Politics & Government /
Development Incentives :
Costs and Benefits
A quick glance
at our provincial government’s web site reveals that the message
we have been sending is “We are open for business”.
We want companies to locate here. We’re
willing to be “flexible” and “supportive” in
order to encourage new business. And
that’s not a bad thing.. unless it reflects a system of misplaced
priorities that places economic development on
a pedestal as a goal unto itself. The goal should be the creation and
maintenance of a society built upon a consensus of values. Economic
development should serve that. I think there is cause for concern that
we have been led towards blindly accepting
that economic growth as measured by traditional yardsticks is
automatically a good thing.
current theory is that the creation of more jobs will benefit all, and
that the way to create more jobs is to entice companies to locate here. The problem is that the
pro-business approach, taken by the
government and blindly accepted by almost everyone, also makes it easy,
and in some cases practical, for
businesses to leave Manitoba at will. It’s
a bit of a conundrum - attract business on the basis of “Positive
business climate” and “ flexible” approaches (Quotes
from Gov’t Web Site) and that same positive climate makes it easy
for them to feel free to do absolutely nothing for Manitoba.
What an irony
it is that at the we always seem to be on our knees begging (not to say
offering gifts and bribes) some call centre company to relocate here so
that it can offer dead-end soul-destroying jobs, so that the government
can pretend that it is helping boost employment, so that we can
continue to condone and support those annoying intrusions and
promotional phone calls; at the same time we are allowing (for one
example) our soft drink and beer producers to create their product out
of province, and then allowing them to use (and destroy) our publicly
funded highways to truck the stuff back here. We’ve
paid them to move away! We’ve encouraged (in the name of free
trade) some businesses (usually union shops with full time real jobs)
actually producing something ) to leave while begging others to move
in. (Call centres, Big Box stores - offering part time work at low
Saul comments that “...economic activity is less a cause than an
effect - of geographic and climatic necessity, family and wider social
structures...” p115 Doubter’s
to explain the poor success rate of new businesses that are the product
of what I would call “artificial innovation”. A
business for business’s sake approach.
What our government has been doing is operating in
the realm of an abstract theory. And
though this particular theory (the same old trickle-down economics) may
be much discredited, Saul’s point would be that all economic
theories are basically useless and can’t work. Even if the
trickle-down theory has any merit it has to be applied in the realm of
the concrete. The businesses created or
supported have to be a natural outgrowth of the people and the place. The effects of the operation of the business
must be in alignment with the goals and shared values of the community
We’re going at it backwards.
We’re trying to foster economic growth in the hope it will
provide wealth, with the understanding that we’ll deal with any
other implications later.
The correct way
would be to decide, starting at the community level, what kind of a
world we want, what standards we would like to see upheld in the areas
of environment, human rights, education, health, and standard of
living, and then look at what we can do to provide them.
Recent government policy - with it’s emphasis
on entrepreneurism, and support for unexamined business speculation -
has been based on a false premise. It seemed to be based on the belief
that entrepreneurs, and existing businesses small or large, need to be
encouraged or enticed to expand or increase their profits.
That we need to encourage them, that they are somehow
timid fledglings at the edge of the nest needing some guidance as they take flight into the
fresh updraft of profit generation.
person or entrepreneur worth having wants to expand, wants to innovate,
wants to create new products and markets,... WANTS TO MAKE MONEY! And
good for them - they are the ones we want. They
don’t need our corporate welfare and cozy deals. They don’t
need to be mollycoddled either. We do need
the private sector, and we need a system that encourages and takes
advantage of the private sector. But we also need a government that
takes a look at what we want as a society and then sets the rules -
rules that allow the private sector to make a justly deserved profit
(not an easy one, not an automatic profit, not an exploitive profit),
and rules that allow for a lifestyle we want on our communities.
that’s not what’s been happening.
Many years ago the city of Brandon went to its knees to bring the Maple
Leaf Hog Plant to Brandon. We hopped into bed with them and turned a
blind eye to as they busted the union in another location and promised
to be good corporate citizens here. (I did beat my last wife honey, but
I would never do it to you ... promise...). After
signing the deal, the implications surface. Is
the waste treatment ready to go? Will the hog prices take a dive? What
will it cost to provide services to the new population? Are our streets
and roads adequate for the increased transportation?
