Category Archives: economics

Oil or Nothing: Alberta’s false dichotomy

Leduc1_WesternExaminerImage_GlenbowAs long as I can remember in Alberta our defining narrative has been oil or nothing. Which, given that I was born in Alberta in 1968 and came of age in Alberta in the 1980s, rather coincided with how the rest of the world saw the story of modern human prosperity.

Fossil fuels, the industrial revolution, automation. We used to think of it as an uphill journey we had come to the end of. But it wasn’t an uphill climb, it dipped and soared. And the journey isn’t coming to an end, the resource is.

These booms and busts became the Alberta story. In the boom everyone celebrated oil, in the busts everyone became nostalgic for oil. Getting stuck in today’s self congratulation is not future forward. Nostalgia is not future forward. Oil is not future forward.

As decades have rolled by the global mindset has shifted, and there are significant swaths of the global physical and ideological landscape that have begun to look past oil (past fossil fuels in general) and toward a future we need to prepare for.

We lag behind in Alberta. We still tell ourselves that our future is oil or nothing. Sadly our stubborn refusal to lift our heads and look down the road has meant that we have not adequately prepared for our future on the immediate horizon.

This is why I am less concerned with Alberta’s current deficit than some are. I’m not happy about it. I think it absolutely could have been avoided, but that avoidance horizon was 20 years ago. It can’t be avoided now if we want our province to be prosperous into the real and looming future.

windturbinecropWe need to bring our infrastructure up to a level that makes us competitive. We need to educate our youth to a level that makes them competitive. We need to build an economy that is competitive.

Yes, we are creating a debt that will be handed down to our children, but at least this time the debt we are creating will be offset by their prosperity gain. Debts past were handed to next generations who had less to pay the debt off with.

Our young people, and our own generation, can and should invest now in alternatives to oil. For reasons of economic stability. For reasons of environmental preservation. For reasons of lofty ambition and creativity and what makes the humans unique as a species.

Close up of a graduation cap and a certificate with a ribbon --- Image by © Royalty-Free/Corbis

So, thank you Alberta NDP for reinvesting in education. Our kids will have the means to pay back the debt because we borrowed to give them the skills for future jobs.

No more boom and bust. No more oil or nothing.

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Eine Klein-era not good example

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. klein ideas

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.

Alberta Premier Ralph Klein declares the Alberta debt paid off, in Calgary on July 12, 2004. THE CANADIAN PRESS/Jeff McIntosh

 

 

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.

RALPH KLEIN AFTER WINNING ELECTION.*Calgary Herald Merlin Archive* SOLD! to the biggest sucker.

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.

 

 

This is the way we all lose #elxn42

A friend just sent me this article in a direct message. Probably because they know I am all over politics. Openly. I am choosing to be open in my reply to this article because I think we all need to be more open and vocal about politics, and stop misinterpreting political discourse as impolite.

READ THIS

My sense is that Stephen Harper is, to some degree, xenophobic. I say this based on statements he has made in the past and the people he has chosen to align himself with. I can only imagine how much worse his inner monologue is, because I also think he is keenly intelligent and knows what not to say out loud.

HOWEVER, my strongest sense about Stephen Harper is that he is very much a man who want power for himself. He is less concerned with how he gets that power than with any ideology. Which is not to say that when he is successful in securing his power that he will not then act upon his ideology.

We should be asking ourselves whether he is the master of manipulation because that is what he excels at. He manipulates people who, for reasons I do not comprehend and have lost the willingness to accommodate, seek simple, superficial and easy answers to the complex questions in life.

Those people vote in knee-jerk reaction to Harper’s masterful dog-whistle politics. Those people hand him the power, which he then uses to undermine each and every one of us. He undermines our access to information (which I guess most people don’t mind because clearly very few of us bother to access information before forming opinions), he undermines our public goods, he undermines our social fabric, he undermines our institutions. He incrementally takes power away from the electorate and puts more power in the hands for the few. And his own hands as Prime Minister.

So, does he believe that it is un-Canadian to cover your face when you take participate in a non binding ceremony? No. But he does believe those women should be able to do and not do as they wish as his whim. And that is terrifying. He believes he should have the right to define what is Canadian. Does he believe that stripping citizenship will survive a Charter challenge, or go unchallenged under international law? No. But he does believe he should have the right to rank Canadians according to his personal whim. And that is terrifying. Does he think he has evidence that the Alberta NDP government is a disaster? No. But he does think he has the right to declare any organization that has ideas contrary to his own to be wrong, regardless of evidence to the contrary.

The scandals that he is suppressing with his dog-whistle and showboating xenophobic assertions are beautiful. They tell me that somewhere in this wounded democratic machine someone is still working for the public good and bringing the corruption to light. For every corruption you see I have no doubt there are ten of which we are not yet aware.

Harper’s ideology is control. He sees that tolerance and sharing of wealth undermine the extent of his control.

