In her famous book "Cities and the Wealth of Nations", adopted Canadian economic heroine Jane Jacobs identified a very effective economic development approach. She coined the phrase "Import Replacement", to differentiate it from the term Import Substitution, a policy followed somewhat blindly by many Latin American countries and India in the 60's.
Essentially, and simply, the concept revolves around the logic that your local economy would benefit most by developing an ability to manufacture a thing, or deliver a service, that it was currently sending the fruit of its own efforts to another economy to acquire.
Jacobs was also a proponent of the idea of the power of distributed energy in the form of organically evolving small enterprises. Those that were viable, necessary, and still efficient at a scale that matched their community. If she were alive in Halifax today, I'm pretty sure she would not go near a Walmart, and would be a fixture at the farmers markets. And it's also fair to say she'd not be a proponent of government meddling in the economy through grants, forgivable loans, and subsidies. She'd want a business to grow deep roots without artificial props, so that it could survive hard times. Trees and parachutes look a lot alike until the parachute hits the ground.
Jane Jacobs' idea for urban design generally followed the same model - a preference for smaller, tightly woven neighbourhoods that were almost self sufficient, comprising larger communities, that were stronger, and ultimately binding together to form the larger city state that drove its own economy.
It is fair to say, I think, that many of our more liberal, and certainly many of our socialist leaning political types have accepted much of what Jacobs stood for as a path worth pursuing in developing new policies for community and economic development. Certainly, the buy local theme has been more and more prevalent in almost all we do of late.
To my engineer's mind, the logic behind import replacement is straightforward, one only need to take an example like beer, something else I know a bit about. When one of my local microbreweries makes a beer, it imports grain (though local options exist and are growing), hops (same as with the grain), and a small amount of yeast. (Indeed, there are a few beers made here every now and then that use ingredients that all come from the Maritimes - this move is growing.) One bottle of beer made on Gottingen Street takes a lot more labour to make than a same size bottle from the Molsons Brewery in Moncton.
The people who work at the Micro, all of them, live here, work here, and play here. Molson's has some employees in Moncton, but they are a tiny speck on a global map of operations. Yes, there are jobs in Moncton at that brewery, but there will be a lot more jobs per bottle at my local micro, and Molson's HQ is not in Moncton. The beers cost about the same, and if I were to develop a $/taste scale, the micro would win easily.
But the profit? Well, 100% of the micro's profit stays right in my Province, in my neighbourhood. The Molson profit? Well, that depends on how many people here own shares in it. Mostly, it's gone out of our economy. So when you buy a Propeller, a Tanner Brewing Co., a Saltbox, or a Shipwright, you really are practicing import replacement of a sort. And when you buy an apple from the Valley, instead of California Washington or Oregon, you are really practicing it.
The benefits of keeping our money in our economy seem to be obvious. There is more money to go around because more stays here. Our quality of life can increase.
But this is about goods. What about services? I argue that services, such as the engineering I've been providing to people, companies and government for 30 years, are an incredibly important part of our economy. In fact the services industry, once the glue that held things together, is becoming more the concrete walls that support it. It's a true renewable resource - ideas and designs are renewable, reusable, and yes, recyclable. One thing we have proven we can make here in Nova Scotia is people. People with good brains. Of course our problem is that many of them have gone away and grown the economies of Ontario and Alberta instead of ours.
Two announcements made by our ostensibly socialist leaning NDP government a few years ago demonstrated why government should refrain from meddling in the affairs of a competitive market, and that it really needs to learn what it's priorities should be when it does do anything. In these cases they got two different things completely back-assward.
In one news item, we heard that our hard earned tax dollars are going to subsidize the staffing costs of a big Alberta Engineering company to enlarge its office in Halifax. Its been here for a while, competing with locally owned business, and other branch offices, for oil field related work, local work, and actually doing work for the mothership back home. They then started recruiting, now that they had my tax money to afford to be able to hire away my employees. As someone who has helped build a small business and created jobs with no help, here in Nova Scotia, that was somewhat irritating.
If they can't justify being here without the subsidies, they should not be here. And if they can, why are we giving them money?
This runs the risk of making the companies that were already here unviable. It takes profit out of our economy and sends it west. Whose idea was this? Are we now going to offer the same subsidies to every other firm in the Province in order to maintain a level playing field? What is government doing in this industry, screwing up the nature of its competitiveness?
It might be justifiable for a government to practice a buy local policy for its own service needs, but the reality is that in NS now, about 90% of all engineering services purchased by the government are provided by companies that are not owned by Nova Scotians and not headquartered in Nova Scotia. And that is partly because government purchasing policies are directed almost exclusively to cater to larger firms. The large firms are, with one exception, all "foreign" owned. Our first job for the NS Government cost us more in insurance costs to qualify than the fee for doing the work. This is the type of barrier to small, locally owned companies that the Provincial bureaucrats who created purchasing policy apparently cannot comprehend. I call it their "Buy Loco" policy.
The second news item was about the potential contracting out of IT services by the Provincial Government. Perhaps someone made a business case for this work being done in India or wherever people work for 10 cents an hour, I don't know, and perhaps it might save money. When things are working. But what happens when they don't (something will go wrong, that's for certain)? Our sensitive government records, stuff we really should be protecting and holding close to our collective chest are going to be under the control of a foreign owned multinational corporation? Now I REALLY trust all of those guys, don't you?
So how much are we saving for this loss of control? Is it really worth it? And how much of what we now spend on the care and control of this data stays in NS after the changeover?
There are some things that should never be privatized. I can't remember who told me this, but there is the "Library Test". You cannot privatize a library. If you do, it becomes a bookstore. Every time you consider privatizing something now provided by government, you need to think - is this like a library? Now we are going to privatize our governmental information management systems? My question is, who's buying?
Please note - I am not saying that nothing currently done by civil servants can't ever be done by private sector contract. I am asking whether there are certain things best left alone, and suggesting that perhaps this is one of them. I am also questioning where the money to do it ends up.
These cases both have one thing in common. Instead of conforming to Jane Jacobs' ideas about strengthening our economy through Import Replacement, they actually do the exact opposite. And perhaps it's not for certain, but they most definitely risk doing the opposite to our economy as well.
Back then, the NDP went 0 for 2 today, in a big way. They were like 16 year old high schoolers desperately trying to look old enough to get into a bar when they've already had too much to drink. With the next election, we told them to take their fake ID's and go back to school. They didn't really know what they were doing. Maybe next time, if there is one, they will have learned, here in our Culture of NO.
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