Fat and lazy

I met an interesting chap last night at a BBQ for the IT industry here in Moncton.  I forget his name but he has done very well for himself investing in early stage technology companies.  Anyway, we were chatting about (what else) economic development and he concluded that “lots of natural resources make a province or state fat and lazy”.   I thought about it and it is an interesting hypothesis.  Certainly if a province has forests, fish, oil, gas or other mineral revenues coming in it doesn’t have to spend as much time worrying about fostering an environment where ideas and knowledge-based industries will emerge.  But beyond the theory, I think in practice I would tweak his theory.

In New Brunswick, natural resources have made us thin and lazy.  Having fish, forests and some minerals hasn’t made this province fat but it has provided enough of an economic base to allow us to survive without other industries (such as aerospace, auto, IT, film, finance, etc. etc.) that are not based on natural resources emerging here in a big way.  But in recent years, much of this natural resource revenue has been ebbing away which will force us to get ‘fit’ following the metaphor.  Getting in shape is a tough job.

An as for Alberta, natural resources have made that province fat but I doubt the lazy part.   The province has invested hundreds of millions into cancer and nanotechnology research.  It has built the most successful primary and secondary education system in Canada (maybe even North America).  It seems to me fat yes, lazy no.

Newfoundland and Labrador has won the lottery of natural resource revenue and we will have to wait and see if they get fat and lazy.

17 thoughts on “Fat and lazy

  1. I would suggest that Alberta has become not only fat in the sense of revenue but also fat in terms of being wasteful and/or inefficient.

  2. I’ve been to Wal Mart in Fredericton, nothing ‘thin’ there:)

    But seriously, that can be said about ANY economic development. The difference is simply whether natural resources are used smartly or not. Your theme about bringing in outside corporations can mean the same-that’s not ‘self reliance’, that’s essentially playing the lowest common denominator and getting other business leaders to do the dirty work, then telling them you’ll help them out when they’ve got cash to spend. That’s pretty ‘lazy’.

    Ontario is FAR larger than NB, and has more natural resources, but that accounts for a tiny percentage of GDP. There is no intrinsic reason why their needs to be reliance on that. Even PEI gets a smaller percentage off of natural resources than NB. Like I said before though, if you throw it away cheap instead of trying to use those resources, THAT makes you ‘lazy’.

    High commodity prices is all that kept NB (sort of) in the black, but as mentioned elsewhere, Graham seems to at least be working as hard as Lord at trying to drum up investment. The question is, what exactly does ‘hard working’ mean? I’d suggest that if you read actual legislation in Fredericton then laziness is not true in business affairs. When big business wants something done-it gets done fast. IF RIM comes to NB then I suspect if the owners wanted their cars polished that Graham would be out there with a rag. It’s the REST of the work of government where NB shows its laziness-and thats because unlike other provinces NBers are not politically engaged (they vote, they just are marginalized).
    My definition of ‘hard working’ is the stuff they SAY they do (but quite obviously don’t), namely, train an excellent entrepreneurial workforce. Throw out the leaseholders, then build community forestry councils that let local people take advantage of local resources. Co-ops are ‘tough’ to build, meaning they take WORK. It takes balls to be a Danny Williams, although its not quite as hard once you find out that the province is behind you (I think a lot of people badmouth Williams because of a kind of ‘penis envy’, since every other Premier is so obviously out of touch with their constituents and have such little support-we can only dream of having a Premier who actually stands up for our provinces).

  3. And Ontario has won the lottery to have the Federal government centered there and to have massive effort to develop and maintain the auto sector. This has resulted in attracting the financial institutions to be HQ’d there.
    Not denying any province to have a lottery win but it is NB’s turn to join the winner’s circle. We have to realize that hockey rinks and highways are not the jackpots we need. We need a solid ED strategy that we pitch to the Feds for support. Then we only accept the photo opportunities for soccor fields and community halls after the ED strategy is adequately supported. Until we prioritize ED, there will be no significant progress.

  4. ” It takes balls to be a Danny Williams”

    I guess balls are increased in size in direct proportion to the amount of oil you control.

  5. “I guess balls are increased in size in direct proportion to the amount of oil you control.”

    I think you got this backwards.

    It takes balls to stand up and declare that you should control your own oil/destiny. Any ball growth after you’ve succeeded is dependent on your original assertiveness.

    Newfoundlanders respect Danny Williams because he stands up for Newfoundland. In a decentralized federation (alluding to another post), standing up for your province is essential to survival.

  6. Yes, definitely backwards. Take a look at South America now, countries that aren’t Venezuela are electing leaders who are saying enough to those who are cheaply wiping out resources.

