Canadians are obsessed with budgets, deficits, surpluses and financially irresponsible quibbling over all things federally fiscal. Alberta, though, has a particularly fascinating idiosyncratic tic that comes out whenever fiscally responsible government is discussed. Talk about economics in Alberta and you will hear a wistful “Where’s Ralph Klein when you need him?”
It amazes me that anyone anywhere still holds Ralph Klein up as a model of political (insert anything positive here). It especially irks me when people wax poetic about his fiscal prowess. Some of us get it, but for those that don’t let me challenge you to think just a wee bit harder.
Yes, Ralph Klein balanced the budget. But it is important to ask HOW he did that.
You know how? He taxed Albertans enough to cover his bills until 1999, and balanced the budget. Plain and simple. Then he brought in a regressive and costly flat tax, stopped maintaining Alberta’s infrastructure, and hastily left office in 2006 before the shit hit the fan.
Why then do so many of us get stuck in a fog of fiscal fisticuffs and fallacious financial fabrications when we talk about taxation and the ‘Alberta Advantage’?
Because Alberta you’re shamefully naive. Or lacking common sense. Or something. This glorifying a balanced budget, demonizing taxation and neglect of budgetary realities has to stop. We by some stroke of luck, timing and strategic voting have a provincial government that understands that you gotta make money to spend money, yet many of us are falling for the sucker ‘low taxes’ line in the federal election.
So folks, here’s a parable to explain how Ralph pulled off that balanced budget you so fondly remember, and the consequences it has had in the years since…
Ralph decided he was growed up enough to own his own house. So he got a job, and went to the bank to convince them to trust him with a mortgage. He went to the bank and demonstrated a certain income based on working a certain way. He worked regular hours at the regular rate when times were slow, and extra hours at a higher rate when times were busier. He had two rates of income coming in. That gave him enough income to buy that house.
And folks, we all know there’s more than mortgage payments to owning a house. There’s furnaces to repair, ducts that need cleaning, shingles that wear out with time and hot water heaters that burst and flood the basement. You have to bring enough income to cover that, over and above the mortgage payments.
Ralph worked hard and put all his income toward paying off that mortgage.
And he did it. He paid off the mortgage.
Then instead of instead of counting his blessings and looking around at what he had built, then planning in order to maintain the lifestyle he had achieved, he decided he was done the work.
Look Ma, I sold Alberta’s future for short term political gain!
He decided all that income that came from those extra hours, the pay at the higher rate when times were busy, was superfluous to his personal happiness. He cut back his hours and all his income was suddenly at the lower regular rate. He lost a lot of income.
Ralph coasted that way for a couple years. Eventually though, evenly the most willfully blind can see the corners of the shingles curling up, and Ralph realised his 20 year old roof would need replacing soon.
So, what did Ralph do? Did he prudently work more so he could do the necessary maintenance on his cherished home?
Not Ralph. He sold that house, and walked away with the profits.
Did you buy that house from Ralph? Did you get in thinking you had enough money only to to discover that the shingles were so bad that the roof was leaking? Did the furnace die on a chilly Sunday evening in February? Did you argue with yourself, saying that the problem wasn’t that you didn’t have enough money, but that you’d been tricked into buying premium shingles and high end furnaces because your family had come to feel entitled to having a roof over their heads and heat in the winter?
I know you did at first. But eventually it was pretty obvious that the only way to survive was to find a way to make a little more money. Now maybe you can work 37 instead of 35 hours. Maybe you can invest in some education that diversifies your skill set to get you that higher paying gig. Either way, the problem won’t go away. You need to make money to spend money, and you need to spend money to live a decent life.
That’s how it really happened, folks.
The flat tax died and is buried in Alberta. We’re going to be okay once we catch up on fixing the issues that accumulated while we didn’t have the cash flow.
Right now Canada needs the same surge in pragmatic thinking in government. Refusing to admit that we must pay taxes to pay for the lifestyle we expect is willful ignorance. Don’t vote for the lowest taxes, vote for the best bang for your buck over the long term.
Does that make sense? I hope it does, folks.