The Phillips Report: Gambling On Our Economic Future

When the issue of having a casino in Peterborough comes up in casual conversation, the most common reactions are usually physical, not verbal. Either people's eyes roll or their shoulders shrug. Most often, people are against it or ambivalent to it. Rarely does anyone engage the idea with a sense of excitement or express how important a casino would be for the future of the City.

Those who do articulate their support first argue that it creates jobs and that it is a way to attract more tourists. Both arguments have some merit. Those who are against it see it as having potentially serious social consequences, such as those who will develop a gambling "addiction." This position has some merit, too. There are, however, some facts that need to be considered when considering the reality of a casino.

First, collectively, the patrons of a casino always leave the casino with less money in their pockets than they had when they walked in. "The House" always gets its' cut, which is substantial, and is used to create the jobs at the casino. 

The second fact, that most people choose to ignore, is that what determines the difference between the money one has in their pocket when they enter the casino versus the money they have in their pocket when they leave it is determined by chance—luck—not their natural good fortune or fate. 

The third fact is that there is a considerable financial investment that needs to be made to create a casino.  This is rarely mentioned in casual conversation. It would be interesting to know if people think that this investment could be better used more effectively in creating jobs and economic opportunity in the City.

Finally, and is most concerning, is that most people believe that the only source of economic growth comes into the community from outside it. The casino is coming to us, not being created by us. In effect, there is a general view that our economic development is up to others, outside the community, not ourselves. This view considers marketing Peterborough as the only means of growing the economic opportunity.

It is time that we come to grips with the opportunities for growth that come from within the community. We need to rid ourselves of the myths that constrain us and seek out, and invest in, the opportunities that already exist in our community.

The most generally accepted approach to future growth is to invest in "shot gun marketing"—shooting out the "message" about Peterborough and seeing what it hits, and comes to us. Although there are often comments made about investing in building on what we already have in the community, there is little evidence that there is any significant investment in it. The idea that there are strengths in the community to build on is given lip service, at best.

The "shot gun marketing" approach, ironically, is a lot like a casino. We are investing in activities where the payoff is determined by chance. To even the most ardent casino supporter, it wouldn’t make any sense for a successful local business looking at making a $1 million investment in its growth to spend the $1 million at the casino and expect a better financial return than investing in their business.   

The Peterborough economy—the mix of the private and public sectors—is more diverse today than it has ever been. Unlike the local economy of fifty years ago, we are blessed with an economic foundation that can support a much larger economic structure than we now have. To build this economic structure, we need to find new ways—investing in new ways—to build on our strengths. Making these investments from our community, in our community, is much more likely to lead to meaningful, sustainable economic growth than gambling on others coming to "save" us.

The arguments for and against the casino belies the real issue: how we can best spend public- and private-sector funds to help us meet our economic potential? The investments required for a casino to become a reality here could be better spent investing public and private funds in building on the considerable strengths that already exist in this community.

It is not difficult to determine where the opportunities for growing the existing economy are. In fact, that work has already been done. Obviously, given the discussion we are having about the casino, there are funds to invest. Now it’s about how to spend them.

The sad reality is that the longer we neglect investing in strengthening and growing what we already have here, the more we lose our competitive advantages to other communities that are making investments in strengthening their communities.

The real lesson coming out of the discussion about the casino is that thoughtful and meaningful investments in the existing economic strengths of Peterborough are more likely to pay off than gambling with our hard earned economic resources.    

[Contributed by PtboCanada's Tom Phillips. Ph. D. Phillips is Professor in the business programs at Fleming College and Trent University.]

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Why Peterborough's Unemployment Rate Is So High In Global Context (And What Can Be Done About It)

THE PHILLIPS REPORTWith all the bad news coming out of the US, Europe, and international financial markets, the most common topic of discussion locally is unemployment. Locally, there is no doubt that the number of those without work has grown since the beginning of the international financial crisis in the fall of 2008.

The data is clear. The number of people unemployed in the Peterborough area doubled between November 2008 and May 2009—from 2,800 to 5,600. Thankfully, the number of unemployed has increased more modestly since May 2009. It now stands at 6,900. The good news is that even through the economic downturn, unemployment in Peterborough historically falls between May and November each year.

