardless, Canada should supply our share of the demand.  We should be part of a global plan to reduce fossil fuel-based energy but there isn’t much benefit to Canada unilaterally reducing its supply if other jurisdictions boost their supply to account for our decline.  There are four Canadian provinces that are major suppliers – AB, BC, NL and SK.  These provinces should continue to unapologetically supply global demand even as they reduce the carbon-intensity of extraction.

In fact, I would suggest that Canadian natural gas could be an important source of energy during the transition.  India, China and other countries continue to build coal-fired electricity plants and are planning to do so for at least another 20 years. Assuming these plants have a 30-40 year lifespan, that keeps the dirtiest form of electricity production in the global energy mix well beyond mid-century.  While not use Canadian natural gas to eliminate coal-fired generation around the world?  This is the argument British Columbia is using to support the large LNG export facility.  It will supply global natural gas demand for at least 30-40 years using gas extracted from British Columbia and Alberta.

I would suggest that natural gas in the Maritime provinces could help Germany and other countries in Europe hasten their reduction of coal-fired generation but oil and gas development needs public support and right now there isn’t much in this region.

In the same vein, I think the potentially resurgent nuclear energy industry could be an important part of the solution.  The new technologies coming to market are easier to deploy and can be better scaled to demand.

2. We need to be serious about the economic transition for oil and gas producing provinces. 

Even though we are looking at a multi-decade transition, it will be hard to replace the economic value generated by oil and gas producing provinces.  Calgary is a globally recognized centre of excellence in oil and gas related professional and financial services. How does that strategically important centre – over 40-50 years – evolve that expertise into other areas?

There are well over a million jobs in Canada reliant on the oil and gas industry.  This doesn’t include the jobs created by spending billions in oil royalties each year.  We can’t be cavalier about this.  Remember Asbestos.

How do the four oil and gas producing provinces transition?  We can start by looking at how other oil and gas producing nations are doing it.  Saudi Arabia is pouring tens of billions of dollars into other industries to ensure there will be a large revenue stream from the proceeds of oil and gas decades after production ceases.  Norway is doing the same.  Maybe the four oil and gas producing provinces in Canada should be able to keep more of the tax and royalty proceeds over the coming decades to build their own sovereign wealth funds.  I suspect this idea will get laughed off but those provinces have ‘overpaid’ into Confederation for years.

Norway’s sovereign wealth fund has over $1 trillion (U.S. dollars).  A country with a population only slightly higher than Alberta has $1 trillion in the bank because of the oil and gas industry.  One would suspect that if Alberta had $1 trillion in the bank or Newfoundland and Labrador had $50 billion in the bank it might change the calculus a bit.

As an aside: Maybe Norway should take half of that trillion dollars and give it to oil producing countries as part of a longer term coordinated plan to reduce supply.  I suspect that Norwegians would find that outrageous but why should other countries pay for one country’s profligacy?  Carbon is carbon.  If you carved up all the carbon in the atmosphere by country, on a per capita basis, Norway would be at or near the top.  Why does it get to benefit just because they extracted their oil and gas quicker than others? Is this such a crazy idea?  The Norwegians would say that they should not be penalized because they saved oil and gas royalty revenue while other countries squandered theirs. 

The PM is calling for net zero carbon emissions by 2050 (although with the billions in trees he will be planting, I’m not sure how ‘net’ gets defined). If he is serious about this, the plan to reduce emissions should be paired with a plan for serious economic transition in the four oil and gas producing provinces.

3. We need to focus more efforts on reducing demand.

It is easy for most Canadians (again remember the skin in the game problem) to fight against the supply of oil and gas – fighting pipelines, extraction, etc. – i.e. efforts to reduce the supply of oil and gas.  It is much harder to for Canadians to reduce their demand for oil and gas.  The former costs them an occasional tweet or like on Facebook.  The latter costs them in the pocketbook.  The problem, as discussed above, is that reducing Canada’s supply of oil and gas will do nothing to reduce global demand (and, thus, emissions) while reducing our demand for oil and gas is a very tangible way to reduce our global footprint.  This can include eliminating coal-fired electricity generation, electrification of the transportation system (assuming greener electricity generation is also in place), energy efficiency, and other efforts.

Part of this discussion relates to long term planning.  I have talked to folks involved with two natural gas distribution companies that are currently laying new pipe in the ground with a payback period of 30 years or more (in other words, they are amortizing the cost of the pipe over 30 or more years).  New Brunswick gave its natural gas distribution firm a 25 year + 25 year extension (assuming it meets its obligations)  – that is basically sanctioning a 50 year cycle for natural gas distribution in New Brunswick which gets us to at least 2070.  We need to have an honest discussion about this.  Any plan to eliminate fossil fuels from our energy mix by even 2060 or later will require planning to start now.

