Readers are all familiar, of course, with the concept of a bad guy getting off on a technicality. That is, someone who is really guilty of a crime but walks free because he had a smart lawyer and a dumb judge.
Getting off on a technicality is generally held to be a Bad Thing. Some of us, however, may be willing to make an exception if it was Cousin Ronnie or Auntie Sylvia who got off on the technicality in question. In such cases we breath a sigh of relief and say that “the system worked.”
So, when someone we like gets off on a technicality, the system worked. When the system works for someone we don’t approve of, they got off on a technicality.
This is important, because, right now, we have before us the spectacle of an entire government – not just one guilty individual – trying to get off on a technicality.
You see, because we were counting on high oil prices pretty well forever, and all of a sudden oil prices aren’t high any more, Alberta is going to spend more this year than it makes in taxes and royalties. When a government spends more than it makes, economists call this difference a deficit.
When Alberta Conservatives spend more than they make, however, it is not a deficit. Or so Premier Ed Stelmach keeps saying over and over and over, hoping presumably that with repetition it will become true. Or, leastways, that after a time we’ll all start to believe it.
When Alberta has a deficit, you see, it is a “technical deficit.”
Now, a technical deficit, the Edmonton Journal helpfully explains (no doubt taking it directly from the premier’s crib notes) is when “the province will be paying out more money than it brings in, but will be able to tap into its $7.7-billion Sustainability Fund to cushion the blow.” (Emphasis added.)
Oh, I get it! This is like when I spend more than I make in a year, but I’m able to tap into my RRSPs to “cushion the blow.” I wonder if I can persuade my bank that the technical deficit I ran up this Christmas is just technical debt. If I do, will I still have to pay it?
I expect I will, alas. This is because this kind of reasoning is usually called… Never mind what’s it’s usually called. For the purposes of this discussion, it’s called trying to get off on a technicality. It may work with governments and the courts, but it seldom does with bankers – unless, of course, you happen to be one. The reality is that a deficit is a deficit, a debt is a debt, and, if I may be so bold, horse pucky is horse pucky.
The irony here, of course, is that running deficits in times of economic distress is exactly what the government should be doing.
Mr. Stelmach is making excuses for a sound policy, as if it were a bad thing, because of a stupid law passed during the premiership of Ralph Klein that attempted to outlaw deficits, even in unforeseen circumstances like those we are now experiencing.
This is foolish, of course, rather like King Canute ordering the tide to turn back. The only difference being, of course, that King Canute was making a point to his noblemen – to wit, that even a King doesn’t control some things. King Ralph and his minions actually believed their own foolishness.
(Never forget that while this nonsense was being peddled in Alberta, Mr. Stelmach was one of Mr. Klein’s “fiscal hardliners,” a true believer in the power of the Divine and Almighty Market.)
So Klein and Co. had the Legislature pass a law ordering the tide, metaphorically speaking, never to flow out. Now that it’s receding, Mr. Stelmach finds himself in a spot. He can’t run a deficit, because that would be “illegal.” And he can’t change the law to recognize reality, because that would be heresy to the One True Faith of his Market Fundamentalist co-religionists.
So, instead, we are told Alberta is merely running a technical deficit. There’s a term for this too. It’s “being hoist with your own petard.”
Not that Mr. Stelmach is likely to pay much of a price for this foolishness. This is Alberta after all.
In his interview with the Journal, Mr. Stelmach had one other interesting thing to say: “I’m from a Ukrainian background,” he explained, “so I know my aunts and uncles and mom and dad would always put a little money in a sock someplace, or between the mattresses. That’s what we have in Alberta, to cushion the blow.”
To those of us who understand the concept of interest, this explanation may not be entirely reassuring. Nevertheless, if you ever wondered what became of all those billions in uncollected royalties flagged by Auditor General Fred Dunne back in 2007, maybe there’s your explanation. They’re in a sock somewhere, or tucked between the mattresses, possibly in a luxury condominium in Palm Springs. You know, only technically gone.