Nip weird talk in the bud

A few people have made comments to me about Ireland’s recent troubles.  These same people have also insinuated it was a good thing that NB doesn’t have the auto industry like Ontario.

That’s crazy talk.  Ireland led the first world in economic growth for nearly 20 years – of course the country will be hit harder by a global recession.  Same with Ontario.  It added 1.3 million to its population from 1996-2006 while New Brunswick declined.  Of course, it will be hit harder by a global recession.

But to even insinuate – even hint – that New Brunswick is somehow better off than Ireland or Ontario because it has been sputtering along for 20 years is crazy.  Nuts in fact.

We can have a serious conversation about the Irish economic model and we can look at ways it could have done things differently.  Sure.  But I will never accept the argument that the Irish model was a failure because it is taking a hard hit during this global recession.  I will never say that the auto industry has been a negative force in Ontario’s economic development.  It has generated hundreds of billions in economic activity over the past 30+ years and been arguably the most important driver of that region’s rise to be among the 3-4 most important economic zones in North America.

Park any of that smugness.  Without Ontario’s tremendous wealth generation over the past decades, New Brunswick wouldn’t have had billions in transfers to prop up its economy.  We need a serious economic development effort in New Brunswick but not at the expense of Ontario.

19 thoughts on “Nip weird talk in the bud

  1. David, I agree virtually always with your comments, but I think that you are off on this one.

    “I will never accept the argument that the Irish model was a failure because it is taking a hard hit during this global recession”. That is a very simplistic way of looking at things. You have to look deeper. The problem with Ireland is that the fundamentals on which economic development was built were shaky at best. It was primarily based on financial deregulation and low taxes (oh, yes, and on transfers from the European Union). And in the last few years, compounded by a huge real estate bubble. Now that the market fundamentalist model has crumbled, all the flaws of the Irish model are becoming evident. Yes, there were very interesting economic development initiatives and great efforts to diversify the economy. And that seemed to have happened. But when we scratch the surface we see that the diversified sectors didn’t make for much of the economy.

    And, please, before anybody comes up with other explanations, I have to disclose that I was recently in Ireland meeting with government officials. So I thing I may know a thing or two about what it’s happening there…

  2. “But to even insinuate – even hint – that New Brunswick is somehow better off than Ireland or Ontario because it has been sputtering along for 20 years is crazy. Nuts in fact.”

    I never insinuated – or ever hinted – that. I have said previously in this blog that New Brunswick is going to be hit as hard as – or harder than – other jurisdictions. Just wait for the NB government numbers on tax revenue decline. And for the increase in EI applications because more people are coming back home. And for the decline in local economic activity because less money is flowing from the West.

    My point here is that we need to look harder at the cause-and-effect relationships in economic development. And we need to once in a while review our points of view. It may have been that we were wrong looking up at Ireland all this time…

  3. Well this answers my lifelong question of how anybody to be fool enough to put NB into poverty for life. Liberals and liquor!

    FREDERICTON – The producer of a new television documentary on the life and times of Louis Robichaud describes the late New Brunswick premier as a political dynamo whose career was cut short by alcohol.
    File/Telegraph-JournalAn emotional Louis Robichaud, left, with then premier Bernard Lord at right, is saluted for creating the Offical Languages Act in this file photo. Journalist Holly Doan, producer of The Premiers series that airs on CPAC over the next 10 weeks, says she wanted to give the legendary premier and political reformer a human dimension.

    His dependence on alcohol, she says, helps define the political giant known as “little Louis.”

    “I think it may have affected his own life and his own opportunities,” says Doan, who explored Robichaud’s drinking habits with friends and family while making the documentary.

    “We thought about alcoholism a little differently in the 1950s and 60s. There was a lot of back-slapping bonhomie.”

    Doan says Robichaud’s drinking does not detract from his successes as the political genius behind such sweeping reforms as the program of equal opportunity and official bilingualism.