He wants us to re-elect him so he can tell us what is good for us. He wants us to re-elect him so that he can continue to do things on our behalf without our knowledge or consent.

He knows that a huge proportion of the electorate that bother to vote then immediately disengage. (Never mind those who simply don’t even care enough to vote)

Canadians want a government they can trust to do what is right, and so they trust without remaining vigilant or questioning.

 

I want YOU to re-elect a government that allows facts and evidence, and yes public preferences that are based in evidence, to tell them what is good for us.

 

Is Harper a racist? Probably. A little. But it isn’t his worst flaw. And that isn’t the important question. The important question is are you? Because if you aren’t you need to wake up and pay attention to the shell game we are calling #elxn42.

 

 

PLEASE challenge me on this. I do change my opinions if I hear good reason. What I don’t change is my world view or my sense of what is, and what is not moral.

Deja-vu,you-too?

My oh my, Mr. Harper dropped the writ. As an Albertan I am having deja vu. Calling an election as an attempt to capitalize on unfair advantage before the truth of a budget reveals itself and before the taxpayers figure out what is actually going on seems pretty familiar to me. I am certainly angry in a very familiar way and being led politically in a familiar direction.

It is so patently obvious that the timing is a ploy to increase his party’s financial advantage. Who can blame him, he has no other real advantage.

He can’t run on his economic record.

He can’t run on the quality of his leadership.

He can run on his accountability or claim a lack of corruption during his time in office.

He can’t run on his policy record for research or science or his ability to create good laws that respect the Canadian constitution and align with Canadian values.

He can’t run on his record on environment.

Watch his speech announcing the election (or read what all the leaders said).

Stephen Harper thinks it is appropriate that Canadians have the opportunity to consider their options. He says elections are not popularity contests but about serious choices. All this I agree on.

It’s not all agreement from me though. Far from it. I completely disagree in an awful lot of what he is trying to sell.

Note when he says now is not the time for the kind of risky economic schemes that are doing so much damage in the rest of the world? Harper has in the past and continues to support the type of flawed economic policies that created the current global economic problems. Austerity is killing the world, and we have austerity because we didn’t have enough regulation of capital markets to prevent the current global collapse from happening. Cuts to the most vulnerable, tax breaks at the top, trickle down economic fairy tales and a short run race to environmental destruction? Therein lies the real risk.

He balanced the spring current budget using a slight of hand and on the backs of regular Canadians and our economic future.  I wouldn’t count on it being solid fact; it may magically not even be true.

Harper claims his party is the only party that is fiscally responsible, but does his record support that? No it does not.

The significant new benefits to Canadians are a short term illusion, for most Canadians. Plus, is he really trying to benefit all Canadians, or just those Canadians that make choices he approves of because? He seems to have his own narrow definition of what makes a Canadian.

Harper goes on about security and being tough on crime. What exactly is secure about constant constitutional challenges to dodgy laws and public fights with the supreme court? How is his approach to crime constructive? It’s really a war on what defines Canada. That doesn’t make me feel very secure.

It takes some real balls to thank to the brave members of our military for their service to our country, afterall, what has he done for the armed forces?

In terms of your election advantages I think Stephen Harper might be a bit over confident.

Harper is a deeply prejudiced, deceitful, secretive, controlling man, and his party marches in step with him. His ideology is out of step with Canada, and a poor long term political strategy.

I hope he enjoys the next 77 days while they lasts. I hope they are his last. I hope that the lesson Alberta taught the arrogant, irresponsible right is a lesson that Canada embraces and will dole out on a Canadian scale.

Let the games begin and let the best man win. I know I’ll be voting for the best man.

 

 

…dee dee deedle deedle dee dee dee dee…

So Huffington Post has decided to put Donald Trump’s campaign coverage in their entertainment section as a way of indicating their refusal to take his parody of political discourse seriously.clown trump

Mother Jones is countering that the problem is that Trump is a serious contender. I agree. He has a frightening level of supportive.

They’re both right.

I understand what Huffington Post is doing. I one hundred per cent support refusing to give this …

trump ruprict

…a seat at the grown-up table. His ideas, beliefs and commentary are laughable. No intelligent, informed, mature person could possibly take his views seriously. America shouldn’t take him seriously. He has no place in serious political discourse. He shouldn’t be given any serious thought as a potential leader. Energy spent portraying him as a serious voice for the average American or as an advocate for the American way of life is energy wasted. While there is (sadly) a market for his kind of chicanery, that market demographic isn’t the intelligent thoughtful voter looking to cast an informed ballot.  He should be ignored for the same reason you don’t give in to your screaming toddler in the toy store.

I also understand what Mother Jones is saying. The right wing created the environment in which Donald Trump became a ‘credible’ right wing voice, and now the joke is on them. He and his ilk have turned the American political and social system against the best interest of America by cranking up the volume on the least rational parts of American society. The right wing is feeding on itself, eating its own tail in an ever more desperate bid to achieve conservative political immortality and defeat progressive liberalism. Trump represents the monster that the right wing allowed to grow out of the childish desire to never admit the legitimate, demonstrable constructive progress America is making in the absence of conservative rule.

