Friday, April 10, 2009

Dr. Phil’s Formula for Economic Recovery

Renovate houses.

That's basically it. And build some other things, like a few roads. Never mind that property values in Canada are falling as fast as Conservative poll numbers.

In his maiden speech in Parliament, Phil meandered on about his years spent working in construction, and how every Canadian wants a bigger house. Then he proclaimed the virtues of a new construction tax credit, and infrastructure investment. You could almost see the gears slowly turning in his head:
  1. I like construction!
  2. But housing sales are falling…
  3. People can renovate their houses instead!!
Since then, Phil has been rushing around to get Brantfordians building. He went to Brantford city council and told them to 'pick an infrastructure project, any infrastructure project.' Then he did the same thing in Paris. He announced funding toward a new ice arena. He let us know that he's been having lots and lots of meetings with Infrastructure Minister John Baird (who must be pretty darn patient to put up with all Phil's pestering).

All of this is good news for Brantford. But if it stops there – and it does – it is not nearly enough.

In his Parliamentary speech, Phil noted a similar initiative in the early 1990s that kept workers working. It is true that in the recession of the 1980s/90s there was a lot of federal money coming into Brant projects – that's how we built the rail trail, for example. But it was a band-aid solution: Brantford continued to deteriorate throughout the '90s, the downtown crumbled, unemployment stayed high. Why? Because at the end of the day, when the federal money dried up, the workers had the same unmarketable skill-set, and the same reliance on heavy industry that continues to leave town.

What we need to do is invest in retraining our workers with marketable skills, not just keeping them busy for a little while. Invest in people, not just in edifices. We need a government that will invest in sustainable, long-term solutions, such as wind and solar energy manufacturing, and building more hybrid/electric autos. The Conservatives' unimaginative economic plan, on the other hand, says, "Here's a hammer, get to work until the money runs out again."

Brantford is less-educated and poorer than average. This is a huge turnoff for investors choosing where to place their money, and renovating houses isn't going to change this. Let us remember that the single greatest factor for downtown Brantford's turnaround was the construction of a university campus in 1998. That's the type of forward-thinking investment that's needed, in addition to building houses and roads.

In a weary voice, a downtown businessowner once told me, "Brantford's always been a day late and a buck short." That, in as many words, perfectly describes the economic plan of Phil McColeman and the Conservatives.


Anonymous said...


What exactly are 'marketable skills'?

Building wind and solar infrastructure is a fantastic idea when deployed properly. For better or for worse we are blessed with the geography of the Grand River valley. This terrain does not lend itself to solar nor wind power generation. Why would a cluster of hot renewable energy startups decide to position themselves in Brant County? The best we can hope for is attracting heavy industry, again, in the form of turbine component manufacturing. Without the required testing conditions no company will set up R&D facilities.

One thing just about everyone can agree on is the generally dismal state of the auto industry. There is an industry contraction occurring in America as we speak, one that will likely never see the number of cars per 100 people ever reach the number it did in 2007. Southwestern Ontario should learn its lesson now. Hybrid cars are more expensive to design and manufacture and use inefficient batteries that are an environmental disaster once the fuel has been spent. Even with these perceived advantages, they are still counted in the same shrinking market as my six cylinder 240 HP SUV. This is not an industry to be investing our hard earned tax dollars in.

Engineering? Surveying? Carpentry? It may interest the academic types responsible for this blog that building an arena, housing development or any other edifice requires skills that the average industrial worker does not possess and never will, unless they get training in these areas. Picking up a hammer would probably do a lot of good for most of the younger generation that is seeing recession for the first time. Try it sometime, boys, and you might understand how hard work and ingenuity builds economies back up after a fall.

Sorry, your anti-infrastrucure logic just doesn't pass the sniff test. It truly stinks.

~~Mike A>

fordian said...

Hi Mike, good to see you're back and thanks for your comment. I will respond with an equally long comment.

I fear that you missed the point of my argument. It was not "infrastructure spending is bad," rather that if we ONLY invest in infrastructure it's not enough.

You point out that building an arena requires skills that the average labourer might not have. But I argue, how will they get those skills if we do not train them? Perhaps that is why the firm that won the design and planning of the Twin Pads arena is from Toronto.

It also might interest you to note that while hybrid sales fell 10% last year, the sales of Hummers fell a whopping 51%. This recession will not last forever, so let's lay the right type of auto infrastructure for when it ends and people start buying cars again (i.e. don't keep building SUVs when the Japanese and Koreans are killing us with efficient sedans). The fact that alternative forms of energy are still inefficient means that they are still in a learning curve stage; this is a natural stage of any technological development, where often the people who act first come up on top financially (the classic example is Silicon Valley).

To sit around waiting for big industry to come back is foolish. Whether it's a tractor manufacturer in Brantford, a paper mill in Crofton, B.C., or a metallurgical industry in Sorel-Tracy, Québec, it's gone and it's not coming back. For every factory that does come to town, two leave. In today's globalized world, for a growing number of products, it's cheaper to manufacture overseas and import. This is just life. It sucks for a great many people, but it's life. We must adapt, move forward, and help along the people who are hurt by the changes.

Alternatively, to keep putting government money into heavy industry located locally is a waste that leads to inefficiency, because the industry depends on the government handouts to stay afloat. It highly distorts the market. This is, incidentally, a major argument against the inutility of socialism after the example of Soviet Russia (of which I assume you are not a fan, Mr. Annable).

What are "marketable skills" you ask? Well, education in science and engineering, for one. Or how about teaching workers skills specific to specialized manufacturing processes – this is how Germany has maintained its superiority in manufacturing complex machinery. Knowledge of computer systems and design is clearly going to be "marketable" in the future. Following Richard Florida, regions with higher levels of arts and culture also exhibit more innovation.

Essentially, I am arguing that if the government invests in human capital, then the free market will invest in projects (there are many variations on this economic theory, but they all essentially revolve around this basic idea).

Finally, it might do you some good to get off your "working-man high horse" and accept that most academics work as hard as the average labourer. How do I know? Because both of the authors of this blog have worked in factories and other labour-intensive jobs. In fact, in just a couple of weeks I am going to return to doing forestry work in a bush camp in northern B.C. for the rest of the summer. The authors of this blog have picked up a hammer before, with the same work ethic as going to the library to spend ten hours pounding the books.

Again, keep the comments coming. It's important to get all the sides of an argument.


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