  4. “Without Ontario’s tremendous wealth generation over the past decades, New Brunswick wouldn’t have had billions in transfers to prop up its economy. ”

    That’s a critical point. NBers seem to be resentful whenever that subject is brought up; perhaps that helps to explain the schadenfreude we see here over ON’s current plight. We’d be better off focussing on how we can get ONs GDP numbers of the past 4 decades.

  5. I didn’t say we shouldn’t explore in more detail what went wrong in Ireland. I am saying that the knee jerk reaction that Ireland’s ability to attract hundreds of billions in FDI was somehow a mistake just because the country is currently experiencing trouble.

  6. I think it would be a better idea to actually explore the reasons for the Irish problem rather than ask a government official for their opinion. Government officials do not generally operate in the real world and nine times out of ten are the cause of many problems rather than the cure. Ireland’s problem is the same as the US, UK, Germany etc, The banks did not behave responsibly and now there is a lack of liquidity. This, in Ireland’s case, coupled with unsustainable public spending policies perpetuated by these self same government officials, had a very negative effect on the economy. Now these self same government officials are running for cover because they are the ones who flapped when it was time to act with the result that the country is only now coming to terms with dealing with the problem. Anon 1 above may arrogantly state the he may know a thing or two about it because he was visiting with Irish government officials but this statement alone makes a mockery of what he actually does or does not know because nobody in their right mind would take anything that a government official anywhere in the world says seriously.

  7. “Anon 1 above may arrogantly state the he may know a thing or two about it because he was visiting with Irish government officials but this statement alone makes a mockery of what he actually does or does not know because nobody in their right mind would take anything that a government official anywhere in the world says seriously.”

    I am sorry, but this is a simplistic comment. Two facts here: (1) I did not meet ONLY with government officials, but the fact that government officials acknowledged the flaws has more value than if someone from the private sector says it (as Anon 6 shows, it’s just too easy for some people in the private sector to make disqualifying comments about the public sector); and (2) the credibility of the private sector is at least questionable after the events of the recent months (some would say years). In fact, it’s hard to believe anyone these days.

    “Ireland’s problem is the same as the US, UK, Germany etc,”
    You cannot put Germany in the same basket as Ireland, the US and the UK at all. I may be called arrogant again, but a little bit of research is usually very helpful. I wonder what the etc includes…

    David, I am sorry this post is perhaps barely within your civility rules but things need to be said as they are once in a while.

  8. The above post needs addressing on a few points.
    1. The comment at anon 1 above states very clearly that he / she above was in Ireland meeting with government officials. His entire view, therefore, is clearly based on this as written. Ireland has a big problem that is purely based on the decisions and actions of her public service. A few years ago the public service unions decided that they weren’t keeping up economically with their private sector counterparts so a system of modulated payments to maintain a balance was put in place. This is a clearly unsustainable practice and it led to a spiralling in government public costs. These payments, among many other payments and schemes, are overseen and maintained at a rate of 6% per annum by these self same ‘government officials’ that the writer references in his post. Naturally enough they are not going to admit that they preside over an unsustainable system in that respect as any government official anywhere in the world would not in the same situation.
    2. The self same government officials were only last January 2009 publicly saying that the fundamental principles of the Irish economy are sound and that they were ‘well placed’ to take advantage of the forecasted global economic upswing that they expected to occur in the third quarter of 2009 (forecasted by government officials presumably).
    3. These self same government officials did not realise last September that things were as bad as they were despite the fact that the private sector knew that the economy was stagnating from January 2008.
    4. These self same government officials looked the other way while the chairman of Anglo Irish bank moved loans worth €127 million euro from his bank to another at the end of the financial year in order to make the banks books look good for the annual shareholders meeting and to keep the price of the bank shares stable. They know about this in January 2008 but did not take any action on it until the media got involved in December 2008. The bank was subsequently nationalised and all of the shareholders lost their money. Now there is a fraud investigation taking place. I wonder why the writer was not informed of this by the government officials he / she met in Ireland. The truth here is that the Government was asleep at the wheel for the past 5 years.
    There are many, many more examples of stuff like this that are perpetuated by the mandarins of the bureaucracy and I won’t bore you with that now but when it comes to credibility I doubt very much if that is something that can be applied to a section of society who, when asked to address a financial black hole in public spending, decide to take a medical payments card back from a group of old age pensioners over the age of 70 as part of a plan to shrink it while preserving their own inflated salaries and pensions.
    5. Ireland’s problem IS the same as the US, UK, Germany (the etc includes France, Italy, Spain, Japan and so on – I didn’t want to over word the comment). The commentator obviously hasn’t read that the German government has bailed out some banks, motor companies etc and is currently overseeing a lot of businesses working on a short time basis (Irish Times newspaper February 3 2009).
    I agree that a little bit of research is very helpful so maybe you should try doing some. I apologise for being long winded and, in truth, could have written another 40,000 words quoting examples of government waste and over expenditure – fully researched and based in fact. I just cannot sit back and watch while someone arrogantly states that the private sector shoulder the blame for something that is clearly beyond their remit. Certain sectors of society and business will do things the wrong way when the regulator is not regulating (eg banks). What is the regulator but a government official?
    In the private sector people are generally qualified for the jobs they hold unlike government where a solicitor can be a finance minister, an accountant can be a minister for health and any idiot can be a bureaucrat.