No, the joke is on the whole society. Donald Trump could be the undoing of the GOP, or worse, the undoing of the US as a respected world power. Really.

Trump sets the bar dangerously low for the GOP. Pretty well any looney they choose to lead them into the next election is going look like a right minded competent human being compared to the alternative – if the alternative is Donald Trump. Sadly this just sets the race up to elect someone who sits just a smidgen to the left of complete asshattery who will appeal to the rabble but inevitably damage the GOP and, if elected, do real damage to the country. Let’s be honest; politics isn’t about finding the best person for the job, it’s about finding the least bad person. Often, and I am tempted to say always in the American 2 party system, casting a ballot is like deciding to settle on a rock or in a hard place.

Ignoring Donald Trump could have dire consequences. America is in a tough spot right now.cob over trump

On a local note, I personally think this is where Alberta and Canada was/is heading but for our inherent tendency to be skeptical of the kind of tomfoolery and corruption that gives fodder to extreme thinking or behavior. We are a nation of moderates that can be roused from our political apathy when our moderation is threatened.

Unfortunately in the US moderation has never caught on so they take everything they do to the extreme, often to the point of defying logic. Donald Trump for President is the result. As much as it hurts our heads, the world would be wise to listen to this man talk so we keep tabs on the crazy before it gets any more out of control because clearly the US hasn’t got a handle on the situation.

 

Precaution & Providence or Parsimony & Peril

(Preface: sometimes I think I started this blog as an homage to the letter ‘p’)

Every time that a story about Greece’s debt crisis comes up on the news I rant a little. My family is used to it.

Many people are, in my opinion, dead wrong on this. Even my husband seems to lean toward the idea that Greece is just a bunch of deadbeats that want to have 16 weeks vacation, retire at 50 and not repay their debts. That’s a fairly common perception. But it doesn’t take account of the root cause of the global (not Greek) financial crisis that precipitated Greece’s current woes. Which is not to say that Greece will not have to scale back their lives and roll up their sleeves, they will. What I am saying is that what the Greeks are being asked to sacrifice is extreme, and they are being asked to make do with considerably less than they could sustained had financial markets been better regulated.

It was not Greek excesses that created these messes.

No good can come of forcing Greece, and Greeks, to suffer more. Pushing people to the edge of an economic precipice has never yielded good results. People on the edge will grab and hold onto anything to keep themselves form falling. Pushing the post WWI Germans and the German economy to the limit of economic endurance and devastating the German economy was a significant contributing factor to the development of the political climate and social conditions under which Hitler’s Nazi ideology gained credibility.

What made John Maynard Keyes mutter under his breath as he stormed out of the Paris Peace Conference is eerily similar to economists are saying about Greek Austerity today. The potential for it to not end well is real. Economics and politics cannot be separated. Greece has some unstable neighbours and aside from potential internal civil unrest, they could be unstable enough to become a gateway into Europe for some unsavory groups.

greece marked

It will also not come anywhere near resolving the root problem or preventing similar crises in the future. The global financial problems were made possible by a few irresponsible/unfettered wealthy corporations, largely banks. It was not dissimilar behavior that contributed to the great depression; bad borrowing and lending, lack of oversight for banks, markets expanding beyond their ability to sustain the  growth. It was capitalism unchecked, unbalanced.

We, globally, must recognize that capitalism has no soul and no remorse and no conscience. For these reasons economic activity must be guided by regulations to prevent them from wealth accumulation at the expense of economic stability. No austerity or ideological doctrine of market efficiency will prevent unhappy history from repeating itself until we admit capitalism has limitations.

cap quote

Not that you need a degree in economics to see where this could be headed but to drive the point home, I will point out that some noted economists are saying this exact thing about the Greek debt crisis. Economics is one of those fields that people claim is subjective, almost more an art than science. This is true to an extent. What you see as the economic solution depends entirely on what you believe is the acceptable economic and social outcome. If you believe that the acceptable outcome is long term stability for the majority at the expense of short term wealth for the few, then you will agree with what I have said. If you believe that unfettered pursuit of wealth is a right and that the accumulation of wealth is in and of itself the goal, you will disagree.

However, there is also some science to economics, and it’s science worth noting.

Read this article by Joseph E. Stiglitz. He is a Nobel laureate in economics. He won for modelling how asymmetric info begs a larger role for government intervention in markets, and how regulation leads to pareto efficiency – the market alone is not efficient. There is no invisible hand guiding capitalism.

And read this articleMaybe you’ll recognize the name Thomas Piketty, Professor of Economics at the Paris School of Economics and author of ‘Capital in the Twenty-First Century’ and current left-wing darling. The other signatories are Jeffrey D. Sachs, Heiner Flassbeck, Dani Rodrik, and Simon Wren-Lewis. Looking them up is your homework.