    This is true in NB as well. NB doesn’t have oil, but it has other resources. It has mining minerals that it gives away for market value with few value addeds. It has an LNG terminal that is worth almost ten million a year in any other jurisdiction, its only politics that has NB giving it away for almost free.

    Ditto to potash, where they are literally giving it away for free in exchange for some jobs. Oil would be nice, but lots of african countries have lots of oil and their people still live in poverty. If your province won’t stand up for you with the resources you have, what would make you think they’d stand up for you if you added oil to the mix?

    In Newfoundlands case you have a Premier who works without a salary because he’s a millionaire-what does he care about oil? Even with oil Newfoundland’s statistics still usually fall below even New Brunswick’s, so having oil certainly doesn’t give you clout. Having 70% of the electorate backing you, THAT gives a politician clout.

  7. “It takes balls to stand up and declare that you should control your own oil/destiny”

    Danny would not be standing without oil. Oil is the grease that moves Danny. Without oil, he would no longer be Premier.

  8. ” Having 70% of the electorate backing you, THAT gives a politician clout.”

    NFLD is booming. Its on the verg of being a have province; no comparison at all with NB. Why is NFLD booming? Oil. Why is Danny popular? Why is any politician in power when the economy is booming popular? People are getting better jobs that pay more. That oil gives Danny clout, and balls.

    Its all about oil. NB does not have oil. If we had oil, there would be little or no pressure to give other resources away.

  9. I’d be interested to hear any opinions on the potential that Umoe Solar might have on the lazy economy in Miramichi. This is the first time in recent memory that Miramichi will actually see an innovative corporation establish themselves in the city. With the potential to employ 350 people, it would have a noticeable impact on the local economy, but wold be far from the savior that we’ve been waiting for. I’m also under the impression that Umoe will need skilled employees, with degrees in chemistry and engineering, more than they will need “local boys”, and this is something that would make the community more appealing to outsiders. For years it has been polluted with labourers and mill workers who went to work immediately after squeaking through high school that the city became overrun with grunts. It would be really to see an influx of educated individuals who could attract newcomers to the community.

  10. I think the term ‘grunt’ is a little pejorative but it is true that the Miramichi has a workforce dominated by blue collar workers used to union wages. It will be interesting to see. I don’t know much about Umoe but I saw a documentary on a large scale solar plant in Toledo and it was filled with retooled auto manufacturing workers. However, they were working for about $10/hour less. When we know more about Umoe I will comment more.

  11. NB doesn’t have oil, but there is Gas, lots of shale trapped natural gas and some conventional. I’m surprised PCSs, the Mosaics, and the Agriums of the world aren’t beating a path to develop a fully integrated fertilizer/petro-chemical facility in New Brunswick. I guess we’ll just keep shipping that raw potash to Brazil, all that gas to Boston, and the Sulphur at the refinery can keep going to China for pet food.

  12. Alberta has spurts of laziness on the ED file. All kinds of talk of diversification, but the politicians out west never put their money where their mouth is.

  13. The unemployment rate in Newfoundland rose from June to July from 15% to 17%, the employment rate lowered from 50 to 49. That’s hardly ‘booming’, if it is, then the 9% unemployment and 58% employment rates in New Brunswick should have you guys cheering about how great the economy is. Just because there is investment in a province means little. You can go to any african country and look at the oil industry and it looks like the country is ‘booming’ but it means little.

    Just take a look at any media comments section right after Williams made the move against abitibit bowater, even though it was about investment Newfies were virtually unanimous in their support of Williams. One opinion poll had his support at close to 86%, and this was shortly after he took office, where amongst his first acts was taking on the civil unions-try taking on public unions in any other province and see what happens to your support. After that he ordered canadian flags removed-imagine what would happen in NB if the Premier did THAT.

    The evidence shows the reverse, Williams very much rocked the economic boat, IF Newfies were happy about the ‘boom times’ they would have gotten rid of a premier who openly took on the large oil corporations-threatening their investments. In Alberta just the mere mention of tampering with gas royalties had protests taking place at the legislature.

  14. NFLD is on the verge of being a have province; the provincial coffers are overflowing with oil revenue. Check the GDP rates; NFLD is booming.

    Joey was at least as tough as Danny. Yet Joey gave Churchill Falls away. Why? Joey did not have oil revenue and NFLD was desperate for anything, even crumbs. Oil revenue gives you leverage.

    Give NB oil revenues comparable to those of NFLD and the NB Premier would suddenly grow large balls. There would no longer be pressure to give resources away; the Premier might even start listening to David Coon!

    Oil is the source of the spurt in Danny’s ball size.

  15. Joey Smallwood gave nothing away. At the time that was simply the economics of it. This was not a ‘federal’ building project, this was financed by New York banks. In order for it to go ahead they needed certain assurances in order to cover the bonds. Nobody could have known at the time that OPEC countries were going to trigger an energy embargo that would see energy prices rise radically.

