Sooner or later, all conversations about the Alberta economy in the modern era come down to one key question: Where the hell did all the money go?
I guess you could rephrase this: Where the hell is all the money going? Regardless, it’s been going somewhere and, over the past couple of decades, that destination has been a matter of lively discussion among Albertans and other Canadians.
This question is so often asked because, while Alberta is known to be rich — Alberta’s GDP per person in 2008 was $81,121, compared with $44,121 for the rest of Canada — to those of us who live here it feels poor.
Whether it’s the shabby condition of downtown Edmonton, our rundown capital city, our pothole strewn streets, the constant sight of desperate street people, the Third World conditions in our Emergency Rooms, the periodic mass layoffs of teachers, university professors and health care workers, or the unending whine by Conservative politicians that we simply can’t afford quality health care, good education or other public services, it always feels as if the whole lot of us are just one paycheque away from the bread lines.
Here we are, plunk in the middle of the snowbelt, and most years even how we’re going to afford to clear the streets is a constant source of worry and debate.
As a weird counterpoint to this constant refrain, we are also constantly reminded how lucky we are to live here in the Richest Place on Earth, the Very Best Province in the Whole Wide World, etc. etc.
So if we’re so rich, how come we’re so poor?
Well, now we know the answer, thanks to an important book by former Alberta Liberal Party leader Dr. Kevin Taft, who has been described in this space as the best premier Alberta never had. Follow the Money, Where is Alberta’s Wealth Going? was published with the assistance of the Alberta Federation of Labour by Detselig Enterprises Ltd. of Calgary. It costs $12.95, and it’s also available as an e-book.
The AFL also financed the production of a short video documentary about Taft’s research by filmmaker Tom Radford.
Before he became an MLA in 2001, Taft was an education professor at the University of Alberta. After the 2008 election, in which the Alberta Liberals under his leadership were badly trounced by then-premier Ed Stelmach’s Progressive Conservatives, he threw up his hands and resigned the leadership of the party.
This was probably a mistake, as the Alberta Liberal leadership was then held for a spell by David Swann, a well-meaning but ineffectual Calgary physician, and more recently was captured by Raj Sherman, the former Conservative who is now leading the party away from its long-held principles and away from its remaining core supporters.
But if Taft’s departure from politics was a bad thing for Alberta’s Liberals, it’s not necessarily a bad thing for the rest of us, as he’s recast himself as an author on political and economic topics who has the skills and credibility to definitively answer such questions as the ones posed above. What’s more, he manages to do it in a readable way without sounding too much like a Liberal Party partisan — even going so far as to confess that he was wrong as Liberal leader to join the chorus that bays constantly for less spending on public services.
Working with researchers Mel McMillan and Junaid Jahangir and relying heavily on Statistics Canada’s CANSIM (Canadian Socioeconomic) and Financial Management System databases, Taft makes a case that I doubt can be effectively challenged by the government’s spokespeople, its apologists among the legions of far-right “think tanks” that serve as the Greek chorus for Alberta’s perpetual state of scarcity and crisis amid fantastic wealth, or far-right entities like the Wildrose Party that demand ever more vigorous attacks on public services.
Before we give away the ending — it won’t surprise you — let’s talk about the places Taft was able to establish pretty convincingly are not getting our money:
1. It’s not going to government spending. While government spending in Alberta is incompetently managed by the Tories, gyrating between throwing money at problems to massive and disruptive cutbacks, over the long term our government spending is close to the Canadian average.
2. It’s not going to public services. “As a society, Alberta spends a steadily shrinking portion of its increasing prosperity on public services.”
3. It’s not going to education. Comparing five-year averages to smooth out individual years’ ups and downs, K-12 education went up 2 per cent, total, over 20 years.
4. It’s not going to health care. When you adjust for the size of the provincial economy, spending on health care puts Alberta last in the country. No matter how you measure it, “health care spending in Alberta and Canada is on a gradual long-term upward trend that is well within reason.” Over the long-term, smoothed out with five-year averages, health care spending in Alberta has been rising at about 1.2 per cent a year.
5. It’s certainly not going to housing and social services.
6. It’s not going into savings. You can tell from a glance at one of Taft’s many useful charts that, as he puts it, “Alberta’s natural resource treasure wasn’t going into the Heritage Fund,” or any other savings pool.
7. And most of it’s not going to personal incomes. Over the last 21 years, average personal incomes in Alberta rose about 35 per cent, accounting for inflation.
So where is it going? It’s going to corporate profits, of course. And the greatest corporate profits are in the oilpatch, naturally. In fact, so much of our money is going into corporate profit that we’re actually selling our collective property at a loss to pad the corporate bottom line!
“Profits in Alberta have grown at rates simply unknown in other jurisdictions, often well beyond double the rates in other provinces and the United States,” Taft writes. “There is no such largesse for public services, and the government is drawing down public savings rather than building them, doing nothing to prepare for the future.
“The transfer of public wealth to private shareholders is blistering, and our own government, rather than fighting like an owner, or even thinking like an owner, is just happy to find investors who want to cash in.” (Those investors, Taft notes as an aside, are often state-owned companies from such places as China, Abu Dhabi and Korea. Which makes our “ethical oil” what? Semi-ethical?)
We’re giving away our resources, people, and we’re getting very little in return. “It was going to profits,” Taft summed up in his conclusion, “and it was doing so at an astonishing rate.”
How astonishing? Corporate profits were up 317 per cent in the same period health care spending rose 28 per cent, incomes were up 35 per cent and education spending increased 2 per cent!
One question Taft says he couldn’t answer from the data he worked with is where all the money goes once it flows into these bloated corporate profits. But you and I don’t need a book to tell us the answer to that one: It leaves the country for places where it does nothing for Canadians.
No wonder, when you think about it, why corporate special interests and their paid representatives in Canada are so aggressive in defending their right to rapidly export even more of our resources via pipeline to wherever — the environment, the rights of Canadians, and due process itself be damned! This does not, however, explain why so many of our Conservative Western Canadian politicians behave the same way.
Taft’s highly readable work is important to Canadians who don’t live in Alberta, because the philosophy of government in Alberta is now in the process of being exported to the rest of Canada, thanks to Prime Minister Stephen Harper, and because the way we are developing our resources has profound implications for the economies of other Canadian provinces. Our mighty oil-pumped Loony, for example, is contributing to the decline of the manufacturing economy of Central Canada.
Moreover, Taft’s conclusions are also not going to be something that you’ll hear reported very enthusiastically in the media, either here in Alberta or anywhere else in this country. Was it just a coincidence that at the same time Taft’s book was being released, a “research paper” worthy of a Grade 9 class project that argued Alberta was paying its public employees too much was being released to massive media fanfare by a claque of neo-Con ideologues associated with the University of Calgary? Whatever the motivation, that was the research that got all the publicity.
No, if you want to read what Taft and his research partners have to say, you’re going to have to make an effort find it yourself. If you come across a review, it’s most likely to be on a blog like this or in an alternative publication.
Talk to your bookstore, ask the reference desk at your public library to order it or purchase the book online. It’s worth the effort.
This post also appears on David Climenhaga’s blog, Alberta Diary.