The TJ is running a drooling editorial today about New Brunswick’s business moguls. The piece starts out with:
The nineteenth century is often referred to as New Brunswick’s golden age. But the twentieth century was the age of New Brunswick’s golden entrepreneurs, when self-made, independent businessmen forged global commercial empires.
The editorial goes on to talk about, of course, McCain and Irving and laments the fact that more McCain and Irving entrepreneurs have not arrived.
Of course, the TJ is in a conflict of interest on this issue and the reality is far more nuanced than that.
I am no basher of Irving or McCain. I applaud many of their efforts over the years but I do think their overall impact on New Brunswick is decidedly mixed.
You can’t separate those empires from the economic problems of New Brunswick in the 20th century.
I don’t like the concentration of economic power – not in the hands of government nor of industry. I am a huge fan of the Sherman Antitrust Act (I did a paper on this in university) and I believe this anti-trust legislation was one of the key pieces of legislation that led to the start of the economic success of the U.S. because it put some limits on economic power and monopolistic/oligopolistic activity.
Consider this. Only three of the top 40 richest Americans in history are alive today. This despite the fact that the total wealth in America is over 50 times what it was in the 1930s. I read recently that John D. Rockefeller was worth in today’s dollars $190 billion. Bill Gates is somewhere around $50 billion. In fact, the top four richest Americans of all time are among the so-called “robber barons” – John D. Rockefeller, Andrew Carnegie, Cornelius Vanderbuilt,and John Jacob Astor – that the government was looking to defang with its antitrust legislation.
So back to New Brunswick.
Everybody knows that both the Irvings and the McCains exhibited (and still do) virtual monopolistic power over many aspects of their business – whether it’s supply chain, vertical integration or even the printed media in New Brunswick.
A very respected old economist in New Brunswick (I won’t mention his name because probably 70% of you would know it) mused one time in conversation with me about how it is funny that Saint John’s period of fastest growth and most successful economic times was well before the arrival of the Irving empire.
As I stated above, my opinion about the Irvings/McCains is actually much more nuanced than many of the folks I talk with.
But the TJ calling for more of these types in New Brunswick is disconcerting. What is needed is a broader mix of multinationals (who would exhibit limited local economic power here) and successful local entrepreneurs (but certainly not those with the kind of economic power we have seen).
Just to finish this thought. At the height of his economic power, Rockefeller was worth about an incredible 4% of the national GNP in the U.S. By contrast, Bill Gates is worth 0.6% of the U.S. GNP (total annual economic spending). While nobody knows the real wealth of the Irving empire, the total GDP of New Brunswick is about $25 billion. If the Irving empire is worth 10 billion, that would mean 40% of the total annual GDP of New Brunswick (or ten times Rockefeller). You might say that a more accurate comparison would the Irvings to the national economy in Canada. But, I disagree because the bulk of the Irving empire is still right here in New Brunswick. Another statistic worth mentioning is that the Irvings, by my estimate, account for about 50% of the value of all New Brunswick exports. A staggering figure unmatched in any province or state – probably in the world.
So, I think we need to spend more time thinking about how to create less centralization of economic power in New Brunswick and not more. And the way you do this (tip of the hat to my friends on the Right), is through more competition. More free markets – not less. We need to make sure that the legislative and legal framework in Canada and New Brunswick doesn’t allow for too much economic concentration.
*P.S. – some will point out the obvious differences between the Irving and McCain empires. However, my thesis still holds IMO.