  9. First, people shouldn’t be making the distinction between ‘public and private’ because more often than not public officials are on the boards of private companies, and private investors often hold high levels within governments. Brian Crowley ‘works’ for AIMS, which means he works for Irving and other large corporations, and he is Harper’s right hand man on maritime economic development. The two generally mean the same thing.

    There is NO evidence that the private sector ‘does better’ at administration than the public sector, in fact the recent fiasco proves that its the opposite. The two are not ‘competitors’. Regulators typically fail to regulate not because they don’t want to, but because powerful interests hold a lot of lobbying power. Economic development has been tied to politicians since, well, long before we were around.

    As for the Ireland ‘model’, forget the present, let’s talk about the past. During its height, when economic growth was strongest, several different reports (within the country and without) were showing that Ireland had the highest rate of child poverty in the EU, even the OECD. That’s when it was doing GREAT. So for models, wouldn’t you kind of expect that when setting up an economic model that a success story would DECREASE poverty? Again, for models, this is a pretty right wing place but the statistics don’t lie, and under Chavez poverty has decreased from 50% to 25%. That’s almost the equivalent of Canada’s, and far lower than the poverty rate in downtown St. John (we can add that the middle class wealth is also growing-in Canada we mirror the US where increasingly wealth is concentrated in fewer and fewer hands).

    That’s with rigid regulations, much like Norway and most of the countries listed on the ‘top places to live’. Canadian’s can’t be too smug about their politicians, as canadian banks WANTED the same deregulation that was given to Citibank and others. It was only canadians who flipped out when the topic came up that stopped it, the ‘credit crisis’ didn’t hit Canada because of CANADIANS, not because of government-and CERTAINLY not because of ‘private industry’ which was clamouring for the same deregulation (still is, ironically).

    But David isn’t talking about ‘economic models’ and that’s something for academics. In Ireland, just like in other wealthy countries, the economic ‘model’ doesn’t state specifically that the poor have to be worse off-like the above poster says, that comes down to regulations and the tax code. But it DOES involve regulations that don’t give carte blanche to the private sector, don’t cheaply hand over public resources, and have a tax system that adequately distributes wealth. There’s a reason Mussolini defined fascism as ‘corporate control’.

  10. “The self same government officials were only last January 2009 publicly saying that the fundamental principles of the Irish economy are sound (…)”

    Can anybody in his right mind expect that a government official say otherwise in the current economic situation? What effect would that have on stock markets, foreign investment, business/consumer confidence, etc?

    “In the private sector people are generally qualified for the jobs they hold unlike government where a solicitor can be a finance minister, an accountant can be a minister for health and any idiot can be a bureaucrat.”

