Archive for the ‘economics’ Category

Chin Up!
January 29, 2016

This column was first published in the January 2016 All Month edition of the Friday AM.

The single most important economic drivers are confidence and certainty. When confidence is low and uncertainty is high, we don’t have a very good view of the economy. The reverse is equally true.

Sad stories and bad stories drive readers to newspapers, and viewers to television and browsers online. It seems we’re hard wired to consume cautionary tales.

This reminds me of an unfortunate but nevertheless true comment about US local television news I remember from the early eighties: “Watch Buffalo burn down on Channel Four”. Many supper time broadcasts began with reports of yet another building fire. Police and Fire Departments were at a loss to explain the frequency. After studying the sad state of affairs, it was determined that pyromaniacs were triggered by TV coverage of buildings engulfed in flames. The fire-starting behaviour was reduced when the coverage was changed: no flames on TV equalled fewer fires, so the story goes.

In some ways, we’re now watching a full blown economic fire on our shared media; TV, radio, print and web. And it’s feeding the worst in us: will our house be next to burn?

I want to suggest that what we really need to do is embrace confidence and certainty. Yes. The dollar is low and oil is cheap. And that’s not likely to change anytime soon. But, on the other hand, the dollar is low and oil is cheap. See what I did there?

The low dollar means we can sell more into the US, our largest trading partner. It also means their economy is on the upswing and they can spend more buying from us, be it commodities, professional services, or manufactured goods. Cheap oil means transportation will, eventually, get less expensive. It takes time for that price change to work its way through the system, but it will.

The low dollar means US visitors suddenly have Canada on their vacation list again and that’s good for the Shuswap. So if you’re in that business, be sure to target our Pacific neighbours on your Facebook campaigns. That’s easier too. Even ten years ago, marketing campaigns targeted to US customers would have been complicated and expensive. That is no longer the case. Thank you social media.

As for Canadian visitors, we’re likely staying closer to home. Consider upgrading your board shorts and bikinis to snowboards and skis come March break. And join in the best snow our ski hills have seen in years. Don’t discount the value of a great staycation either. We’re not exactly hard done by in terms of landscape and leisure.

Finally, and this is probably the part that inspires me most, cauliflower is really expensive. This excites me for the growing season ahead. We are fortunate to live in such a bountiful agrihood. With so many producers – fruit, vegetable, livestock, dairy, and grain – our producers are basically guaranteed a good year assuming weather conditions cooperate. That’s good for our micro-economy. I can live without cauliflower for a little while (well, truth be told, a long while) because I know that soon, our farmers will be planting and I have complete confidence in their ability to deliver. I might even try my hand at a decent garden myself. But that’s for another column.

So chin up Salmon Arm. Wether your glass is half full or half empty, you can still douse the flames. The glass is refillable and we’ve got plenty of water.

In you, I am, most certainly confident.

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Counting on a Merry Christmas
December 11, 2015

This column first appeared in the December All Month edition of the Salmon Arm Friday AM

Christmas came early for me this year with the new government’s first announcement that the mandatory long form census would be restored. Sometimes the best presents are the most difficult to wrap. Numbers – good, properly collected ones – are important because, like words, they tell compelling stories and make better decisions.

I invite you to spend some time with your friendly neighbourhood statistics at statcan.gc.ca. Simply enter Salmon Arm in the search box on the top right hand corner and, voila, our numerical story unfolds.

We are relatively older than the provincial and national averages. At the last census, the median age in Salmon was 48 while the national average was 40. Some cities in Canada are 10 years younger than the national average. It’s important to know this because, just like people, no two cities are alike. Often times, a provincial or national “one size fits all” policy decision does not fit all at all. Which is why good representation from MPs, MLAs and municipal councillors is so important, especially in smaller communities.

Not all of the demographic cohort grow at the same rate. For instance, from 2006 to 2011, the population growth in the 65+ category grew by 16.6 percent while Salmon Arm overall grew at 9.1 percent.