4.  We should continue to work hard with other countries on a global response

The argument that people make is that Canada is a bit player when it comes to global emissions.  This is true.  All the more reason to be part of a global response.  Greta wants us to listen to the scientists.  Throw a few economists and public policy experts in the room and I agree.  How do we globally respond?  What incentives could be put in place to reduce global demand (or supply for that matter)?  If more natural gas in the short term would reduce the demand for coal but the economics favour coal, what could be done globally to respond?

Should we link global trade to country-specific carbon reduction plans?  How do we ensure that the poorest countries aren’t hit the hardest?

5. Above all, remember we’re all in this together.

Preston Manning is worried that the current fight over our response to climate change will lead to another round of western alienation. If New Brunswickers, the Québécois, Ontarioians, and other Canadians put themselves in the shoes of Newfoundlanders, Albertans and Saskatchewanians (?), it would help.

Canadians produce oil and gas.  Not just Albertans or British Columbians. We all do – and we all benefit directly or indirectly from the industry.

 

 

Images from my recent trip to Alberta reveal just how oil and gas is woven into the fabric of Alberta’s economy and culture.

Hanging on the wall in my hotel room in Edmonton.

 

As seen in a display at the Alberta Royal Museum in Edmonton.

 

A whole room at the Glenbow Museum in Calgary dedicated to the late 1970s/early 1980s oil fight between Ottawa and Alberta.

 

As seen in a display at the Glenbow Museum in Calgary.

 

Looking out 40-50 years what industries might replace oil and gas?  This isn’t easy.  There are not many industries around that generate very high salaries, massive royalty revenues, and very long supply chains.

Could it be tourism?  Arguably, William Van Horne (Minister’s Island) was the founder of Alberta’s now thriving tourism industry. It is hard to see how tourism could replace oil and gas.

As seen in a display at the Glenbow Museum in Calgary.

How about agriculture?  Again to help the new railway industry, Alberta was sold to immigrants as a place to set up farms. Could a boost in agriculture replace oil and gas? It is unlikely.

As seen in a display at the Glenbow Museum in Calgary.

Alberta is a province known for its booms.  It is hard to imagine how a province could grow its population five-fold in a 10 year period.

As seen in a display at the Glenbow Museum in Calgary.

 

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Who’s your city? Growing older or younger?

For my presentation to EDAC next week I put together a few slides on the state of urban centres in Canada.  There are 150 or so across the country so it can be a little hard to distill the data into something that is meaningful.  The tables below are an attempt to categorize urban centres based on two important criteria – population growth and age of the population.  Of course, to be more thorough we could add structure of the economy, concentration, industries at risk, etc. but as a high level snapshot, I think it is quite interesting.

I group the 150 urban centres into four quadrants – fast growing and young, fast growing and older, slowly growing or declining and young, slowly growing or declining and older.

As a caveat, I use the terms ‘young’ and ‘old’ loosely.  At 51, I don’t particularly find 60 as ‘old’ but for convenience I use the term.

Among the to 50 fastest growing communities, as measured by population growth between 2013 and 2018, and those that are young (defined here as 70 or less people aged 60 and older for every 100 under the age of 20 – i.e. considerably more young than old), all are located in western Canada.  What’s going on in Squamish, BC?  – second fastest growth rate and one of the youngest populations in Canada.  None east of Manitoba.  Makes you stop and think about the future.

The urban centres that are slowly growing or declining and young, provide an interesting contrast.  There are only three that fit this criteria – again all in the west – all in Alberta.  The point here is that it is great to have a young population but high dependence on a single industry can overcome a demographic advantage.  Can these communities take advantage of the young populations and foster new industries?

 

The fast growing and old group is an interesting one because it looks like they are positioning themselves as retirement communities.  Wasaga Beach in Ontario expanded its population by a very fast 19 percent between 2013 and 2018 but it now has 251 over 60 for every 100 under 20. Almost all of this growth has come from intraprovincial migration. Again there is an interesting geographic view on this.  All of the Ontario urban centres are in southern Ontario within a two hour drive (without traffic!) of Toronto.  There is one in Quebec, east of Montreal and the rest are all in British Columbia – and not just in the periphery of Vancouver. It looks like Canadian retirees are gravitating to southern Ontario outside of Toronto and other big cities and smaller urban centres in B.C.

The fourth quadrant, the one that is most concerning, is the slow growth/decline and old quadrant.  There are no communities in this group west of Ontario.  They are all in Atlantic Canada, smaller urban centres in Quebec and places in Ontario that haven’t transitioned their economies particularly well in recent years. Elliot Lake is a bit of a warning for those in the fast growing/old quadrant.

