[Newsbot]

Title: Alberta election 2015: Why political change could make economic sense
Category: Business
Posted By: andyt
Date: 2015-05-07 07:27:05
Canadian

[DrCaleb]

"Countries with large endowments of natural resources, such as oil and gas," writes Nobel prize-winning economist Joseph Stiglitz and his co-authors in their paper Escaping the Resource Curse, "often perform worse in terms of economic development and good governance than do countries with fewer resources."



Here's hoping that we can get some other industries up and get out of this boom-bust cycle evertime Venezuela or the Saudis sneeze.

[andyt]

DrCaleb DrCaleb:

Here's hoping that we can get some other industries up and get out of this boom-bust cycle evertime Venezuela or the Saudis sneeze.

Well, you've got the low oil prices to motivate you. OTOH, if they go up again, it will be hard to resist the temptation to just ride the gravy train again. Albertans aren't alone in this. Canadian business would rather make a quick, sure buck than invest in the long term and make big bucks. I've seen this in the BC forest industry, and Ontario manufacturing. Little investment in technology that boosts productivity, little investment in RD, too afraid to go and seek out other markets.

Funny about the reluctance to invest in tech. We're continually told that canadian workers are overpriced. Yet, according to economic theory, that should spur investment in labor saving tech. For some reason it doesn't apply to Canada.

And what to diversify too? Vancouver has got you beat on the IT side. A city everybody wants to live in, hipper reputation, what the IT crowd is seeking. Even with our housing prices we've had some big players move up here recently. Guess those folks earn enough to afford our housing.

Manufacturing? You're kind of in the middle of nowhere with as small population. Vancouver has the port, Ontario has the population and lies near the dense population in the US.

So what is the Alberta advantage? Be interesting to see some ideas on that. One that comes to mind isn't exactly diversification, but would involve refining the crude. Maybe even manufacturing products from that crude. I don't see tupperware getting cheaper because oil prices are down. But yes, a national energy policy that says Alberta supplies Canada's oil needs before any exports. Make sure that Alberta gets a fair price for this oil, so we're not ripping them off.

This is where if we were a real country instead of a bunch of squabbling provinces, we could do things like that. Alberta's oil to benefit the whole country, but so would economic activity in other provinces - super equalization, I guess.

[Thanos]

Given the terrible track record industrial diversification historically has had in Alberta, most efforts of which either fail altogether or collapse in a government-funded boondoggle, I'm not convinced any NDP effort will succeed any better than the ones the PC's tried over the years. At best there will be some mild job creation which will be completely negated when any new companies that start up won't be able to survive without government support. One illusory step forward and three big steps back, as per the usual formula.