We earn slightly less than the provincial average but our housing costs are significantly lower.
The median after-tax income of economic families in Salmon Arm in 2010 was $57,223 (British Columbia of $67,915) But our average monthly shelter costs are 76% of the provincial average.

Most of us live in single family dwellings and the median value is $349,000. When you compare this to the average $667,000 home price in British Columbia in 2015, up almost 100,000 since 2014, you can see the early conditions under which young families with some labour mobility from the Lower Mainland might consider a move to Salmon Arm thus giving us the opportunity to lower our median age which is important for long term future planning.

Given our older demographic, it might not surprise you that many of us drive ourselves to work. Some of us walk. Few of us take the bus or ride our bike. Active transportation is an area in need of improvement and is an attractive quality to newcomers. In fact, if you look up a real estate listing in the area, you might note the “walk score” of the property in question. Building trails, connecting neighbourhood and enhancing a community’s health adds value to our properties and indeed to our lifestyles.

Of course you’ll remember that the Christmas story also had to do with a long walk and a census. Mary and Joseph travelled on foot (mostly) to Bethlehem to be counted, after all.

Perhaps Christmas is a reminder that we all need to stand up and be counted; for what we believe in, for what we care about, for what we contribute and this Christmas especially, for the newcomers (from near and far) who will soon settle here and be counted among us.

Merry Christmas.

I elect to challenge assumptions
October 2, 2015

This column first appeared in the October All Month edition of the Friday AM in Salmon Arm, BC
 
A federal election is a most excellent opportunity to challenge assumptions. Our news feeds are filled with promises, statements, attacks and assumptions that need to be challenged. The future of our communities and our country depend upon our ability to rationalize all that is put forward in exchange for our precious vote. 
 
My take so far:
 
1) A long election campaign is worthwhile giving Canadians more time to decide.
 
Not so fast. A long election campaign means that the Caretaker’s Convention is in place for the Federal Public Service. No decision that shall lock in the future government to a course of action can be implemented. Seventy-eight days of fewer decisions has a direct impact on the business of running a country, running provinces, and running municipalities. We’re sidelined to some extent during such a long campaign. It’s my view that this unilateral decision is one for which we all pay in the short and long term. Plus, I think we could have done it just as well in 40 days. 
 
2) A failing economy is the fault of government. 
 
That’s false as far as I’m concerned. We compete on a global scale. The price of oil is controlled by those who have the easiest and quickest access to the resource. Our oil takes more time to get out of the ground and to market. The industry knows this, and that has had the greatest impact on the downturn in the Canadian oil industry.
 
It does point to the need for innovation, automation and specialization. Government can foster a climate that motivates business to change. But the change is ultimately up to the market to implement. We are leaders in science, engineering, international development, non-profit management, and resource management but we have to show the next generation that we believe in them by giving them what they need to succeed as early on as possible through education and infrastructure. But there is risk involved. 
 
3) A low tax environment will create jobs.
 
False as of late. Prior to 2008, that statement may have been the case. As it is now, we live in an ultra-low interest rate environment combined with a low-risk business environment. Yet money isn’t moving at the rate it once did. Money is like water: if it doesn’t flow, growth slows. There is, by some estimates, 650 billion dollars of dead money sitting in corporate bank accounts because the appetite for risk is not what it once was.  Unspent money can be expensive, as it turns out. 
 
Ninety percent of the Canadian economy is small business. It’s more difficult to access credit despite record low rates. When the largest share of the market has more difficulty accessing capital, the whole model falls apart. It’s my view that there is a direct correlation between access to credit and economic growth. If you don’t believe me, ask your small business owner friends about their relationships with their banks and multi-national suppliers. If we protect cash at the expense of reasonable risk, we slow things down. Cue the second quarter of 2015 of the Canadian economy. 
 
4) Cuts are bad. Surpluses are good.
 
