An abandoned gas well.
An abandoned gas well. Credit: Environmental Law Centre Credit: Environmental Law Centre

I have a vague recollection of former MLA Kevin Taft mentioning about Alberta taxpayers footing the bill for cleaning up after the corporations were done with the oil wells.  He may have mentioned this around the time I was doing number crunching for his book Follow the Money: Where is Alberta’s Wealth Going? or before the release of his later book, Oil’s Deep State. Either way, that conversation is prescient as Premier Danielle Smith pushes a $20 billion giveaway for oil corporations to clean up the mess at taxpayers’ expense. This was addressed by Professor Andrew Leach in October last year and reiterated by journalist Stephen Magusiak this February. Both have offered incisive commentaries that the $20 billion freebie would simply go to corporations that were obligated to clean up anyway and would be tantamount to rewarding polluting firms. However, my purpose here is to focus on the soundbites that ECON 101 students are indoctrinated with, and which remain with them long after they have graduated. I am also interested in highlighting the inconsistencies of those (including Premier Smith) who project the simplistic lessons of ECON 101 far too well. 

The issue with ECON 101 is that it introduces students to stylized assumptions and simplistic principles that do not reflect the real economy. These assumptions include perfectly competitive markets where many sellers compete without market power. This is a caricature of the real world that is replete with corporations that exercise market power, fund political campaigns, and lobby governments to influence policy making in their favour. Such corporations, given their resources in contrast to the general public, also fund partisan think tanks that weave a narrative on various economic issues in their favour. Additionally, the whole issue of the “revolving door” is neglected in ECON 101, which refers to the fact that politicians in office cater to corporate interests so that when they leave public office they could be handsomely rewarded through seats on the board of directors or as consultants for various corporations. Among the principles is the idea of trade-offs or opportunity costs, which entails that there is no such thing as a free lunch. Yet, historical record shows how large corporations like the East India Company acquired free lunch through colonialism and how “too big to fail” corporations were bailed out at the taxpayers’ expense in the aftermath of the 2008 financial crisis.

READ MORE: The ‘RStar’ scam’s not a good deal, but it’s a done deal

Both Leach and Magusiak point out the connection between the UCP government and the lobby/research group SAEN (Sustaining Alberta’s Energy Network) that is behind the R-Star program that pushes for the $20 billion free lunch. It is interesting that this socialism for the rich is justified by those who usually push capitalism for the general public through draconian cuts to healthcare and education. This irony is manifest in Magusiak’s excellent reporting that SAEN helped the campaigns for MLA Tyler Shandro (former Health Minister and MLA Demetrios Nicolaides (Minister of Advanced Education). Yet, such partisan think tanks, free market ideologues, and self-serving politicians conveniently neglect their own lessons that they so pontificate to the general public. Indeed, taking free market economics to its logical conclusion in the tradition of Austrian economists like Hayek entails that corporations should be left to the brutal discipline of the free market. Thus, the inconsistency of instigating draconian cuts to healthcare and education but demanding freebies for large oil corporations is there for everyone to witness.   

Even if we ignore the nuanced understanding that sometimes free lunch is possible, the ECON 101 lesson that there is no such thing as a free lunch indicates that the $20 billion giveaway comes at the cost of healthcare and education, which have been mercilessly gutted through the pandemic. So much so, that many of us note amongst our families and friends that there are those whose medical procedures and operations have been inefficiently delayed due to under capacity of hospital beds. Similarly, we note that our youth and students are laden with the cost of higher tuition fees and our teachers and instructors are unnecessarily overworked as essential staff have been laid off through the pandemic. Amidst all these draconian cuts that affect the general public, economic inequality exacerbates as the upper management in various sectors continue to draw six-digit salaries as evident from the multiple sunshine lists. 

Apart from corporate freebies, Premier Smith is also pushing against the “just transition” advocated by the federal government. In doing so, she is out of tune with the younger Albertans who take climate change seriously. This is reminiscent of her tone deaf “libertarian” approach when she defended the homophobic “lake of fire” viewpoint of pastor Allan Hunsperger. That cost her the election in 2012. Thus, by pandering to the far right and corporate interests, she ignores the youth who are disenchanted by outdated viewpoints on social issues, economic inequality, and climate change and who challenge simplistic caricatures of the economy in ECON 101. 

To recapitulate, neoliberal partisan think tanks and self-serving politicians wield economic theory simplistically, hypocritically, and inconsistently. Their stranglehold of ECON 101 soundbites should not go unchecked. We can push back through alternate soundbites. 

  1. The $20 billion freebie to corporations comes at the taxpayers’ expense. 
  1. Corporate freebies come at the cost of gutting healthcare and education. 
  1. UCP MLAs and the SAEN lobby group benefit each other, not the general public. 

Eternal vigilance is the price we pay for democracy.  Challenge politicians we can, and we must!

Junaid B. Jahangir

Junaid B. Jahangir is an Associate Professor of Economics at MacEwan University in Edmonton, Alberta. He is interested in economic pluralism and renewed perspectives to teaching economics. He has also...