Friday, August 07, 2009

Real Economic Development, Not Slogans

Responding to David W. Campbell, who said (among other things) "we must get the focus back on private sector employment and investment. We have lost thousands of manufacturing and forestry jobs and you can’t replace them with public sector workers (admin, health and education)."

Construction is probably not all public sector work, since real estate sales in Moncton are back up to levels they were in July 2008 and July 2007.

Looking more broadly, the goods producing sector is up 3 percent over last year, which is excellent news. This reflects not only the construction jobs, but also a 20 percent increase in agriculture, and despite an almost 10 percent drop in the never-reliable Irving-style (Forestry, fishing, mining, oil and gas) industries.

In the services sector, financial services are looking strong (employment up 8.2 percent). Scientific, professional and administrative services are strong as well. These offset more Irving-style job losses (Transportation and warehousing, down 13 percent) and weakness in tourism.

That said...

"But we must get the focus back on private sector employment and investment." Yes and no. We could dramatically shift the focus simply by privatizing health and education, but that would wreck our economy and reduce those services to shattered ruins. Nobody (except perhaps the most neo of conservatives) wants that. So it's not simply about focusing on the private sector.

Indeed, the remark reflects the fallacious belief that all private sector economic activity is wealth producing, while all public sector activity is wealth draining. This is simply not the case. A wide variety of public sector activities can directly drive revenue into the province (for example, sales of energy by a crown corporation) while others can drive it indirectly (for example, tourism marketing and promotion). Meanwhile, private sector activity can be nothing more than an unproductive drain on society.

What we in fact want is net employment income stabilization and growth. What I mean by that is that we want a combination of:
- employment stabilization and growth, so people in NB have the opportunity to find work and realize their ambitions, and
- personal income stabilization and growth, so people can pay their debts and save for the things they want, and
- public accounts stabilization and growth, which means earning sufficient public sector revenues (from direct sales and from taxes) to balance the budget and pay down the debt, while maintaining adequate reserves and credit to make new investments in public enterprises

In the face of this more adult set of priorities, it should be clear that simple talk about shrinking the public sector and focusing on the private sector is either partisan or uninformed. No?

With that in mind, what should we _really_ be doing to emerge from the recession in a stronger position than we entered it? Let's take stock:

- no more fooling ourselves. Extraction-based resource industries (forestry, fishing, mining, oil and gas) are unlikely to offer long-term prosperity. We should not be expending much more public money chasing after these falling stars. Any investment, especially a major investment (such as large-scale public funding for oil refineries) is long-term investment in (very) short-term employment.

- there _is_ potential in New Brunswick agriculture. We are not blessed with prime agricultural land, true. But as the Cranberry farm in Rogersville shows, we can look at other shorts of agriculture. We should be investigating different forms of livestock. We should be considering fish farming (especially freshwater fish farming).

- New Brunswick has significant tourism potential, but it is poorly marketed and not adapting to a changing environment. What tourism exists now depends on car traffic, mostly from the U.S. and central Canada. This is the kind of tourism that gets wiped out by high gas prices (even the threat of higher prices was sufficient to drive it down this year). We need to be developing capacity as a destination, not a drive-to (or drive-through) province. This means better rail support, ports and marinas, facilities and spectacles and attractions.

- we should keep importing and building windmills. Because new Brunswick has a much smaller installed base of housing and industry, we are much more able to achieve energy self-sufficiency through wind than just about any other region. This allows us to consider becoming net energy exporters through nuclear energy or having energy in reserve for growth. That said - we're not going to produce the huge amounts of energy needed for, say, Aluminum smelting. We need to know our limits here.

- we can have a technology sector, but a decade of inaction has squandered whatever lead we had, which means our tech future is not a cakewalk. Right now, what the province lacks most is a skilled workforce, meaning that even if we have opportunities, we are not able to take advantage of them. We have to create not only the opportunity, but the _expectation_ that to be a New Brunswicker is to be a literate, skilled and highly educated citizen of the world. The tech sector will have to be based on a capacity (our experience in call centers should help here) and probably new products (we have sand - could we make silicon?)

- we should be exploring _some_ sort of heavy industry. Could we revive boat-building with newer, smarter boats? Could we pioneer personal submarine production? Personal aircraft? There's a fairly wide niche for new products made of new materials that a tech-savvy smart province could develop - we should be looking at alternatives here and (yes) risking some money. I know, I know, the Bricklin was a failure. It doesn't mean everything we try will be a failure. Moncton is to the point where it could support a large industry, perhaps in the Scouduc region. We should be exploring this.

That's it for now. You get the idea. If you want to talk about economic development, great. But let's talk in ideas, not slogans. Leave silly little slogan economics like "we must get the focus back on private sector employment and investment" to the partisan political players. Get serious with real-world proposals that actually address economic development. Up the level of discourse here. Become smart.

(Can you tell I'm getting frustrated? Come on, enough with the sloganeering already, ok?)

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