Again, false. We need to stop talking about cuts for the purpose of surpluses. We need, instead, to talk about productivity. Something as Canadians, according to the OECD (Organization for Economic Cooperation and Development), we sorely lack. Some things need to be cut as public dollars need to be spent as efficiently as possible. And a surplus is just another way of saying that government took more than it needed. If a federal surplus goes directly to pay down debt after all the needs are met or to fund reserves for future public projects, then it’s worth it. But it has to be part of the plan in the first place. 
 
5) Canadians don’t understand the complexities of economics.
 
False. We are all economists. Economics is the business of managing households. We make economic decisions—powerful ones—every day. We are the most powerful economists in the system. How you spend your household budgets, what you buy, what you save and where you invest has far more impact on the economy than what any party of any stripe might have you believe. With personal debt levels at record highs, we likely know more than government about the real balancing act that is household management—or economics. 
 
6) Your vote doesn’t matter.
 
False. It always matters. But we like to vote for the “winner” and if we aren’t sure, we don’t vote (that’s just a theory). Running an election for the sake of defining a single winner is only of benefit to the winning party. But all parties represent some risk and some benefit. I don’t believe in the all or nothing approach. I don’t believe we can afford to take that view any longer. 
 
Which leads me to may last point. Please cast your vote for the local representative that you believe will best represent and engage us as an innovative, caring, contributing, and capable community. Some will tell you to vote for the conductor of the orchestra. My preference is that we elect good musicians who are in tune with the rest of us. 

Out on a Limb
September 8, 2015

This column first appeared in the September edition of the All Month Friday AM in Salmon Arm

I’m going to go out on a limb here (pun intended) and suggest that in Salmon Arm, we live in an urban forest.

What distinguishes us from many other communities is the tree canopy that surrounds and protects us. It’s as though the town was conveniently placed at the base of a natural forested amphitheatre from Bastion Mountain to the north, to Fly Hills to the east, Mount Ida to the south and Larch Hills to the east.

Trees are marvels of engineering. From roots, to trunk, bark, limbs and leaves, they reach towering heights in search of light and water to grow. They provide oxygen, act as nature’s air filters, air conditioners and shade from the sun. They dampen noise, nurture the soil and prevent erosion.

Our forest sustains us in many ways. And, as life would have it, sometimes we only appreciate what we have after it’s gone. I refer of course to the the catastrophic loss of reportedly 1,500 trees in Vancouver alone this past weekend during a violent storm on the coast.

In addition to their contribution in their lifetime, they also sustain us when harvested as building materials and, in turn, ensure major employment. Salmon Arm’s largest private employer is Canoe Forest Products. They harvest trees and manage forests. In BC, two trees are planted for every tree cut.

When a tree falls in the forest (maybe you’ve heard), they go on to provide habitat and valuable nutrients for the next generation of trees. When trees fail in urban environment, they need our help. Sometimes we have to move them away, trim them up, treat them for disease or replace them altogether. And given all they contribute, I suggest it makes good business sense.

Speaking of good sense, an emerging field of study called biomimcry addresses the ingenious attributes of nature. Engineers, scientists and businesses tasked with solving complex problems are more often turning to nature for sustainable solutions. From fish scales (that prevent bacterial build up) to coral (which captures carbon and uses it to build shell) to flowers petals (which repel dust and dirt), we have many lessons to learn from the nature that surrounds us. But that’s just a secondary job, the first priority is to contribute to a healthy environment where nothing is wasted (we could learn that lesson too).

Some communities in Canada boast about the economic advantage of their tree canopy. Oakville, aptly named, is a champion in this regard. Oakville is a community approximately 50 kilometres from Toronto on beautiful Lake Ontario. During the Federation of Canadian Municipalities conference I attended with Mayor Cooper in Edmonton in June, I went to a workshop hosted by Trees Canada. The Mayor of Oakville outlined the direct correlation between their city’s urban forest policy, the health of the population, their relatively higher family household income and their ability to attract high-paying employers. It was a compelling argument; one that was not lost on me as I drove home from urban Edmonton to my rural neighbourhood of mature trees in Canoe.