Several attempts have been made to understand the numbers. In many cases, more questions have emerged than answers. The Statistics Canada area is larger than the City but not, in terms of population, but not as large as the County and City combined. So what does it really mean for the City? How is unemployment measured and is the collection of the data accurate? As interesting as these issues may be, they provide little insight into the greater jobs challenge Peterborough is facing.

Economists are notorious for making predictions, so I am going to avoid making them. There are, however, economic forces that have a direct effect on the local economy and push it in one direction or another.  Where they will lead us, exactly, cannot be determined. Many of these forces are beyond the control of businesses—big or small—or local, provincial, or federal governments. Like it or not, the international financial crisis that began in 2008, the sovereign debt issues in Europe, and the debt ceiling debacle in Washington all have an influence—and not always in a small way—on our local economy.

Peterborough is a much more diverse economy than it was when it felt the effects of economic recessions in the 1970s and 1980s. This diversity in both the private and public sectors has given it a strong foundation upon which to build. To build on that foundation requires customers: local, national and international. Our industrial sector very likely serves more customers internationally than Peterborough businesses ever have, but the global economic environment is not doing so well, and, therefore, we’re not doing so well either.

The US is, in many ways, weak. Economic fragility and instability always leads to short-sighted decisions and more emphasis on maintaining themselves than on growth. These realities in the US inevitably have a negative impact on business here.

Last week the exchange rate was $1.06 US for $1 Canadian. That represents more than a 50 percent increase from when a Canadian dollar cost 70 US cents, not many years ago. That means a product made in Peterborough and sold for $100 Canadian cost the US customer $70 US a few years ago. Last week that same item would have cost the US customer $107 US. This clearly puts pressure on local businesses selling in the US to cut costs, and most importantly, become more productive to remain competitive.

These factors, relatively close to home, are combined with instability Europe to create a dismal view of prospects for economic growth and more jobs any time soon. The likelihood of what has been recently called "a double dip recession" is growing by the day.

The good news is that the Peterborough economy is international in scope. The bad news is that the international economy is generally not doing as well as the Canadian economy. Unfortunately, the standard of living to which we have become accustomed requires us to be a small part of a very large global marketplace.

As much as governments are the easiest to blame when an economic downturn occurs, all levels of government—municipal, provincial, and federal—have done exactly what was required to keep the local economy from suffering too greatly when the first downturn occurred almost three years ago. However, as we have seen from the recent disaster in Washington, there is a limit to what governments can do. If we are to lay blame it is not with government.

With the realities we are facing it is a waste of time to endlessly analyze what could have been done. The obvious question now is: What can be done?  Unfortunately, little can be done in the short-term since the negative forces are far beyond the ability of us, or our business and government leaders, to control, or even influence. Some measures can be taken to minimize the most serious consequences of this economic environment. The more important question is: What can be done now to be better prepared for the inevitable recovery?

In the private sector, this is a time to invest in new ways of doing business so that they are more productive and efficient when markets begin to recover. These necessary investments are much more than just technological. New organizational processes and partnership need to be explored, evaluated, and acted upon. The economy that will eventually emerge will not be the one that we enjoyed before November 2008. It will be much more competitive. We must be prepared for that inevitability.

In the public sector, the infrastructure—physical and human—must be put in place for the recovery. All levels of government should be commended on the initiatives that they have undertaken to improve the economic foundations of the area. There is no doubt that the physical infrastructure is being improved and expanded.  Educational opportunities and new facilities at both Trent and Fleming have expanded, and the recent announcement concerning skills training at Fleming will ensure that skilled people will be ready when the recovery comes.

The more difficult question is: What can the unemployed do? Even though there are examples of well-educated people who are unemployed, the truth is that those with higher levels of education have greater job stability and significantly higher incomes, overall. With the competitive pressures growing for business, those who will be first employed when the recovery arrives will be those who can contribute most to the future success of the business—the ones with the greatest productive and creative potential. 