I’m not convinced that all the necessary and
appropriate questions were asked.
We need to
examine the complete balance sheet. Yes a
certain number of jobs are created, that’s good. Yes the company
pays taxes (if we don’t bargain all that away). Yes some people
will move to Brandon and perhaps that’s also good. The questions
is what are the costs? More people means the city will be required more
services - education, health, street repairs, and above all - hopefully
sewage treatment so that the nice folks downstream don’t have to
pay for our good fortune.
all that it may still be a good deal to have the economic growth the
hog plant will provide. But as soon as we bend over backwards to make
it easy for such a company to move in we’ve sown the seeds that
make it just as easy for them to move out. Because
we should only want new development if it comes because this is a
viable place for the enterprise and if an enduring balance can be
struck between the owner’s need for a profit and our
community’s standards. If we have to
turn around in five years and say, “Oops, sorry but the wages
you’re paying have created a situation whereby the increased
social services we’ve had to provide for the influx of workers
hasn’t been counterbalanced by the taxes received.”
Or - “Oops, Sorry but we need to have
you spend a whole bunch more money to meet environmental standards.
“ then, they’ll be gone like a shot - because there will
always be some community desperate enough to accept them.
What has been happening is that in
making our development decisions we have not been doing a complete
cost-benefit analysis. Admittedly, real
cost-benefit analysis is a difficult task and imprecise at best. But we
should at least be making the effort. Instead we are accepting new
development based on the ideology that all growth is automatically
Investors, speculators, and
owners of businesses that might benefit from contracts to build and
supply materials for both the construction, maintenance and operation
of a hog plant, a call centre, or any other new business certainly
expect to benefit. And so they should, and more power to them if they
do. But what bothers me is that they would like to pretend that I as a
citizen am going to share in this benefit.
It’s all about expanding the tax base I’m told. So the
taxes have gone down … right?
Okay, so we
shouldn't expect something crazy like that – but they’ve
gone up at a slower rate than otherwise? Right.
question which community will have the higher taxes – city or
question: Is that what we mean when we say bigger is better?
also about jobs.
It is pretty obvious
that in Brandon, Maple Leaf has created jobs that no one wanted very
badly. The work is unpleasant. In the
not-too-distant past a meat packing plant solved that problem by paying
good wages. Today our strategy is to import foreign workers. I love the
fact that the foreign workers have given Brandon a more multi-cultural
feel, but our schools, health care and other services have felt the
It’s always amusing when
a business leader proclaims that “we’re in the business of
creating jobs”. What rubbish.
They are in the business of making a profit - if they’re not
I’d have no respect for them. Businesses should not be
bragging about creating occupations which pay far below any reasonable
The purpose of
enterprise is the generation of wealth for owners and indeed much of
that has incidentally been beneficial for the country. But don’t
tell me you’re doing it for me! I
don’t expect to benefit from your investment of time and energy.
All I want is to make sure that your efforts don’t harm me in
some way. And for that I’d like to depend on government to set
rules that ensure that new development is of the sort that does enhance
my community rather than detract from it.
What then is the proper role of government?
The movement to
save our rural areas
through “entrpreneurship and supported development. (Is this any
different than the “boosterism” that existed at the turn of
Eg. The New
“Boosterism” : How the new
spirit of entrpreneurship will save our Rural Paradise - and persuade
people to move to “Hog Barn Heaven.”
a third based on an examination of the
government’s emphasis on attracting business. The
theory being that the creation of more jobs will
benefit all, and that the way to create more jobs is to entice
companies to locate here. The problem
being that the pro-business approach, taken by the government and blindly accepted
by almost everyone, also makes it easy and in some cases practical for
businesses to leave Manitoba at will.
Sinclair Lewis explored it in “Babbitt”. James Friessen
makes mention of it in his history of the Prairies, Maggie Siggins
examines some of it’s consequences in “Revenge of the
Land”. It was the tendency of the business elite of small towns
and aspiring cities to get everyone to buy in to the “growth, All
Growth, and Any Growth is good” philosophy. Perhaps
it was a necessary optimism generator in the birthing process of our
modern rural society. Perhaps it did more harm than good, that’s
hard to measure.
Well, it’s back in a new set of
clothes. And it now seems to be government policy (or rather it takes
the place of government action.) Now it’s called, Rural
Development, Entrpreneurship, Rural Futures, .. whatever.
