When recently researching public debt, I found an article from India that gave reasons why a country would turn to deficit financing. The first example was when the world dealt with the cost of rebuilding after the Second World War. Another was when developing countries try to achieve faster economic growth by borrowing and financing new industries. The third situation was when a country is poor. “These countries fail to mobilize large resources through taxation,” the article stated. That is: “Taxation has insufficient coverage due to mass poverty.”
I tried to figure out where Alberta fits. We’re not rebuilding after a war. We are not so industrially underdeveloped that we have to gamble present indebtedness for future growth. Oddly the example that fits best is mass poverty: taxation insufficient to cover expenditures.
I suppose you could argue we constitute a different class: “A rich jurisdiction whose citizens refuse increased taxation and force their government deeply into debt—then criticize the government for being in debt.” This, I believe, is the essential Alberta. If the same scenario can be produced by a public-welfare-minded socialist government and by a free-market conservative government, then it really can’t be a left/right matter. This folly must be an inherent characteristic of the society in which it occurs.
The last time this happened in Alberta was in the 1980s. Much like recent times, a sustained oil glut on the world market had cratered the world oil price. This lasted into the mid-1990s. In 1985 Peter Lougheed left politics and the popular choice as his successor was his former right-hand-man, Don Getty. Getty had been out of politics for six years, running a private investment firm. When he took over, I clearly remember Albertans saying, “This is exactly what our shabby economy needs. A businessman. An oilman. Getty will take his corporate experience and apply it to Alberta.”
Which is exactly what Getty did. Understanding that his shareholders (voters) wouldn’t put up with a cash call (taxation), he borrowed billions. As the economy grew worse, not better, he began cutting public spending as well.
We’re a rich jurisdiction whose citizens refuse increased taxation and force their government deeply into debt—then criticize the government for being in debt.
The irony I’m noting is that when Getty put the province in debt rather than increase taxation on Albertans, we criticized him for acting like a corporation. I myself teased that he had perhaps forgotten it’s not as easy to declare bankruptcy when you’re a province as when you’re an oil company. Now that the exact same thing has happened, do we say: “Look at the NDP. Acting just like a corporation?” No. We say: “They’re taking us into debt, just like socialists always do.”
There are other differences. I don’t remember Albertans blaming Getty for causing the price of oil to fall or threatening him with death as they do with Rachel Notley. Nor do I recall them hitting golf balls at pictures of him—perhaps because he used some of their debt money to build new Alberta golf courses. Actually, I think the real reason he was absolved is that he gave heaps of debt money to oil companies because the poor muffins had no savings and were in a bad way.
But let’s look at the present. What comes next? In Getty’s case, the enduring low oil price finally brought him down like a big linebacker on a stay-in-the-pocket quarterback. Getty retired. Enter the people’s choice: Ralph Klein. What made Ralph popular was ripping the crap out of education and healthcare and shredding the social safety net rather than taxing Albertans a penny more. And so it went: Ralph carved down the provincial debt, hospital bed by hospital bed; put the mentally ill back on the street; told a room full of AISH recipients that they didn’t look sick; got drunk and threw the money in his pocket at some people in a homeless shelter.
Ah, the good old days. How does the Klein story end? The oil price rose, Alberta returned to prosperity, and Ralph somehow got the credit.
As Wildrose comes a-courting, and the PCs say no no but have yes yes in their eyes, what are Albertans being promised? Jason Kenney offers to ignore crumbling hospitals and roads while tearing up public sector contracts. As for taxes, not only will Kenney refuse to raise them or launch a sales tax, he will rid the province of its carbon tax and get back to pouring money into the coffers of the poor oil muffins.
Ahem, just one reminder. When Ralph did this good service for Alberta—getting rid of billions in public debt—he left behind billions in infrastructure debt, which governments after him have either ignored or endeavoured to fix. The NDP have done the latter, using the Keynesian economic logic that you spend in bad times, save in good. But that of course is not Alberta’s normal way. As Premier Aberhart described it nine decades ago, Albertans prefer “poverty in the midst of plenty.” The Alberta advantage. #
Fred Stenson’s most recent novel is Who By Fire (Doubleday).Other books include The Trade, Lightning and The Great Karoo.