    Disclosure: I am a bureaucrat, have a master’s degree, a PhD, and worked in the private sector for 15 years. I opted for the public sector some time ago because I believe that I can contribute for a better country from this position (and also because I was disgusted by some things that I saw while I was in the private sector). I could be making more money in the private sector, so if that makes me an idiot, well, so be it.

    I just think that this kind of discussion should always be kept within a rational and civil context — and away from the ideological camp. Ideology in this context only clouds good judgment.

  11. A good point, but the point for the new anonymous poster is that this is NOT a ‘panel show’. Stating credentials means nothing here, it is the argument and the facts that back it up that counts. People sometimes get rude on blogs, that’s true, the best thing is to ignore them when they do. People sometimes have bad days, or are angry about things, or who can tell.

    Hopefully the above poster will stick around, because it’s the knowledge FROM those years that will be of interest here, not the resume. I could start posting that “God told me last night that Foreign Direct Investment is evil” or that I have six PHD’s from all the big six. People can say ANYTHING on here. The point at issue IS ideology because the first post that started this was based on ideology (any argument made without sources to back it up is ideology to me). That’s the statement about the ‘fundamentals’ of the Irish economy. Low taxes aren’t necessarily correlated to financial deregulation, and even ‘low taxes’ is a misnomer. In Canada the wealthiest sectors saw their taxes plummet, but the middle class or ‘average’ worker certainly never saw ‘huge’ tax drops. And who is to say what exactly the ‘fundamentals’ of an economy are?

    Corporations are the sector that saw the biggest plummet in taxes in Canada, and for SOME sectors like mining Canada is still very much considered a ‘tax haven’. In many sectors Canada never saw ‘deregulation’, because in sectors like forestry and mining there was no regulation to BEGIN with. New Brunswick has looser mining regulations than Columbia (according to the Fraser Institute in case anybody thinks that’s ‘ideology’).

    That’s why its pointless to talk about an “irish model” or a “canadian model”, because the ‘model’ simply means the collection of EVERY regulation and legislation and who really agrees with EVERY decision a country has made?

    So its not so ‘weird’ to blast the ‘Irish model’, IF you are looking at different sectors than David. From the point of view of the poor, there was little change, so if you are concerned about poverty, obviously there are issues there. If you are thinking about maximizing profit for a certain sector of the economy, then you’ll have different criteria.

    For the other issue, ministers rarely make decisions on their own, they have huge staffs to do that, with public input and meetings with what are called ‘stakeholders’. What is far more worrisome from a public policy standpoint is not that ‘any idiot can be minister of finance’, its that those ministers generally get their cues (and sometimes funds) from lobbyists and industry. Brian Mulroney could have been an idiot, but I’m far more concerned about his relationship with a German tax evader and fraud artist than I am about his intellect (and the same goes with virtually every politician and bureaucrat).

  12. “In the private sector people are generally qualified for the jobs they hold” Interesting observation. So can anybody tell me why companies keep going to government asking for help?

  13. Good points Mikel. It was not my intention to show credentials, but to make the point that it’s not just “any idiot” who can be a bureaucrat.

    My last thoughts about this topic:
    – It is imperative for the private sector to understand how government works. Everybody is entitled to an opinion, but more often than not companies make decisions based on the wrong understanding of how governments operate.
    – Every society has the government that it deserves. Politicians, bureaucrats, and the policies that they design are only a reflection of what the society asks.

    I know that my last statement may spark some more philosophical arguments. But my point is that bureaucrats and politicians bring to their offices the values of the societies in which live. And as a consequence, their decisions are inevitably shaped by them (for good or bad). So when we criticize our politicians and public service we are just failing to look at our own bellies.

  14. Much of the private sector knows full well how government works-they typically control it. Irving knows full well how the NB government works, which is why they get handouts and lax regulation. The small businessman is usually a much different situation though. The posts above are something far different, some people will simply refuse to believe virtually ANY statement from a ‘bureaucrat’ or even somebody with credentials, that shouldn’t dissuade others from debate though. All that can be done is footnote some info and leave it to readers to decide for themselves.

