andyt andyt:
Khar Khar:
diversificaton
All talk of diversification is about socialism - ie the govt stepping in to boost certain sectors of the economy. I thought Alberta was all about rock solid, stand on your own two feet, conservatism?
Albertans, as a whole, can wiggle all they want, but they act like there's no tomorrow during boom times. Then blame others when things go south, as we see exemplified here. They can claim they are too different from Norway, but it just doesn't hold water. You con't have to be a homogeneous society to save during good times, you just have to have some maturity and willpower. And setting a decent price for the resources sold also needs no homogeneity. Just some smarts and willingness to stand up to the multinationals.
I don't understand how the province partnering up with oil companies, like Norway does to get a decent return on the resource, is deemed socialism, but there's all this talk of diversification. How can that be accomplished without government participation?
Considering my own stance is that diversification comes from us not putting onerous restrictions on new industry while at the same time significantly reducing the tax put into it, I'd argue with two of your sentences; a) that Albertans were going against their stance on your own two feet stance, and b) that socialist policies are a viable option (especially when popularly suggested ones have already failed). A leading energy economist here even pointed out how much it would take for the Albertan government to try and start up a new sector independent of the market. Indeed, diversification cannot happen (at least to no large extent) in Alberta because of our economic capacity and orientation, as I pointed out. A large portion of my post was dedicated to posting why suggestions to diversify via socialist methods had consistently failed to do anything, and what success we had with growth was from low taxes via the Alberta Advantage (which ended up assisting energy industry as well).
Nor do I think Albertans, as a whole, acted that way. The articles in my last post are stretched across the boom years as much as the bust years discussing an issue that does concern Albertans and economists alike. It's not that Albertans ignored that we are a resource based economy for year, it's that sectors not based on energy growth never experience the same explosive growth and development as the energy sectors and hence regardless of success never become the same size of our economic pie. Most Albertans are well aware we have a volatile market, and it's something we talk about all the time; there are no shortage of people who were here during the last Albertan collapse and were worriedly waiting for the next one.
Also, no, we don't get to set a higher price for oil or gas, especially since we can essentially sell to only one actor. Indeed, we are
forced to sell at a discount because the United States is the only state with access to our oil and gas resources. Our "willpower" was inherent in how we fought for Keystone and for Northern Gateway, and how useless that answer is to Albertans problems became apparent; regardless of Albertan political will, it is immensely easy for BC, Ontario, and the USA to shut us down. "Standing up to multinationals" and having will and maturity is what we already do and have, and much like diversification, the fact that it has failed Albertans is often (and understandably easily) ignored.
It's a bit problematic to presume that there are millions of Albertans who have ignored this all the time they have lived here, first of all; even moreso when we have committed ourselves to such strategies and seen it all fall through anyway, unfortunately.
Thanos Thanos:
The Heritage Fund depletion is an interesting argument. The comparisons with Norway and Alaska are easy to use but the miss an important factor. Norway is a completely homogenous culture where the oil industry is nationalized and there is no requirements for transfer payments. In other words Norway was never in a position where 25% or more of their wealth was stolen and given to places like the Maritimes or Quebec. Norway could save in a way that Alberta couldn't because over a quarter of their revenue simply wasn't given away to someone else. Alaska, thanks to the various oddities of American politics and state's rights, also isn't obligated to cough up anything to the federal government for dispersal elsewhere. It's Alaska's resource so Alaska and pretty much no one else gets to decide what they do with it. I'm not saying that the Alberta PC's wouldn't have botched the entire thing if they didn't have the federal government coming in and stealing from us. They probably would have just based on the nature of the people who form the upper ranks in that party. But Alberta is clearly subjected to interferences and confiscation by the central power in this country that Alaska and Norway don't have to deal with, therefore the analogy between the three jurisdictions is pretty much false.
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I agree that our situation compared with Norway is definitely not as close as people would like to assume, even though there are some parallels. We are a sub-national state that has very different needs, wants, obligations and development.
However, I support the Heritage Fund regardless of incongruities with foreign states, especially since such a fund at the provincial level would, over time, reduce the vulnerability of the Albertan economy to not just resource volatility, but the political volatility you are concerned with here. It is much harder for a politician to harm a province with a sufficiently large fund in the other hand that we can draw interest and investment from. Depending on how it is structured, it may also assist in reducing the booms and busts in government spending, especially as different levels of spending become normalized. Spikes in prices cannot be excuses for new spending, given volatility, but are good excuses to save up a few billion dollars on the side for Albertan use.
We were able to start it up once. I'd like to see us do it again, personally.
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) advice being given by people from BC and Ontario on how to run a provincial economy remains endlessly hilarious.
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