With few opportunities to gain experience during the economic downturn, the only way to improve ones’ productive potential is through education. With the government investments that have been made to expand both Trent and Fleming, the opportunities to improve ones' productive potential are right here in Peterborough.

From a community-wide point of view, this unexpected economic downturn can lead to even greater prosperity when it ends if we treat it as an opportunity. Businesses, governments, and people have to do whatever they can to lay a broader and stronger foundation upon with to build a stronger, more innovative, and more creative local economy than we had before the downturn. Every aspect of our community— for-profit, not-for-profit, charitable—needs to look to how they can better serve a growing community once the economic tide has turned.
We need to return to the natural tendency to lay blame for the current economic instability and the current level of unemployment. As I have said, we cannot blame our governments for doing too little. There is only so much they can do. And it is not local businesses' fault. They surely don’t like the current conditions, so why would they create them. Something has happened in Peterborough that goes far deeper than the actions (or inaction) of business or government. 

The real culprits in this economic disaster are those who preach and practice out-dated and consistently unsuccessful approaches to how economies should, rather than really do, work. At the heart of the financial disaster beginning in 2008 are the same failed ideas that led to the Great Depression and every financially-driven economic downturn since then. It comes down to, like it or not, the ideas that underlie the actions of business—particularly finance.

At the heart of these ideas is the nineteenth century notion that all consumers and all businesses—as isolated, individual entities—following their own motivations will lead to socially beneficial results. No other way of doing things, according to this philosophy, could do better for society. This is the philosophy that is at the heart of mainstream economics. Of course, it has been, and will continue to be, proven not to lead to socially beneficial results. The theory and the facts simply don’t match. It is amazing that we now find ourselves appealing for remedies for our current economic disease from the very people, and their unwavering ideas, that made us sick in the first place.

It is ironic that those preaching the pro-individual, anti-social dogma cherish competition because of its ruthless punishment for those who fail in the marketplace, but they are not willing to live by the same rules themselves. Not one of the US business leaders who, beyond a shadow of a doubt, contributed to the global crisis, have been made accountable for their actions—and accountable to society, not just their shareholders.

More disturbing, especially in a time of high unemployment, are the cases of those who preach the failed ideas and praise the rigors of competition and accountability but do so from behind guarantees of lifetime job security. Why should we expect positive change when there are no incentives to get it right for society?  Those who are in a position to influence the economy but get it wrong are unaccountable and keep their jobs. Those who trust those in positions of influence, pay the price.

In times of crisis, it is much easier to find and focus on the true heart of the matter. We are in an era of unemployment and deficits—deficits of many different kinds. The most serious deficit we now face is the deficit of economic ideas that are relevant to our time—not the nineteenth century—and the deficit of will to rid us of the root cause of economic disaster and the unemployment that comes with it.  

[Contributed by PtboCanada's Tom Phillips Ph. D.]

[Editor's Note: Phillips is Economist & Sustainability Director - Greater Ptbo Innovation Cluster. This is his 4th column for Click here to read his first column for us on Peterborough's "Creative Class", here to read his second column "Growing Peterborough From 'The Inside-Out'", and here to read his third on Peterborough's astonishing record of success in lacrosse.]

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PtboCanada Interview: Mayoral Candidate Daryl Bennett

Daryl Bennett (photo courtesy Bennett campaign) Daryl Bennett, 62, is running against incumbent Paul Ayotte for Mayor of Peterborough in the October 25th municipal election. Bennett, a Principal in The Liftlock Group of companies, grew up in East City and attended Armour Heights Public School and PCVS.

Bennett has volunteered for causes such as the 2004 flood relief effort, the campaign to build a new hospital and saving Market Hall. He is also a sponsor of bursaries at Trent University, and was named Citizen of the Year in 2004.

In this interview with PtboCanada, Bennett gives his vision for the city, and the reasons why he thinks he has what it takes to be Mayor.

PtboCanada: You say you declared your candidacy because you care about our city and about the future of our city. The way things are going, how does Peterborough's future look? Are you concerned about lack of jobs here? And if so, how do you propose we turn things around? Also, you say you intend to revitalize Peterborough and provide new opportunities for its residents. Can you give us an idea of some of the main policies and how they might differ from Mayor Ayotte's approach.