    I would argue STRONGLY against the idea that a society gets the government it deserves. Did Iraqi’s ‘deserve’ Saddam Hussein? Of course not. Do the countries of latin america deserve the thugs that typically control them? Of course not. Canada is very much a ‘mediacrocy’, if it doesn’t get into the media then it doesn’t exist. Is it really true that New Brunswickers think its more important that kids stand for Oh Canada than the fact that generations of their kids have to leave to find work? You’d think so from the CBC.

    In fact I’d say the opposite, NO society ever gets the government ‘it deserves’. In Canada politicians rarely enact policies that reflect the population, and this has only grown in time. My old example is TJ Burke’s blog where the Minister of Justice practically laughs at the idea of Newfoundland and Nova Scotia’s banning of cell phones while driving, even though most of Europe has done the same. Does that reflect the policies of New Brunswickers? We don’t know, what we do know, is that the current government has ZERO interest in the issue and since its never mentioned in the media, nobody knows anything about it-even enough to offer an educated opinion. And thats just one example out of hundreds. I can again mention the Residential Tenants Act-do YOU think that its proper legislation that roomers and boarders are denied basic housing rights? The ONLY province in Canada to allow such treatment of the poor? Do you think its right that a tenant can be evicted in the middle of the night in January for no reason at all? That, of course, is actual New Brunswick legislation, but do you really think New Brunswickers support that? If they do, then the province has become one of the meanest areas I’ve ever heard of. It’s true there is culpability because NBers can protest, but again, its never in the media so people simply don’t KNOW (you do, and now you’ve got part of that culpability:)

    In fact, not only do New Brunswickers not get the government they deserve, they didn’t even get the one they VOTED for. Although long forgotten, the majority of New Brunswickers voted for Bernard Lord’s policies-NOT the liberals. And of course immediately after taking office the liberals raised taxes and ‘flip flopped’ on a number of campaign promises. So how can a society be said to ‘deserve’ policies that they specifically voted against? If a party lies all through the campaign, then how can an election be said to be valid at all? That’s not philosophy, thats basic public policy.

    Bureaucrats are an even different story because they are not elected at all. When David Hay, the CEO of NB Power is criticized for handing out bonuses and getting paid FAR FAR beyond what a civil servant deserves, I’m not ‘looking at my own belly’. Hell, there’s no reason that CEO’s and other head ministers can’t be elected. Let them put out their plans for the utility and NBers vote on which they prefer.

    So that sounds a bit like buck passing from a bureaucrat. Sorry, but like every person a bureaucrat is accountable for their own decisions, and when bad decisions are made public, it is THEIR doing, and telling the public-“well, I’m just a reflection of you”, just doesn’t cut it. That might not have been what was meant, but its what it sounded like. It’s true that in a nominally democratic society people have a responsibility to hold their government accountable, or at least try to do so,but its a complicated issue.

  15. Mikel, I knew that my comment was going to spark that kind of reaction. That’s why I raised the issue of PHILOSOPHICAL arguments. Let’s look beyond the surface and you will get my point.

  16. I don’t know what any of that means, but back to the point-David should keep in mind one very important thing-that it is at least in large part BECAUSE of the auto pact that the Bricklin enterprise failed. The federal government largely ignored it, and they couldn’t set up distributorships in Canada because of the auto pact. They had numerous deals in the US and a quality product which was generating good jobs. Yes, the CEO was a bit of a wild card, but no more than most CEO’s, and the government COULD have made solid business practices a part of any package that saw government money flow to Bricklin.

    So that runs contrary to the thinking of this blog. Had Bricklin succeeded then other auto manufacturers would have looked at the location, suppliers would have set up shop as well. None of that is a certainty, I’m just pointing out that different views are certainly not ‘weird’ or nuts or crazy-they are just different. It was the auto pact that built ontario, so without ontario growth, some of that growth COULD have belonged to New Brunswick. It seems pretty reasonable then to not accept an economic model that sees one jurisdiction gain massive growth which crashes, over more moderate growth spread out.

