No matter how badly they mismanage it, Alberta conservatives can usually expect to get a pass on the economy.
There’s no point carping about this. It’s not just Alberta. Public opinion research suggests it’s a common delusion among the populations of all the so-called advanced economies of the West, a half-century of powerful evidence to the contrary notwithstanding.
Nor is there much point imparting truths that you know the folks who need to hear them won’t believe. Still, people keep trying.
Last week, with Alberta’s provincial election looming, Edmonton-born economist Jim Stanford released a paper that argues persuasively that from any perspective except corporate profits, the economic policies pursued by the United Conservative Party (UCP) government since 2019 have been a flop.
“In one area, Alberta has indeed led the entire country: the robust growth of corporate profits, which have expanded dramatically as a share of provincial GDP in the last four years,” the director of the Centre for Future Work, which operates out of Vancouver and Sydney, Australia, wrote in his study, The Failures of Trickle-Down Economics in Alberta.
READ MORE: Cutting corporate taxes didn’t help investment in Alta. – raising them won’t hurt it
“But on other indicators of economic and social progress – including employment, wages, capital investment, and economic growth – the province lags the rest of Canada, often ranking last among Canadian provinces,” wrote Dr. Stanford, who is the author of a regular economics column for the Toronto Star and holds academic posts at the University of Sydney and McMaster University in Hamilton.
Trickle down doesn’t work
“The business-centric policies implemented in Alberta over the last four years have failed to stimulate investment, growth, jobs, or prosperity,” he concluded in his study, which defines trickle-down economics as “the assumption … that reducing the regulatory, tax, and labour obligations of private corporations will spur them to expand their scale of operations, resulting in employment and income gains that ‘trickle down’ to the rest of society.”
Instead, Stanford’s study concludes, “they have succeeded in redistributing income to the corporate sector, which has enjoyed unprecedented profitability. But that wealth has distinctly failed to ‘trickle down.’
“The empirical evidence suggests that policies promoting a more balanced vision of economic development – including pro-active efforts to stimulate higher wages, public services, investment (public as well as private), and better, more stable jobs – would be more successful at achieving a prosperous and fairer provincial economy,” Stanford goes on to explain.
Of course, that last bit is the part the folks who have advocated and lobbied for the UCP’s policies really don’t want us to hear – which is why it’s unlikely that Stanford’s study will get much attention from Conservative-dominated media, which in Alberta is most of it.
The study shows that under the UCP, Alberta has had:
- The slowest economic growth in Canada
- Wages that fell far behind inflation
- Below-average job creation
- A significant drop in business investment
- Among the slowest rates of economic growth in the country
This comes as no surprise, of course. “Trickle-down economics” – a term popularized during the Reagan Administration in the 1980s – have been a catastrophic failure everywhere they have been implemented, which includes to varying degrees almost all of the industrialized West.
Equally, though, they have been a spectacular political success – boosted by corporate-financed propaganda mills commonly known as “think tanks” (although they are responsible for precious little actual thinking), an elite consensus among all governing parties in most Western democracies including supposedly social democratic ones, and sophisticated digital political manipulation strategies that came of age in the past 15 or 20 years.
Cutting taxes for the wealthy has never trickled down to the rest of society. It has just made the rich richer, the rest of us poorer, and society less equal.
Many long-term studies, including this British one in 2020, showed that over half a century tax cuts for the rich and major corporations never tickled down.
Slowest growth in Canada
So we shouldn’t be surprised that yet another study demonstrates that this idea – which was and is the core principle of the UCP economic platform under premiers Jason Kenney and Danielle Smith – hasn’t worked well.
How badly have UCP economic policies performed – in the midst of yet another oil boom, no less, for the last part of the party’s term in office?
Between 2018 and 2022, Alberta ranked last in Canada in growth in average weekly earnings, change in the minimum wage, change in share of Canadian non-residential investment, change in labour compensation share of GDP, growth in real GDP per capita at basic prices, and change in the employment-population growth.
The study says: “The only economic indicator in which Alberta has led all provinces has been the growth of corporate profits: they increased by 145 per cent between 2018 and 2022, and the growth of profits relative to GDP in Alberta has led all provinces.”
Someone is bound to raise the impact of the pandemic, which of course was very real during Mr. Kenney’s term at the helm.
“To be sure, the COVID pandemic and its aftermath posed historic challenges throughout that period,” Dr. Stanford wrote. “But other provinces also suffered from the pandemic, and they outperformed Alberta on most criteria during this time.
“Meanwhile, revenues and profits received by Alberta businesses (led by the petroleum sector) have now rebounded dramatically – yet it is hard to find any evidence of that renewed wealth trickling down to the broad population of Albertans.”
Perhaps once upon a time there was a kernel of truth in the notion conservative parties by nature were more likely to be conservative about how they spent money, although the “facts” underpinning this popular belief were always shaky.
As big-C Conservative parties sank into neoliberal cant over the past half century, though, it has become increasingly apparent that this is no longer so.
Regardless of the final result in Alberta on Monday, this has undoubtedly contributed to the difficulties experienced by the UCP in this campaign.
As many people have observed: Inequality is a political choice, not an inevitability.
Albertans have an opportunity to influence that choice tomorrow.
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