Roasting Francis McGuire

Just got back from the roast of Francis McGuire – the former Deputy Minister of Economic Development under McKenna and for awhile my boss (at least way up on the chain). He’s a good guy and I am happy for him.

But an old colleague mused in conversation that if things had stayed on the trajectory, New Brunswick would have been far, far ahead in its economic development that it is today.

His logic – call centres to IT outsourcing to data centres etc. Waffle manufacturing to auto manufacturing, etc. An evolutionary path. We convinced IBM, Xerox, UPS, FedEx, etc. to put their call centres here – the next step would have been more value added stuff.

But I don’t know. Nothing follows a linear trajectory. Service New Brunswick was the absolute leading edge in eGovernment in the mid 1990s and now, I am told, that in Eastern European cities you can get a smart card to pay for the bus and other city services with one microchip. You can pay for parking your car in a city lot with your cel phone. In Eastern Europe.

We need a new line of trajectory. We can learn from Francis and Mckenna for their hustle and can-do attitude but we also need to think bigger. We need to invest in infrastructure. We need to imagine how can keep our power rates competitive to sustain and attract industry. That gang wasn’t about investing in the future. It was about getting through the recession of the early 1990s. It was about selling what we had (the call centre value proposition) not about real investments in building a broader value proposition for our economic development.

Consider Mercedes-Benz. I wrote the proposal for the Mercedes auto plant in 1994. It eventually went to South Carolina – with a $200 million ‘incentive’ package that basically involved building the infrastructure that the company needed to move there (extending runways, training the people, free land, etc.). New Brunswick would never have done anything like that. Not then. Not now.

And as for Mercedes? 15 auto plants have set up in the southern US since then with several hundred billion in new investment and tens of thousands of jobs.

And one other late night stat for you to chew on. Since we ‘lost’ (meaning never really tried) the Mercedes plant, there has been over $6 billion in Employment Insurance payments to people in New Brunswick – mostly seasonal EI payments to pay people not to work. We had an opportunity in the mid 1990s at the front end of Canada’s longest sustained period of economic growth in its history (14 straight years without a recession) to really get it done. And we didn’t. Now we are on the tail end of that economic boom, with a declining population, rapidly increasing government spending and almost no new private sector economic development (with the limited exception of the energy thing in SJ).

Good night and good luck.

7 thoughts on “Roasting Francis McGuire

  1. You really need to read this book, I mean REALLY. It’s called “The Great American Jobscam: Corporate Tax Dodging and the Myth of Job Creation”.

    Anybody that thinks corporations pay 30% tax is seriously delusional. Just because that’s the mentioned rate means nothing. As we’ve mentioned at this blog numerous times, corporations contribute a mere 3% of New Brunswick’s budget. That’s even though two of the biggest corporations in the world are ‘headquartered’ in the province.

    In 2002 an ontario tax audit showed that half of ontario’s corporations, 350,000 of them, hadn’t even filed corporate tax returns.

    So again, this is why you guys pretty much stand alone. You think the average new brunswicker is sitting around thinking “boy those irvings are just paying too much tax” or “we need to give these guys more ‘stuff’ to make the economy better”.

    That is of course why you see the government SAY that it is most interested in ‘entrepreneurs’. Of course we know they aren’t, but they say it because that’s the only way people will get on board. The same as the way when Al Hogan, who earns god knows how much, says ‘New Brunswickers want tax cuts’, he says it because thats the only way HE will get a tax cut. If you want to know how the rich get richer, it all starts with claims of ‘lower taxes’.

    And again, that’s the big lie- the middle class CAN have lower taxes, IF those with the wealth paid their fair share.

    If you really want to see a platform, just go check out Ralph Nader’s policies-this guy is a bred in the bone capitalist, NOT a ‘corporatist’ (which we seem to see a few of around the blogs).

    So on NBT’s side, go read that book mentioned above. A good example is Illinois, where a huge corporation, I forget which one, came to the governor and asked what kind of ‘incentives’ he was offering. He told him that there were none, because he asked how he’d like HIS taxes going for incentives for other companies. That CEO said ‘that makes sense’ and set up shop there. Of course nowadays these companies can move so fast getting them in a location is FAR from the end of the story.