    It would make perfect sense to NOT have thirteen ‘regional’ governments racing to the bottom but instead have a federal system that actually looks at creating growth in each incrementally. That was ‘sort of’ the EU model, which let new members create tax concessions which builds their economy enough to make it not dependant on ‘handouts’, but as David admits, there is plenty of room to criticize specific policies that may have had unforeseen consequences.

    For an easy way to hammer the point home, what happens if next year Microsoft packed up and moved from Ireland? They COULD do that, and certainly have done that in the past. So does that make the ‘irish model’ better or worse? Actually, there COULD have been an interesting ‘New Brunswick model’, namely, as I’ve said before, the public educational system is largely being franchised by Microsoft. You can bet that Microsoft is putting some money in, but what if instead of cash, the New Brunswick government made a condition that they could only be part of the educational system IF they set up shop like the Irish situation. That’s not really a ‘model’, it just sounds like a different (better?) way of doing public policy-which is why its usually a waste of time talking about ‘models’. Every piece of policy is different and complicated enough on its own.

  17. “They had numerous deals in the US and a quality product which was generating good jobs”

    Was it really a quality product? All I’ve heard about it was that it was built to be safe but ended up being a bit of a piece of junk. On the lighter side, a Bricklin was once used as the grand prize for The Price is Right.
    It also sounds like there were some other very shady things that caused this venture to fail, like it cost $16000 to make the thing and they were selling them for $8000.

  18. There are several good books and documentaries on the Bricklin. This was a real success story for New Brunswickers-not the government. That’s because guys who worked in lumber and fishing were hired to build cars, and actually did a pretty good job at it. Of course the first year was terrible, there were numerous design flaws, but keep in mind this was the age almost ‘pre Nader’, which meant the Gremlin and other cars were routinely killing their drivers in Canada and the US.

    There was also the stories of nepotism, where Bricklin was putting all his friends on the payroll, sometimes for no work. That was coming out in the media at the time, and like with any corporate scandal its usually reporting that helps put an end to it, and like I said, if the government were providing cash, they could also provide regulations on hiring practices, etc. (true, that doesn’t mean they WOULD).

    And most of the design features were then pretty much stolen to be incorporated into the big three autos, and for safety it was WAY ahead of its time. It was one of the safest vehicles on the road-all essentially built by a entrepreneurial grassroots company. There is actually still a very active Bricklin owners fan club, its certainly only a small minority of the number originally built, but how many Chevy Civics do you see on the road (and that’s early eighties-hell, you don’t even see K Cars on the road anymore, and that’s from the early nineties).

    But that’s just a convenient example. The auto pact essentially did for auto’s what the Arrow did for canadian jet plane engineering. The deal essentially said that the big three could provide the country’s autos, and it killed any opportunity for canadian manufacture. My point is even broader than that though, the question is simply whether high growth in one area is preferable to slower growth in multiple areas. Norway has always had ‘slow growth’, but ‘growth’ is not in itself a good thing. Is it good to win a million dollars in a lottery if you are going to buy cocaine with it til you’re broke and dead? That’s sort of what addiction to growth has done for the world. I listened to two business leaders in the US and even they were saying that the ‘investor protection’ economic ‘model’ (for lack of a better word) was what caused the credit crisis and is the main impediment to ‘smart growth’. And these were gung ho right wing business leaders.

  19. It is interesting to read dissertations on the Irish economy and the various viewpoints, opinions and vitriol that it appears to evoke. Living in Ireland as I do it is difficult to equate what we experience on a daily basis with what appears to be the international perspective. Certainly blame has been apportioned as it has in most other countries that are affected by recession and that is natural enough, considering the length of the world wide boom, but counter productive. Thankfully, people seem to be moving on now and attempting to repair damage. Let’s hope that the lessons will be learned but I sincerely doubt that they will. Such is human nature.

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