Thursday, June 21, 2007

Self-Sufficiency and Development

The New Brunswick Self-Sufficiency Task Force has reported and produced some interesting conclusions and suggestions. There is, however, good room to be concerned about what this Task Force is actually saying. Self-Sufficiency sounds like a good thing. The Task Force's goal (to find ways to transforming New Brunswick from a "have not" to a "have" province) can't be questioned as a good thing. What is of concern, it seems to me, is the way the Task Force has gone about framing its conception of what the future entails and the route to economic development. Three inter-related issues seem to me important to consider in this regard.

First, the discourse of self-sufficiency sounds both good and reasonable. It has old-fashioned connotations of autonomy: an individual who is able to make their own way in the world and who does not rely on others. This is clearly the way in which the Task Force conceptualized their work but self-sufficiency is not really what they mean. I'll be so bold as to venture an argument with little in the way of supporting evidence but is "self-sufficiency" a good thing? Economic development, it seems to me, in this modern (or post-modern) age is not about self-sufficiency. Its about inter-dependence. Economic development occurs through trade networks and exchange. The simple truth of the matter is that New Brunswick is not self-sufficient, nor should it be. Is there a modern economy that is? Take the US as an example. It is hardly self-sufficient but instead relies on trade with a host of nations around the world. Canada is even more trade dependent than the US. The production of wealth, we learn in intro economics, can occur in a variety of ways but one of the key modern ways is through specialization and trade. It is cheaper for me to make X and you to make Y. So instead of us both making X and Y (and entailing extra cost for so doing), I make a lot of X, you make a lot of Y and we trade with each other and we are both further ahead. If we wanted to be self-sufficient we would both make X and Y. We'd be poorer but we'd be self-sufficient. To create more wealth we specialize and trade. That specialization generates more wealth but that trade makes us dependent on each other. A lack of self-sufficiency (and concomitant dependence) actually succeeds in making each of us better off.

In this sense, the whole discourse of self-sufficiency is misplaced. I'll make another bold statement: self-sufficiency for NB, far from being the route to development would actually cause a contraction of the economy. What we are talking about then is wealth creation (development) and not self-sufficiency. Why am I concerned about this? Is it not just semantics? Perhaps but I think there is something else at work here. I think that the name self-sufficiency precisely because it sounds good disguises what is actually at stake and the recommendations the task force is actually making. If we think about some of their recommendations, they actually have nothing to do with self-sufficiency. They may have something to do with economic development but exactly how the task force is proposing to go about developing the NB economy is disguised by this discourse.

Second, at least in the speech I heard one of the chairs make, the recommendations of the task force are shrouded in an aura of inevitability. Changes are going to happen. Changes are going to happen fast. We have to get aboard the train because it is leaving. Those who miss the train (that is: don't accept the changes that are coming) will be left behind. Discourses of inevitability are problematic in themselves because no one knows what the future holds. By definition, the future is unknown, that is what makes it the future. In this sense, the task force's discourse of inevitability is not just misplaced; it is wrong. But, here is the really wild thing. At the same time that the task force promotes a discourse of inevitability, it tells us that we have to do thing to make this inevitable future happen. This is odd. If something is inevitable, it does not matter what you or I do. It will happen anyway. That is, after all, the definition of inevitability. What is inevitable? Mega-project oil refinery development in Saint John for one example. It is inevitable. It is good? The discourse of inevitability makes that question irrelevant but this is the very problem with the discourse: it does not ask the right question. It asks only what will happen; not what do we want to happen. An oil refinery in Saint John might be good. It might not. I don't know. I haven't studied the issue. To be honest, without having looked at the issue, I have qualms about it. I'd rather think about alternatives fuels and eco-friendly development strategies. But, as I said, I really don't know. What is important, however, is that I should know. Rather than telling us what is inevitable, we should be asking what is good? What do we, New Brunswickers, want? My second problem with the task force, then, is that its discourse frames the development issue incorrectly. And, it upholds this incorrect framework through a contradictory discourse that tells us that the inevitable future is coming so we better make it happen (or, otherwise, I suppose, the inevitable future might not happen). Instead of asking questions about what we want our future to look like, we get told what will happen.

Finally, the task force is enamoured with the idea of foreign capital investment, a matter of wider concern in Canada. Recently, of course, there has been a certain degree of concern about the "hollowing out" of corporate head offices as Canadian companies are bought out with their upper management moving to the US (or, elsewhere). A lead story in the Globe recently suggested that there should not be a lot of concern about this. The task force seems to agree. Foreign capital investment will strengthen the economy, the seem to be saying, so what do we care if the company owner lives in the US or Germany or wherever. As long as we have the jobs and the development occurs, as will be well. Will it?

The first thing we need to recognize in addressing this question is this: no one should have any illusions about the benevolence of Canadian capitalists. Canadian capitalists are capitalists. They are no better or worse than American capitalists. They will make decisions in their best business interests. That is, after all, what capitalists do. We should not expect Canadian capitalists to be any more environmentally friendly than foreign capitalists, or any more favourable to gender equality or any more favourable to workers' rights, etc. It would be naive, I think, to believe that nationalism will win out over business interests.

Even with this in mind, we need to take a clear look at what foreign investment will mean for the economy and the society. Sometimes, people who favour foreign investment like to dismiss concerns about it as just so much lefty political shmuck. I don't buy it because casting aside concerns before an analysis has taken place is a sure route to pre-mature decision making. We should not, of course, get caught up in political rhetoric. Little good is served by casting aspersions at "foreigners" just because they are foreigners (like I said, in my view, they are no better than Canadians). If this is the case, why be concerned about foreign investment? Because (1) foreign investment rests control of the economy outside of it. It is the anti-thesis of self-sufficiency and its not mutual dependency. it's a power relationship. Someone, somewhere else, makes decisions about employment, wage rates, political donations, pollution control, etc. Moreover, because they are somewhere else, they have a trump card to force governments in line: do what we say or we will leave. (2) profits are sent outside the country. Business costs/revenues break down into three categories: labour (the price of workers), rent (the price of resources) and profit (the price of capital). If you have foreign investment in control of your economy a portion of the revenue (profits over costs) is sent away. Wages stay in the province because workers live here and, for the sake of argument, let's assume that rent does too because we'll assume our company uses local resources. Profit, however, goes somewhere else. Some portion of money is sent away. If the company were locally owned, that revenue stays here. If not, it goes elsewhere. The effect of foreign ownership then is to take some portion of money out of the local area and send it somewhere else. That might be "inevitable" but it doesn't strike me as the surest and fastest way to promote development.

Overall, then, the task force has made their report and said some interesting things. I have not gone through the whole report. Google it (NB self-sufficiency) and you can have a look at it. From what I can tell, however, there are problems with significant aspects of what they are saying. All of this, of course, suggests that we need to think differently about economic development. It seems to me that one of the telling things about the task force's discourse is that it is old-fashioned. Its discourse of inevitable-ness, the merits of foreign capitalists, and the pull yourself up by your bootstraps seems more at home in the nineteenth century than the twenty first. Our discourse should be about something else. We should not be thinking about the inevitable development of fossil fuel industries but thinking differently about our economic future. Until we do this, I suspect the goal of development -- of becoming a "have" province -- will go unrealized.

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