If you want more, come see me at the Economic Developers of Canada conference next week in Edmonton.

 

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Watch out, the Christians are coming!

Someone told me today that a People’s Party of Canada candidate in New Brunswick is talking about  Radical Islam overrunning our nation.

I was on a consulting team that surveyed places of worship in Greater Moncton a few months ago. Eleven places of worship took the survey from a variety of faiths. We asked for the respondents to tell us how many immigrants have started attending their place of worship in the past couple of years. Using the mid-points from the attendee ranges (1-20, 50-100, etc.), estimated recent immigrant attendees to Christian churches (Protestant and Catholic) outpaced recent attendees to non-Christian places of worship (the synagogue and mosque responded) by seven to one.

There is a lot of evidence that new immigrants are repopulating churches in urban and rural areas across New Brunswick (Charlotte County, Shediac, etc.).

I am pleasantly surprised by this trend.  I believe places of worship are important institutions for immigrant retention.  Not everyone is a person of faith but for those who are, churches/mosques/synagogues can be excellent venues for building community, networks and friends, and for learning cultural norms and practices.

I attended a Baptist church one time in Brazil and except for the language, the one-hour plus sermon and all the hugging and kissing at the conclusion it could have been a rural church right here in New Brunswick.  The hymns were the same.  The prayers were the same (a little longer).  The sermon – right down to the style of preaching – was very familiar.

The Koreans, Filipinos, Chinese, eastern Europeans, Latin Americans, Syrians, Africans and others are attending churches across New Brunswick and this is a win-win – for the churches and for the newcomers.

I have said and continue to say that we need to broaden the conversation about immigration across New Brunswick. I recently listened to an excellent interview with with Michael Ignatieff where he lays out a strong case for immigration but is clear that countries need borders (he talked about walls but with doors) and that people being uncomfortable with immigration is normal and doesn’t make them automatically racist or anti-immigrant. He also talked about the responsibility of immigrants to adapt and conform to the norms of the countries they move to.

I found Ignatieff very refreshing after the “you are either with us or against us” tone of the debate these days – not just on immigration – on any big public policy issue.  Old Iggy wasn’t much of a politician.  I’m not sure Canada (or anywhere else) is ready for a philosopher-king.  But he is right on point about the current state of liberal democracy (quite optimistic) and the importance of immigration.

So let’s have a conversation about immigration.  If you hear someone talk about radical Islam taking over Canada, ask for facts.  I can point you to a number of Muslim acquaintances in New Brunswick that can clear things up for you.  They practice their faith, have good days and bad days at work, argue with their teenage kids, struggle to meet the monthly budget, dream about the future – just like 98% of the rest of us in New Brunswick.

And as for the Christian immigrants coming from Asia, Latin America, eastern Europe and Africa? I’ll just say you really don’t have much to worry about them, either.

The truth is that New Brunswick’s quality of life and our ongoing high standard of living will depend on our ability to ensure at least a modest level of economic growth. This is the only way (barring massive increases in federal transfer payments) to ensure we will have the tax revenue to pay for the high quality public services and public infrastructure we have come to expect.

And we need an influx of younger workers and entrepreneurs to offset those leaving the workforce through retirement.  There are still lots of New Brunswickers joining the workforce every year but not enough to offset the exits.

Let’s go out and find young and ambitious people from across Canada and around the world to come and fill the gaps in the workforce, help provide the talent for future growth industries and induce lots and lots of tax revenue.  That also sounds like a win-win.

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Trudeau’s million new jobs? Thank immigrants for that.

There have been over a million net new jobs created since the Liberals came to power.

But the Tweets and advertisements do not tell the whole story.  Only 20% of that employment growth was from people born in Canada.  The rest of the jobs were filled by immigrants, non-permanent residents (and a fraction from Canadians born outside Canada).   That is approximately 800,000 net new jobs filled by immigrants and non-permanent residents since JT took office.

Immigrant employment didn’t come at the expense of those born in Canada.  The unemployment rate among those born in Canada has been steadily on the decline from 6.8 percent in August 2015 to only 5.5 percent in August 2019.

There are barely enough young people born in Canada right now (and others not in the labour market) to offset those leaving the labour market by retirement – so if you want to grow the labour market you will need immigration.  In provinces like New Brunswick there are not enough – the born in Canada workforce here is in decline and has been for a number of years.

So the next time you hear the politicians talking about a million new jobs, remind yourself of where the vast majority of those new workers are coming from.

Without immigration, our labour market would stall and our economy would sputter.

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