A short history lesson

First things first. I don’t pretend to be a historian. However, I am a bit of a student of economic history – in particularly related to New Brunswick. So I offer this short history for your consideration.

Going back 50 years or so in New Brunswick the economy of the province was relatively strong. Most people that wanted to work could find work in the province – primarily in the forestry, fishing and mining sectors – and all of the support industries – retail, professional services, government, etc. There were lots of seasonal jobs but most people in those sectors would work two or even more jobs (logging in the fall, fire fighting in the summer, etc.). However, there was not a strong infrastructure of social programs in the province (education, health care, etc.) and governments of the day began increasing taxes and spending to build this infrastructure. Labour legislation was enacted, minimum wages, workers’ compensation. Universal education and health care infrastructure was developed and, particularly in the 1960s, equal opportunity which allowed both the anglophones and francophones in the province to thrive and prosper. All of this social infrastructure was funded out of the taxes generated from the economy.

Then, starting in the 1970s and continuing to this day, the economy (again relatively speaking) began to stagnate. Growing industries levelled off and even began to decline. Governments responded with income support and other programs designed to support people who couldn’t find work or who were in seasonal industries and couldn’t (and ultimately wouldn’t) work in other jobs at other times of the year. These social assistance programs (welfare and seasonally recurring employment insurance) grew and grew and in the 1990s at their zenith provided hundreds of millions in income directly to people.

What was the rationale for all of this spending on ‘social’ issues? That’s what governments do. Ask any policy maker, politician and even member of the general public.

The perplexing issue for this writer and most economic developers in New Brunswick was that there was very little concern for sustaining the underlying economy on which all of this social spending was based. If a plant closed – that was just a natural evolution of the economy. If fish stocks declined – natural – unavoidable.

So as of 2005, goverments spend billions in New Brunswick on social infrastructure and almost nothing to sustain and grow the underlying economy on which the social infrastructure is based. That is why billions of dollars generated from the taxes paid in the stronger provinces in Canada have been transferred here in the form of equalization payments in the past 10 years alone.

Just to provide some perspective the provincial government will spend more in 2005 filling potholes than on economic development. Municipal governments will spend ten times more on garbage collection than on economic development. Why? Because that’s what governments do.

Ultimately, we – the public are to blame for this. We, influenced by the media and many other vested interest, establish the priorities. Ask any MLA – most of the calls are related to potholes (I covered this in a previous blog). Ask any municipal councillor what the priorities are. Pick up the garbage every other week instead of weekly and see the public outcry. But the collapse of the Miramichi economy – not my problem.

I offer a slightly different perspective on the world. I believe that we now should attack our economic problems with the zeal that we attacked our social problems starting decades ago. It will undoubted take as long but for the sake of the province and our future – I believe we must do this and we must start now.