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Alberta Diary

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David Climenhaga, author of the Alberta Diary blog, is a journalist, author, journalism teacher, poet and trade union communicator who has worked in senior writing and editing positions with the Toronto Globe and Mail and the Calgary Herald. His 1995 book, A Poke in the Public Eye, explores the relationships among Canadian journalists, public relations people and politicians. He left journalism after the strike at the Calgary Herald in 1999 and 2000 to work for the trade union movement. Alberta Diary focuses on Alberta politics and social issues.

Sorry about what we said, Tom, but spare a sigh for Alberta, latest victim of Dutch Disease

| February 13, 2013

Who would have thought Alberta, of all places, would end up suffering from Dutch Disease?

Surely it was just weeks ago we Albertans, always ornery and lightning quick to take offence, were excoriating the likes of federal Opposition Leader Tom Mulcair and then-Ontario Premier Dalton McGuinty for daring to suggest such a thing might even be possible.

Dutch Disease, as alert readers will recall, is the term coined by the snarky upper-class wits at the U.K.'s Economist magazine back in 1977 to describe what happens when rising revenues from natural resources pump a country's currency to the point its suddenly overpriced manufacturing and export sectors take a beating, with predictably depressing results for jobs and profits.

With both the Alberta and federal Canadian governments dominated by Albertans whose fortunes are closely tied to the petroleum industry, stating aloud that that Canada's pneumatic petro-Loonie was making it hard for manufacturers in other parts of the country to prosper came to be viewed in certain circles as an activity perilously close to sedition.

So when Mulcair had the temerity back in May to suggest Canada might have contracted Dutch Disease, Alberta Premier Alison Redford used one of her antisocial-media accounts to Tweet that the NDP leader's remarks were "divisive, ill-informed and false."

As for McGuinty, who was still Ontario premier at the time, Redford all but called him an ignoramus for suggesting the phenomenon had "knocked the wind out of Ontario exporters and manufacturing in particular." She even demanded an apology and, sort of, got one.

But that was before Alberta encountered the dreaded "Bitumen Bubble" -- the misleading term Redford coined for her Jan. 24 "State of the Province" Address to the province's television viewers.

The Bitumen Bubble is what happened when the once-short distance between the price fetched by light and delightsome West Texas Intermediate crude and Alberta's dark and disagreeable bitumen goop just kept growing apart, blowing Redford's Progressive Conservative government's optimistic economic projections to smithereens.

Now, je digresse, but some of us have a fairly cynical view of this sort of situation, recognizing as we do that Disaster Capitalism requires a disaster now and then to keep us all sitting on the edge of our theatre seats with our disbelief conveniently in suspension.

Like rust, neoconservatives never cease their corrosive work, and if they don't have a real disaster -- as may or may not be the case here in jurisdiction formerly known as The Richest Place on Earth ™ -- it's always possible a contrived one can stand in quite nicely, thank you very much.

That way the the masses are softened up for another round of public service cutbacks and the speedy beatification of former premier Ralph "Scissorhands" Klein, and even a few progressive sorts can be persuaded to take up the wheedling cry for a sales tax, while the reliably retrogressive National Post proposes combining that with the elimination of all income taxes, especially the progressive variety.

There's no need to mention just which social group defined by a percentage point would benefit from that plan, now, is there?

But now we can see that while Alberta's Bitumen Bubble may not be quite the same thing as Dutch Disease, it's weakened our economic immune system and, sure enough, made us susceptible to the syndrome we said didn't exist.

I cite no less an authority for this than the Alberta Government itself, which sets it all out quite clearly on a web page for those of us among the sans-culottes who were not invited to the government's Economic Summit last weekend but who might still be susceptible to a good sales pitch.

"A provincial budget is a lot like a personal budget," the page explains in simple words. "You need to know what you have for income and expenses, and you need to know where your spending priorities are."

And why do we have less income all of a sudden, you may wonder?

Well, because "a $1 drop in the oil price over 12 months equals $141 million less in revenue (and) a 1 cent rise in the exchange rate over 12 months equals a $154 million drop in revenue." (Emphasis added.)

And why is the exchange rate rising, you ask? Could it be Syndrome Hollandaise, the petro-version?

OK, I admit it, it's going to take a lot of those 1-cent-per-year raises to explain the entire missing $6 billion. We've probably just got a Dutch Cold, is all. Good thing we don't actually manufacture anything here in Alberta, I guess.

Still, I'm sure Redford is writing a note of apology, like the one she demanded from McGuinty, to Mulcair right now. "I'm really sorry, Tom. It turns out you were properly informed and quite right. Not divisive at all! Please send money."

Or not.

This post also appears on David Climenhaga's blog, Alberta Diary.

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Comments

Well put David, with humour and verbal economy.  Too bad that in Alberta even so called progressives lose their tongue when it comes to challenging an orthodoxy that is dishonest, self serving and essentially stupid.  The proposal that we eliminate income tax entirely says it all....though the 1% (and Alberta is the province where the stats on wealth distribution most clearly mimics that of the USA) is too caught up in their life style version of the 'bitumen bubble' to have the intelligence left to get why such an idea would only make things worse.

When only 8-10 % of your population make enough money to afford the McMansions we are throwing up in Alberta.....cutting all social programs, privatizing roads, health and education isn't going to make enough people wealthy, let alone middle class.......to find buyers for our real estatel  And yes, thank goodness we don't actually manufacture anything....but there's also our arable land.  Who's gong to inherit that? 

We have an economy of giant vacuum cleaners....sucking up money as if it were topsoil.  And maybe it is, but when its all in the hands of the elites, Dutch disease is going to look like a minor skin rash compared to what we'll have to deal with. 

 

Interesting article.

I guess this means that, like Rip Van Winkle, even the neo-cons must wake up one day. But when they do,they're sure to look around in astonishment, shake their heads and yell indignantly, "Who left this place in such a godawful mess!" Ah, well....enlightenment, in their case, would be too much to hope for.  

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