Tuesday, October 04, 2005

Did I mention the economy? Questions for candidates in the Maple Ridge 2005 Election.

"Grow the labour force and work towards increased productivity." This
is the latest mantra from Ottawa. The electoral candidates in Maple
Ridge may wish to reflect on how these very broad, perhaps high-brow
aspirations, fit into the context of this District. What role can
Maple Ridge play in British Columbia's and its own prosperity by
focusing on jobs and productivity? What do the candidates have to say?

Land Use + Community Well-being + Civic Fiscal Health + Environmental
Husbandry + Cultural Stimulation = Economic Development When considering the future of Maple Ridge what do you invision: a pastoral/green place or a place of business, a microcosm of any other large municipality?

What do you think of free markets beyond the borders of Maple Ridge?
Do you think they impact on our future?

Do you think we are missing the opportunity of training our young
people in the trades?

If someone suggested to you that we should encourage the idea of
retraining the homeless for work, how would you react?

Do you see the foot print of the built environment obliterating the
green environment or would you put a cap on development?

The vast majority of taxes come from the residents in Maple Ridge, do
you think this is fine or should it be balanced out by encouraging
growth business tax base?

Maple Ridge has the smallest percentage of industrial land available
of almost every other District in BC. Is this good or bad?

Is there any point in actively seeking external investment or should
the District just go with flow and see how things pan out economically
in the future?

Do you think any of the working population would prefer to work in
Maple Ridge in a job comparable to the one they already have to travel
to each day?

Could the working population benefit from or even want higher paying

What do you think about regional head offices moving into Maple Ridge?

As candidate do you have some idea of what the demographics are in
Maple Ridge and how they can be used to move economic development ahead?

What role do you think regional and local transport plays in economic

Do you see Maple Ridge and Pitt Meadows competing for the same
economic pie?

Will our workers flow out from Maple Ridge to work in Surrey when the
new crossing is complete?

Will businesses relocate to Surrey from Maple Ridge? Does it matter?

If the Pitt Meadows airport were to handle larger aircraft would that
make Maple Ridge a better place to own a business?

Is Maple Ridge growing too fast or too slow for your liking?

Do you think the 2010 Winter Olympics will benefit Maple Ridge? How?

How do the candidates intend to join the dots? Do they understand the
connections between the economic drivers above?
What is Economics?

By Dr. Hans-Peter Weikard, Environmental Economics and Natural Resources Group

Land is living space for humans and a great variety of other species. Land is the most important input factor for agricultural production. Industrial production and services compete with agriculture for the best location. Understanding land use patterns requires an understanding of decision making and competition. Economics is the discipline that analyses social processes as based on individual decision making. We can distinguish two main branches of economic analysis: positive (or empirical) economics and normative economics.

Positive economics develops and analyses explanatory models. Given a suitable description of a social phenomenon, economic models seek to explain it. An economic explanation shows how the observed phenomenon results from individual decisions. The usual behavioural assumption is that an agent maximises a predetermined goal. This rather general framework can be used in different applications.
· Market demand is analysed assuming households maximise satisfaction from consumer goods and services (cf. Kreps, 1990).
· Market supply is analysed assuming firms maximise profits (cf. Kreps, 1990).
· In the area of politics and bureaucracy, politicians are assumed to maximise votes or the chance of re-election; bureaucrats are assumed to maximise their budget (cf. Mueller, 1989).
From the last item it is clear that economic thinking and the use of the economic method of analysis is not restricted to the analysis of economic phenomena, like production, consumption, markets, prices, etc.
Economics as a discipline is defined by its method, not by its subject area (cf. Blaug, 1980).

Normative economics takes a different perspective. It does not aim at explanation but rather seeks to provide guidance to decision makers. For given aims of the decision maker and a given situation, is there anything we can recommend to do? The most relevant topics in normative economics are
· Cost-benefit analysis. A rational decision requires that we count the costs and the benefits of alternative actions. (cf. Zerbe and Dively,1994)
· Risk analysis. In decision making under risk we must assess the actions under different circumstances and their respective probabilities. How much risk should one take? (cf. Brehmer and Sahlin, Eds., 1994)
· Discounting. Costs and benefits may come at different points in time. A later benefit may be worth less (or more) than a current benefit. How should we compare across time? (cf. Price, 1993)
· Strategic situations. Others can react upon one's own choices. What is best in a situation of strategic interaction? (cf. Gibbons, 1992)
· Interpersonal comparisons. Others are affected by one's own actions. How should others' well-being be taken into account? (cf. Elster and Roemer, Eds., 1991)

Two broad areas analysis can be distinguished: microeconomics and macroeconomics. Microeconomics focuses on models of individual agents and their interaction, while macroeconomics focuses on aggregate phenomena like unemployment or growth.

To sum up, the key features of mainstream economics, sometimes called "neoclassical economics" are maximising behaviour and the idea of an equilibrium, where each agent is satisfied with the outcome, given the initial situation. Recent heterodoxies have criticised mainstream views on various accounts:
· Public choice and institutionalism: The role of institutions is not given sufficient weight. Too much of traditional analysis assumes an ideal planner (cf. Rowley, Tollison and Tullock, Eds., 1988).
· Ecological economics: Mainstream economics neglects that the economic process is closely intertwined with nature (cf. Costanza, Ed., 1991).
· Evolutionary economics: Agents may not be maximising but rather follow some "rules of thumb" which have been successful in an evolutionary process. Spontaneous innovation and competition create a dynamic evolving system, rather than an equilibrium of markets in an economy (cf. Witt, Ed., 1992).

Blaug, Mark (1980) The methodology of economics. Cambridge: Cambridge University Press.
Brehmer, Berndt/Sahlin, Nils-Eric (eds., 1994) Future Risks and Risk management. Dordrecht: Kluwer.
Costanza, Robert (ed., 1991) Ecological Economics. New York: Columbia University Press.
Elster, Jon/ Roemer, John E. (eds., 1991) Interpersonal Comparisons of Well-Being. Cambridge: Cambridge University Press.
Gibbons, Robert (1992) Game Theory for Applied Economists. Princeton: Princeton University Press.
Kreps, David M. (1990) A course in microeconomic theory. New York: Harvester Wheatsheaf.
Mueller, Dennis C. (1989) Public Choice II. Cambridge: Cambridge University Press.
Price, Colin (1993) Time, Discounting and Value. Oxford: Blackwell.
Rowley, Charles K./ Tollison, Robert D./ Tullock, Gordon (eds., 1988) The Political Economy of Rent-Seeking. Boston: Kluwer.
Witt, Ulrich (ed., 1992) Explaining Process and Change. Approaches to Evolutionary Economics. Ann Arbor: The University of Michigan Press.
Zerbe, Richard O. Jr./Dively, Dwight D. (1994) Benefit-Cost Analysis. New York: HarperCollins.

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