    This is also a historical bone of contention because Smallwood himself maintains that he had NOTHING to do with setting the terms of the contract-it was bankers. However, without those numbers, the result, as he said, would be that nothing would ever get done. So that’s that argument done.

    Again, GDP means nothing. Voters look in their fridge to decide how they vote, they don’t starve on EI but then claim ‘well at least the millionaires are getting richer’.

    So one more time. IF you have an oil job, then you make good money, so why in heaven’s name would you support a premier who is putting that at risk playing hardball with oil companies, who are necessary to sell the stuff?

    IF you don’t have a job, why would you care about GDP? But on that point, we had the discussion about GDP before, and even NB’s GDP is fairly presentable-in per capita terms.

    Guess what, you don’t HAVE oil revenue if you give it all away. Again, there is tons of potash in New Brunswick, projections state that outside of Saskatchewan it may be the largest single stash in North America. Now, its not worth the price of oil, but it IS a big resource, so by Richard’s logic, why hasn’t Graham ‘grown a pair’ and gotten a great deal on potash? Not only did he give away the land, but he also dumped the royalties. Even though the potash market for Sask Potash is in South America and NB is FAR cheaper to ship from than Saskatchewan.

    So its a self fulfilling prophecy, IF you have no balls, then resource extractors walk all over you, and you have no money. As a scientist I would have thought Richard would be less prone to bias, but this is all evidence to the contrary of what he keeps repeating as fact, simply by repeating it. Like I said, since Williams is a millionaire there is no reason for him to even CARE about what the economy or polls are doing.

  16. “At the time that was simply the economics of it.”

    Good grief. Joey gave QC most of the benefits because he was desperate for jobs. Had he not been, he would have held out for more or walked away. But he did not have oil revenue, so he had little choice.

    “Smallwood himself maintains that he had NOTHING to do with setting the terms of the contract”

    Ha Ha. Joey was lying thru his teeth. Your comments re the demands of NY bankers just underline my point – Joey had no choice.

    “why hasn’t Graham ‘grown a pair’ and gotten a great deal on potash?”

    Same reason as Joey – he’s desperate for jobs. The more desperate you are the less leverage you have. Every business negotiating with NB knows that.

    “why in heaven’s name would you support a premier who is putting that at risk”

    He’s putting nothing at risk; all that happens is a slight delay in the process. NFLDers don’t want another Churchill Falls and they know (as does Danny and the oil companies) that we are at peak oil. NFLD has the leverage. Nothing to do with balls.

    Its all about oil and the leverage that comes with owing a scarce resource. When potash becomes as scarce as oil (relative to demand) then NB will have leverage. Not there yet.

    “Williams is a millionaire there is no reason for him to even CARE about what the economy or polls are doing.”

    You must be kidding; how many provincial and federal leaders are in it for the money? Danny’s ego needs to be stoked; much better for that to be Premier and wave the NFLD flag than be an anonymous millionaire.

  17. Exactly, but you are confusing politicians with political circumstances. Does Graham seem overly conserved about the economics of New Brunswick? Not at all. Smallwood wasn’t desperate for jobs-he HAD a job. Potash is the same as any other commodity, sometimes its cheap, sometimes not. It’s value has been increasing of late, Potash corp made twice as many profits in december of 2008 as it did in december of 2007. Its price has been at a record high, and its expected to double, although the price has fallen a little of late.

    So again, if a government poorly mismanages one resource, whats to say it won’t poorly mismanage another? The only reason there is much benefit to ALberta because of its oil is that it is difficult to get out of the ground.

    And again, Alberta has oil, yet the Premier dropped the idea of reevaluating the royalty scheme because of protest. So obviously simply having oil doesn’t give one balls.

    I’d say Graham and Lord were in it for the money. In Lord’s case we have public documents that showed he became a millionaire thanks to being Premier. Graham could barely find a job as a substitute teacher, but had political connections through his father. Politicians are the same as everybody else, they all make different decisions in different situations. That would be like saying Mr. Campbell runs a blog because he wanted to be ‘famous’. Notoriety has SOME benefits, but usually not that many if money doesn’t accompany it.

    In making deals the unfortunate fact is that when evaluating ‘balls’, or driving a hard bargain, we simply don’t know what other options would be available. There are always options, particularly in NB. Graham or Lord could have told Irving ‘hey, a gas terminal is a great idea, we’re going to have an auction to the highest bidder’. They COULD have done that, it would be politically popular, but they didn’t (for other reasons). As NB’s economy has grown they have typically been LESS likely to drive a hard bargain, so again, the evidence is contrary to the above view, no matter how many times you repeat it.

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