To Reykjavik with Envy

To Reykjavik with Envy

Reykjavik, Iceland is bustling again according to most reports. Restaurants and shops in the Icelandic capital are humming with energy.  “A stunning reversal from just four years ago, when the country reached the point of financial meltdown”, according to a recent article by Asher Schechtert, an international consultant based in the US.

As we sat and watched many of the world’s financial markets collapse in 2008, Iceland's banking system crumpled under the strain. The króna, Iceland's national currency, plummeted in value and thousands of Icelanders lost their life savings overnight as national protest became commonplace.

At the time Iceland was reduced to an international bailout and its prime minister prayed for divine intervention. With business seeming totally destroyed, Iceland looked poised to return to its historical roots.

In four short years, riddled with international incidences and political and financial conflicts with the UK and the Netherlands, Iceland is clawing its way back from the abyss. In the process it has been forced to rediscover its roots and return to one of its traditional values – modesty.

They are also currently in the process of building a new constitution and replacing a modified one adopted in 1944 when they separated from Denmark.  Icelanders are reinventing themselves and redefining who they had become. According to Schechtert, “the luxury automobiles are becoming a thing of the past as Hummers and the like are being replaced with more practical Volkswagens and luxury yachts have been replaced by fishermen's dinghies. The lost finance industry jobs have been replaced with more economically productive work. The fishermen and sailors who were enticed to leave the country's traditional industries in favor of more profitable financial professions have now returned in large numbers to their previous fields of employment. During the last four years, Icelanders have gone back to the basics and back to the ocean, and many them are happy about that transition.”

I realize that the rise, fall and recovery of the Iceland economic, political and social fabric are topics for doctoral dissertations and academic studies – not an editorial essay.  It can be as complex as the galaxy or as simple as the nose on our face.  In the beginning, I suppose, everything is simple – it is when we intervene and makes things better that everything goes to hell in a hand basket.    

My rationale for bringing it up you ask? Well, I visited Iceland in the mid-90s when their economy was in full flight and their Nordic lifestyle and their survival instinct was the envy of nations.  As much as I was enthralled with the mystery of the Island…I was also absorbed by the vibrancy of the people – and I was enchanted by their sense of place.

As Lisa Moore noted in a 2005 CBC documentary Hard Rock & Water, Iceland and Newfoundland & Labrador share much more than their rugged appearance.  We are isolated. We are similar in size. The fishery is/has been an important economic generator.  We are fiercely independent. Our culture runs deep.

Unlike Iceland, Newfoundland & Labrador has fared relatively well in recent years with increasing focus on mining, the offshore, and the tourism industry.  Unlike us, Iceland has few resources with the exception of cod, and to a lesser extent tourism. It also has a population that boasts a 99% literacy rate and appear fiercely loyal to their homeland.  Again, the rise, fall and recovery of the Icelandic economy are topics for scholars… My query today is more specifically related to our own piece of ruggedness on the eastern edge of the North American continent.

The question has been bantered about by many in recent weeks as to why a resource rich, self-professed ‘have’ province like Newfoundland & Labrador is cash poor these days.  Government is blaming it on the world economy and the negative impact that it is having on commodity prices. Others are pointing fingers at government and blaming our predicament on poor fiscal planning. Regardless of the reason… according to government we are spending more money (expenses) than we are generating (revenue) which results in debt (deficit).

A rather unbelievable turn of events ... so unbelievable, in fact, that I am not even sure it is true. I don't think there is any real concern where the province is heading financially. Leading economists suggest that we will be back to surplus within 3-4 years.  As well, if truth be known, there already exist surplus funds to cover the operating deficit for this year and next. The Premier is forecasting challenges for the next two years but projecting a balanced budget before the next provincial election. This government may well be viewing the current "short-term" fiscal crunch as an opportunity to implement "long-term" sweeping changes across the province. An example of how poor politics adversely affect good governance...

I am not suggesting that sweeping changes are not necessary…but changes have to be implemented in coordination with strategic and long-term fiscal planning that is void of petty politics. Anything less will simply result in more of the same.

Regardless of how it is viewed and irrespective of which party is in power…this province has historically been governed through the lens of a political prism. Successive governments appear not to realize that infrastructure and human resource spending is not a one-time investment but a long-term expense that consumes an ever-increasing percentage of our annual budget.

The moral of my tirade you ask! Spend like drunken sailors and we will surely wake up hung over and broke. In that light, it appears that we have been staggering for some time… and, unlike Iceland, void of the intestinal fortitude to change our ways.