Bennett: I would not be running if I didn't think it was necessary. I didn't just wake up one morning and decide to become the Mayor. The decision came over the past four years, brought about in part by watching and listening to people's concerns about how difficult it had become to deal with City Hall—the stories about families whose children were spread far and wide because of the lack of opportunity in our own community; the stories about elected members of Council speaking about their lack of empowerment to deal with the needs of their constituents under the current regime. And finally, the decision came looking at a picture of my youngest grandson, with a perceived caption of him saying, "Why didn't you try to do something for my generation?"

One of the most important functions of the Mayor is to build consensus. It takes six votes to pass all matters at City Hall and it takes leadership to bring the members of Council together to do what is best for the community. Gaining consensus and making decisions is something I've done all my working life. The job of bringing business and tourists to our community starts by getting the operations of the City in order and creating a new environment of customer service. We, the Council, create the environment that pro-actively sets the agenda for progress. That means that we don't just follow processes that are already in place. The days of dotting i's , crossing t's and filling in the blanks so we can convince ourselves that everything is in order are over. We have far more potential to be the best we can be, and our job is to get on with it.
PtboCanada: What would you do to clean up our downtown, get rid of the crime/drugs/panhandlers, etc.? How would you help change the perception that our downtown is not safe and get more people down there to support the local businesses?
Bennett: Some of the answer is already in place, through the promotion and activities of the DBIA (Peterborough Downtown Business Improvement Association), but we can do more. I think the Police Service has done good work as well. What we need to add to those is a more frequent consultation with and involvement by the businesses themselves, so that the health of the core is always top of mind. I think that the opportunities for eyes on the street that result from downtown housing will help, as will a new approach to downtown waterfront improvements. The ultimate strength of the downtown lies in a collective understanding that we all have a precious and historic resource that has to be actively supported in order to compete with the powerful suburban model.

PtboCanada: Aside from your website you launched, we noticed you're employing social media (Twitter) as part of your campaign @Bennett4Mayor. Will you continue to "tweet" if elected mayor as some other mayors do (e.g. Mayor Ellis in Belleville, Mayor Miller in Toronto) to let citizens know what you're up to in the community? How will you make yourself accessible within the community?

Bennett: I think it's time we bring a new generation of technology to reach out to people, and Twitter is a good example. So is internet voting. Personally, I will continue to operate much the same as I have for the past forty some years. I'm very much hands on; I understand that communication is essential in any business or government, and people will not have to wonder what I'm up to.  

PtboCanada: How do you plan to reach out to the younger generation (Gen X, Gen Y) to show them you care about their needs? Because they are the future of this city.

Bennett: Well, everything about our campaign is aimed at providing the kind of leadership that will improve our collective well-being, and particularly for youth, whose opportunities to stay here and find work and a good life are far too limited. Peterborough has good schools, and we are fortunate to have Trent and Fleming to attract youth and to develop their skills. But it is our job at City Hall to create the employment and community conditions that will entice them to stay. As part of our campaign, we will be scheduling community consultations for youth so we can hear from them directly. As Mayor, I am attracted to the idea of a permanent Youth Council so their concerns are always on our agenda.

PtboCanada: For those that say Daryl Bennett is "a suit", all about business and his "old boy network", what do you say to that?

Bennett: Well, it all comes down to what a business is and what business people do. To me, business is a process of bringing people together to create, advance or resolve things. We all do that. Whether it's creating a lease on a building, operating a retail store, operating a media outlet, drafting the framework for a new by-law or delivering a social program, you bring people together to make change that is in the interests of your customers and your community. I've had some forty years of business experience where I have done just that, and I've had some success at it. I believe I can apply that experience for the benefit of the people of Peterborough.

PtboCanada: What would being Mayor of Peterborough mean to you?
Bennett: A wonderful opportunity to give something back to the community that has been so good to our family. A vote for me on election day will be a statement that the citizens of this community think we can do better.  

[Daryl Bennett's website; 2010 Municipal Election; MyKawartha's Electionfest blog]

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