It's The Economy, Stupid

I’m not sure where this term, skin in the game, comes from – I won’t google it because I may not like its origin but I do like the concept.  I think it applies to economic development here in New Brunswick. Nassim Taleb – the black swan guy – co-authored an excellent paper on the general theory of skin in the game back in 2013.  I think he is coming out with a book on the subject soon.

New Brunswick has an economic development problem.  It’s economy is growing very slowly (on average, 0.5% per year since 2008), employment is declining and investment is flat.  Productivity remains a key challenge.  Why does this matter?  Can’t we just limp along as a province for the next 2-3 decades until we get beyond the Boomer demographic hump?

I’m not sure.  The premise behind the idea of Canada is that rich provinces will cover the shortfall in poorer provinces and every Canadian will have good quality public services and public infrastructure at reasonably comparable levels of taxation.  In an increasingly competitive world the ‘rich’ provinces (think Ontario) are facing their own heightened competition for investment, talent and ideas.

In my view, the best approach moving forward is for each province/region in Canada to buckle down and build an economic agenda that focuses on a substantial increase in the inward flow of migrants, high growth potential entrepreneurship and economic opportunities for which the region has a strong value proposition.

This brings me to the skin in the game concept as it relates to economic development.  I believe that industry groups, municipalities, and other actors need to put skin in the game and work with the provincial and federal governments on the growth-focused economic agenda.  It’s easy to blame government when things go wrong.   And government needs to shoulder some of the blame.  But if we really want industries and communities that thrive, we need a collaborative approach where each stakeholder plays a role based on its strengths.  Government has things it does reasonably well and others that it doesn’t.  This vision of government as a bank for industry that gives cash and then ‘gets out of the way’ is not going to get it done.

So, we need municipalities, industry groups, universities, not-for-profits, etc. to put skin in the game.  Some of the most inspiring stories I have heard in the past year have been community-level efforts to foster economic development. St. Stephen comes to mind with its wildly ambitious goal of adding 1,000 people to its population within a decade.    Transport yourself to 2025 to see how St. Stephen envisions its future.

The provincial government is trying to seriously evolve how it approaches economic development putting much more emphasis on the factors that drive long term economic success – the talent pipeline, infrastructure, innovation, focusing on areas of strength and we need our partners to step up to the plate too.  We should be well beyond the old NB value proposition of lower costs and lots of available young workers (the value proposition circa 1990).  We now need to be a place (actually many places) where entrepreneurs and companies want to be because there is a broad value proposition for them to be here.