For nearly a decade we’ve been bomdarded with
so much propaganda about the new world order, global marketplaces, the
“New Entrepreneurship”, that we’ve come to accept
without question that it’s the road to salvation. What
we need to do about unemployment, about poverty,
about rural depopulation, about .. anything is FIX
IT OURSELVES! No better yet - lend every
possible type of freedom and support to entrepreneurs and it will FIX
ITSELF. Instead of spending money on heath, education and those
pernicious welfare handouts, spend it on government programs to
encourage people to.. make money?
“Entrepreneurship” courses started appearing in high
schools we should have started to clue in.
Some important questions need to be asked before we accept this new
this coming from?
Who stands to benefit the most?
What is the motivation?
And even before that, we have to ask.. is there a
problem at all?
The problem we hear
about is rural depopulation. The
population in some parts of rural Manitoba is declining - there is a
rural to urban shift taking place. Shocking statistics are passed
around, out of every 10 high school graduates only two are staying in
their home communities, small school are being closed, rural elevators,
that other lynchpin of the prairie town are disappearing and curling
clubs are having trouble scaring up enough members for a decent 4 event
I’ve been hearing this
for decades. Lets look at the main point - rural depopulation.
First - these people aren’t
disappearing off of the face of the earth, they’re not dead or
dying, they’re not languishing in some urban purgatory
- they just decided to MOVE AWAY! And
usually if not always ... BECAUSE THEY WANTED TO!
Lets take Child A.
He wants to be a television reporter. He takes
the course and passes with flying colors, he’s good at it.
Guess what there are no TV Stations in his old
home town. What to do? Can’t really see the sense in moving the
TV station so maybe he’ll be the one to move. He knew that going
The Changing Face of Rural Manitoba
Rural depopulation has been a hot
topic in the coffee shops, beer parlours, town council meetings, and
school staff rooms of western Manitoba for decades, but the real change
in the prairie breadbasket is just beginning to take effect. The closure of many rural schools, the abandonement of prairie rail lines and
grain elevators, the cutbacks in postal
“re-organization” of health services have all been noted
and examined. Much has been said and
written about them, but the cumulative effect of these decades of
changes is just beginning to make a real difference that is visible and
unmistakable even at a glance.
drive, south from Brandon, on Highway #10 at about eight in the
morning. If there is a real trend to rural depopulation you
wouldn’t know it from the traffic on this stretch of two-lane
blacktop. If there is no one down on the farm, maybe it’s because
they are all on this road!
Well that’s partly true.
They are all heading into Brandon: many to work, some for
medical, legal, or business appointments, and some to just shop. They are caught in an economic Catch-22. There are not adequate services, goods, and
jobs in their home towns so they make regular trips to Brandon. Or...
because they make regular trips to Brandon it’s not profitable
for local businesses in their home town to provide services, goods,
The small town Chambers of
Commerce and the municipal and village councils have been grappling
with the problem with varying degrees of success since the sixties.
at Home” promotions were common. The most recent of which has
local banks offering interest free loans for Christmas shopping - on
the condition that you spend it locally.
twist is the attempt to lure not only business, but inhabitants. In the
late 1980’s the village of Rossburn advertised in Toronto papers
and attracted some permanent residents. As of Jan 99 their Internet
Home Page contained two telling items : “Wanted
Resident Dentist” and “Commercial Property For Sale :
Incentives may be available.”
Other towns tried selling building lots for $1, on
the condition that you built a home a resided there.
And some of these promotions worked. After all there are
some real benefits to small town life in Manitoba. You can sell your
expensive city home and buy a comparable one for a low as half the
amount. If you don’t need the city
for your livelihood, if you are retired, able to telecommute or
self-employed in an industry with low transportation overhead, lower
housing costs can mean an enhanced lifestyle. Additional benefits
include intangibles like a lower crime rate and a sense of community.
And despite the size, some services are easier to access.
As rural centres stand on the brink of
a possible revitalization they are shooting themselves in the foot by
being lured into environmentally unsound agricultural expansion in the
form of large hog barns, giant grain terminals, both of which have
impacts that have not been carefully considered.
What do you do when a hog barn moves in next door? Eg. Diane and
Gary G / Sheryy
What effect will increased grain
hauling distances have on prairie roads?
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