Trees work hard to sustain their forest and in turn, sustain us. Might I suggest that a simple take away when faced with a problem within our own environment is to consider the question “what would nature do?”.

“When nature has work to be done, she creates a genius to do it.”
-Ralph Waldo Emerson

The Age of Extraction
August 6, 2014

This column first appeared in the August 2014 All Month Edition of the Friday AM in Salmon Arm, BC

In the last decade, Canada has spent most of its time focussed on fixing its economy rather than strengthening its society. 
 
As a result, in my view, we now stare down the barrel of  income disparity like it’s a new danger. It’s not new. It’s just made worse by what’s happened to our economy these last ten years. And while income disparity will always be global as corporate forces search endlessly for cheaper labour and greater shareholder value, now it’s noticeably regional and local as well. 
 
How many of you are separated three weeks out of a month so dad can work away and earn the money in the patch? That sacrifice allows the extra money to fuel the economy with home renovations, new trucks and trips away. Income disparity also means that working and living in the same place is a luxury few of us can afford not just in third world countries but in small Canadian rural communities as well.  Ironically, our stronger economy is also leading to a weaker society. We can’t be there for one another as much as we once were. We’re too busy making money. 
There is a difference between money and wealth. The economy is focussed on money. Society is focussed on wealth. We build a society’s wealth with money from the economy if we use it right. Income disparity tells me that we aren’t using it right. We’ve elected a steady stream of leaders – Harper, Clark, Ford – who promise us more money, rather than more wealth. 
History reminds us that Canada has always been a resource economy. Wood and water once upon a time. Oil and gas now. And, as a society, we’ve always handsomely rewarded those who were prepared to take that risk with money. But in turn, once upon a time, they built wealth – wether it was a foundation, a museum, a hospital, a university or a city park – their riches created wealth. I’m not sure that’s so much the case today. 
Do the rich have an obligation to create wealth rather than just spend money? In the Age of Enlightenment, this was called “noblesse oblige” – the obligation of the nobility to create wealth. Maybe we will call this century the Age of Extraction where we’ll remember all the oil, gas and money we extracted from the economy at the cost of a society of well-being. 
 
It’s not enough to just make money and trust the government to spend the tax revenue appropriately. It starts at the ballot box and it continues at city council meetings and volunteer efforts with community groups. We all have a role to play. If we stand back and complain governments aren’t doing a good job, yet make no personal commitment to the decision-making process, we are the problem. Ironically, some leaders would prefer this laissez-faire approach as 100% of us pay taxes and fewer than 50% of us bother to vote. No wonder the balance is off. 
It’s my suspicion that Steven Harper longs to be the King of the Canadian economy rather than the Canadian society. He thinks it’s his golden ticket to perpetual power. I hear he is a military history buff too. I hope he remembers the fate of those who proceeded him so many centuries ago.
In the 1600s, the conquest of the new world garnered Spain a massive fortune. In fact, they were the richest country in the world but the King of Spain insisted on hoarding all the gold for the rich which led to the entire country’s demise. They’ve yet to recover. In the 1700s, the King of France lost his head because of the price of bread. The price of bread is heavily regulated to this day in France. Seems they learned that lesson, at least. Complex dysfunction can manifest itself in very simple ways. 
No doubt, economics is integral to a society’s well being and worthy of our significant attention. Trouble is, sometimes we get it wrong like Spain and France once did. And when it goes wrong, it goes terribly, terribly wrong and everybody pays. I don’t know about you, but I’m tired of paying for those mistakes. Sure we need money but we mostly need wealth. You cannot isolate one from the other. And if you do, you could lose your crown, your country and possibly your head. Are you listening King Stephen?