  2. You can also pay all of your utility bills through your cell phone in Eastern Europe – and pretty much in every other developed country in the world. This has been available in Scandinavia, Ireland and the UK for nearly ten years. Road tolls, parking, electric, gas, phone and cable TV can all be paid with cell phones. Music can be downloaded to the phones from iTunes, Nokia, Napster and a million other sources, legal and illegal. Email can be accessed better from the latest PDAs, iPods and iPhones instead of Blackberries and laptops are very nearly obsolete. Its very nearly a cashless society and its a whole industry or bank of industries that NB has no knowledge of or no interest in exploiting. I read the big blurb about the Wireless internetting of Moncton – Prague, for example, has been wireless with free access for the last 5 years. I have said it in the past -NBers look down on these nations but, in fact, we are light years behind them. People who have left Poland and Romania to find productive work elsewhere are now returning in their droves to take up jobs with better pay at home. All because of their entry to the EU and some fancy footwork by their governments.
    As I said earlier – we look down on everyone else from our ‘sophisticated’ perch of social inclusion, technology and quality of life instead of trying to learn from them. We focus on traditional industries in a non traditional global economy and we do not embrace current trends, models and industries to the same degree as other economies – all to the detriment of ourselves and our future. We focus on the trees instead of the wires that should be hung from these trees and it is a sad state of affairs when the only newspapers in the province concentrate on not keeping us informed adequately.

  3. I should just mention a caveat to the interesting post above, and thats that ‘WE’ do NONE of those things. ‘WE’ have virtually NO say in any government policies, telecommunications or otherwise.

    There are two problems there, one is the lousy media system which NEVER tells people any of this stuff. When’s the last time you saw a report in the Irving rags on anyplace in the world that isn’t war torn?

    How often during the last election did the liberals state as policy that they were going to axe early immersion, raise taxes, or increase debt by expanding capital projects? As the NDP said at the time, both candidates should have been travelling the same bus.

    Most people can’t even tell you much about policies in PEI or Nova Scotia, hell, the Irving rags virtually never talk about policy in New Brunswick.

    Again, that starts with the political system. It’s no surprise that EVERY european country uses proportional representation where there are various parties who will represent people’s interests. Not that that solves everything, but again, these problems all point back to public policy, and that’s government. Lousy government, lousy policies-and lousy outcomes.

  4. One MORE thing that should be mentioned is that very little attention is paid to the political economy as being transitional just like technology. There are big battles being fought worldwide on that, particularly corporate globalization-another reason why its hard to get people to sign onto to new deals. Here’s this on Prague, which owes much of its prosperity to dumping its ‘poorer cousin’ Slovakia:

    “The respective fates of the Czech Republic and Slovakia seven years after their separation are symbolic of the growing inequality taking root even on the Social Democratic soil of Europe. In Slovakia, unemployment runs at 20 percent — twice the level of its neighbor. Inflation there is 14 percent, compared with 2.5 percent in the Czech Republic.

    Yet Slovakia is a raging success story compared with many of the other transitional countries of Central and Eastern Europe. According to a little-noted report released by the World Bank just one week before the Prague conference, “there is little doubt that poverty has increased dramatically” in the former Eastern bloc since it entered the global system. “Moreover, the increase in poverty is much larger and more persistent than many would have expected at the start of this process.”

    It is the Eastern European version of a worldwide phenomenon. As Jeremy Brecher and Brendan Smith note in a new book, “Globalization From Below,” 89 countries are worse off than they were 10 years ago. In Africa, where per capita income grew by 34.3 percent from 1960 to 1980, per capita income subsequently fell by about 20 percent from 1980 to 1997. At the same time, they point out, the world’s 200 richest people have doubled their wealth in the past four years. “

    So NBT may be onto something-at least HALF of something. Want GOOD investment, stop the handouts (but tax them fairly).

  5. Without doing any research I know for a fact that HM Government of the UK does not use PR for elections.

  6. […]there has been over $6 billion in Employment Insurance payments to people in New Brunswick – mostly seasonal EI payments to pay people not to work. We had an opportunity in the mid 1990s at the front end of Canada’s longest sustained period of economic growth in its history (14 straight years without a recession) to really get it done.

    Although, you could argue that rural New Brunswickers in slow growth regions weren’t ready, or didn’t want to accept, the EI reforms which were implemented, in ’97, by the Chretien government.

    In other words, the defeatist attitude was so entrenched (and still is) in parts of our province that if you have the gonads as a politician or elected leader to disrupt it, be ready for the onslaught that ensues (circa ’97 general election results in New Brunswick).

    What’s even more frustrating is we still have guys like Dominic Leblanc and Yvon Godin fighting for more welfare, not less. And the former replaced the EI queen in Angela Vautour for cripes sakes.

    Tell me, how does such an attitude help their constituents in the long run economically?

  7. The UK parliament doesn’t use proportional representation, but many governments within it do, the scottish parliament is the most recent addition. And of course many argue that that is the main problem in britain. SMP and FPTP have been features of the british commonwealth, it is primarily former and current colonies that are the holdouts against PR.

    Godin and others fight for more EI (not so much welfare since that’s a provincial jurisdiction) because that is what their constituents need. With a surplus in EI its hard to argue against that. They are doing what they are SUPPOSED to be doing,which is act in the best interests of their constituents. What’s the option? Tell them all to move out west?

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