Learning from the Land of Fire and Ice

Economies Under Pressure

In his highly entertaining 2011 book Boomerang, Michael Lewis describes a variety of cultural factors that helped precipitate the financial crisis in countries around the world: large scale tax evasion in Greece, rampant real estate speculation in Ireland, individual greed in the US, and banking naiveté in Germany.

Best known for his exposés of the wilder excesses of casino capitalism on Wall Street in his previous books Liar’s Poker and The Big Short, Lewis argues that similar cultural traits may in due course precipitate the collapse of the Eurozone, cause public sector pension defaults, and even the melt-down of US municipal finance.  His fundamental analysis is that presented with the opportunity of cheap credit and fast profits, entire populations bet their futures on the prospect of personal wealth acquisition in the absence of societal wealth creation.   Current events in Cyprus make it hard to deny Lewis’s analysis.

One of the most extreme examples cited by Lewis was the spectacular growth and subsequent collapse of the Icelandic investment banking system which led to the creation of a per capita debt of more than $300k for every one of Iceland’s population of 300,000.  In his analysis, Lewis cites a male-dominated cultural bias for the heroism of the Icelandic sagas as a major part of the problem.  According to Lewis, close ties of friendship and family in a small society combined with an over-developed sense of national pride made the financial disaster in Iceland much worse than it needed to be.

Lewis notes that one cause of national hubris in the ‘land of fire and ice’ was the spectacular success of the privatization of the Icelandic fishery.  This policy reform led to more sustainable management of the fishery through a strictly imposed quota system and massively increased profitability.  The ‘tragedy of the commons’ experience of the Newfoundland cod fishery was thus avoided by the Icelanders, but one consequence was the use of fishing profits to fund more higher education.  And this led in turn to a desire on the part of some of these more highly educated Icelanders to make serious money for themselves.  As natural risk takers, a nation descended from the Vikings discovered investment banking as a spectacularly attractive opportunity, increasing the country’s exposure to foreign assets 50 fold between 2002 and 2007.  Iceland played and lost, and although the country is now in recovery mode under female leadership and disavowing its neo-Viking experiment, many Icelandic families will pay the price for generations to come.

Happily the Canadian economy survived the events of 2008 and their aftermath better than most.  We have even retained the ‘triple A’ investment status that has been lost by countries like the US and the UK.  But this is no comfort for those in the University sector who might be hoping one day for an Icelandic style national investment in post secondary education – even if we promised to encourage somewhat different aspirations in our graduates!

The University Sector Under Pressure

And so, as I step into the role of President at Cape Breton University, I am acutely conscious of the global economic context in which Post Secondary Education in Canada now operates.  Most governments around the world wish to minimize their investments in Universities and Colleges whilst requiring ever more ‘outputs’ from their higher education systems.  In the UK, where I spent the last three years, the government recently trebled student fees to around $14,000 per annum, transferring the entire cost of a University education to graduates who will incur many years of debt repayment.  And while we may not expect such radical measures at the Provincial level in Canada, neither should we expect anything other than a long term squeeze on taxpayer-funded investment in Universities.

Here in Nova Scotia, Universities watch for political and budgetary signals with a mixture of apprehension and resignation.  Last week CBU was notified it would be getting $1.2m less from the Province in 2013/14 than it received in 2011/12. The sector as a whole is getting a $20m haircut.  It is crystal clear that the Provincial Government wants more for less.  However there seems to be little appetite for sacrifice, efficiency or compromise at the institutional level.  No University President is going to voluntarily offer up cuts in important programs or contemplate mergers, but it is clear that Universities will need to significantly increase levels of innovation, efficiency gains and/or growth in years to come.

In this situation I believe Cape Breton University is uniquely placed to role model what all Nova Scotia Universities will need to look like in 10 or 20 years’ time, harnessing global social, economic and technological trends to our advantage.  The reasons I believe that CBU is so well positioned to help lead this agenda in our Province are threefold: i) the record of entrepreneurialism in the University since its inception; ii) the clear differentiation of the institution on topics of national and international significance; and iii) the unique cultural and economic resilience of the Cape Breton Island community.

Learning from Iceland and Building on Strength

So what can we learn from the Icelandic experience and global trends in higher education policy?  And what does that mean for Cape Breton University?

I believe that, just like Iceland, Cape Breton Island has social and cultural capital in abundance – assets that allow any community to make things happen because people know what hardship and hard work looks like.   Based on a speech to the Sydney and Area Chamber of Commerce last week Mayor Cecil Clarke seems determined to harness community trust and goodwill in a highly inclusive approach to regional economic development involving the private sector and all levels of government.  Whether it is through their experiences of working in tough industries like coal mining and steel making, or whether it is because of the challenges of geography and the relatively harsh environment, it is clear to me that people in Cape Breton know how to stick together and they support fiercely Cape Breton institutions.  Cape Breton has unique natural capital, and immense potential for the development of renewable energy, just like Iceland.  And we have human capital – smart men and women who are developed through the Schools and Colleges and of course CBU to expect the best of themselves and to demand the best for their families.  We have socially engaged entrepreneurs in our aboriginal communities, in our more recent immigrant communities and in those families descended from the French Acadian and British settlers of the 17th and 18th centuries.  Adventurers all, but rooted in the community and the natural environment in this, the most beautiful island in the world.

Unlike the pre-2008 Icelanders however, Cape Breton knows it must harness its assets and its culture of hard work and trading, not to create financial bubbles or to perpetuate dependency, but to create real wealth through investment, entrepreneurship and innovation: making and selling things the world wants to buy.  Cape Breton needs to trade on its unique skills and assets and bring real value to the world – in manufacturing, tourism, renewable energy, and yes in its educational ‘products’  too.

That is why I was so pleased to see CBU as the only University to be mentioned in Minister Flaherty’s recent Federal budget with a well deserved $5m contribution to the Purdy Crawford Chair in Aboriginal Business Studies (watch the video here).  It is why every time I see CBU students excel at sports or academics – and I have been watching closely these last few months – I have been amazed at their passion and commitment.  And it is why I have so much respect for the achievements of CBU’s academics and staff for their dedication and expertise, led so well in recent years by Dr Harker and his senior team.  Dr Heather Sparling’s success in securing a national Chair in Musical Traditions was another tremendous achievement that we celebrated last week.

Whether it is through CBU’s internationalization strategy, the University’s commitment to sustainable energy embodied in the Verschuren Centre, or the unique and many contributions the University makes to aboriginal affairs, social justice, Cape Breton culture, music and the arts, science, business and the health and education professions, it is clear that CBU people innovate and they create value for students and for society as a whole, both locally and globally.

Whatever challenges face CBU in the future, and there will be a few, I believe this spirit of innovation and entrepreneurialism and our commitment to value creation for all our stakeholders will give CBU the ability to lead change in the University sector in our Province, and more globally.

David Wheeler

President and Vice Chancellor Cape Breton University

Dr Wheeler’s recent interview with CTV on trends in Post Secondary Education may be viewed here.

His recent book (with Elizabeth Kurucz and Barry Colbert) Reconstructing Value: Leadership Skills for a Sustainable World is now available from University of Toronto Press.

Follow Dr Wheeler on twitter @drdavidwheeler1



Lewis M (2011).  Boomerang:  Travels in the new Third World.  New York: W W Norton and Company.