Kevin Taft follows Alberta’s money and finds out where it all went

Your blogger, with another doomed politician, this time the author of Follow the Money, Where is Alberta’s Wealth Going? Just in case you’re thinking of being sarcastic, the sign says “Red Deer Public Library.” Below, the cover of the book.

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 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 Dr. Taft’s research by filmmaker Tom Radford.

Before he became an MLA in 2001, Dr. 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 Dr. 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, Dr. 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 Dr. 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 Dr. 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,” Dr. 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, Dr. 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,” Dr. 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 Dr. 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.

Dr. 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, Dr. 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 Dr. 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 Dr. 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 Rabble.ca.

7 Comments on "Kevin Taft follows Alberta’s money and finds out where it all went"

  1. Anonymous says:

    Corproate profits help us all. 2/3 of people are shareholders of companies through their investments or public pension funds.

    Only the Wildrose gets this. The other parties are all varying versions of left wing.

  2. Ronmac says:

    I wonder how much of this European debt is going to sneak into Canada to be soaked up by tax $. That will be a money trail worth pursuing.

    Easy to do. Announce cutbacks here, cutbacks there. And oh yes, say you are possibly rethinking old age security which is sure to arouse a storm of protest (10,000 placard-waving grannies on Parliament Hill anyone).

    The beauty of it is later on you can back down and you'll come across as a gov't that listens, that is flexible…and while nobody is looking a few hundred billion is shifted in page 345 of the budget.

    I heard billions of U.S. toxic assets were allowed into Canada and mopped up in the Economic Recovery Act in 2009.

    One thing is for sure. This gang of fraudsters who are currently wrecking havoc in the world economy will have no greater friend in Prince Stephen.

  3. Sam Gunsch says:

    Taft, Climenhaga, Warrack.

    Radicals, radicals, radicals, all.

    Downright unAlbertan writing this kind of stuff. You know it's just so easy to criticize.

    Next thing you know somebody will be calling Alberta a 'banana republic'… of course they did.

    http://thetyee.ca/Opinion/2011/04/13/HarpersBigQuestion/
    Warrack, one of the architects of the iconic Alberta Heritage Fund, told the Tyee earlier this year that the province is being run like a "banana republic" for failing to collect fair rents for non-renewable resources like the oil sands.

    Warrack is a professor emeritus of business economics at the University of Alberta and former minister of lands and forests in then-premier Peter Lougheed's cabinet in the early 1970s. Warrack then served as utilities minister and on the energy cabinet committee. He also authored a detailed history on the Heritage Savings Trust Fund and was a key player when the province famously revamped the royalty regime and set up the arm's length oil wealth fund to benefit future generations.

  4. Sam Gunsch says:

    For free elite advice re education funding advocacy(or royalty collection)… see pg 5 today's EJ for Indira's tips on how to advocate for the public good in corporatist Alberta.

    1. ""negative advocacy" is not effective"
    (today's Edm Jnl pg 5.)

    2. Indira, UofA pres.elite, says use "…conversations with government directly, not through the media, and the government is listening".

    Taft, Climenhaga, Warrack.

    Hello…you've been doing it all wrong. You skipped out while Indira went to class, didn't you?

    http://www.edmontonjournal.com/head+preaches+quiet+diplomacy/6076467/story.html

    …'such "negative advocacy" is not effective'.

    Thus pronounced Indira re "A group of professors in the arts and science faculties who last month publicly protested cuts".

    ok… perhaps I'm just being mean. So here in the positive:

    Indira's democracy lesson re advocating within AB corporatism:

    Indira says use "…conversations with government directly, not through the media, and the government is listening".

    File that under "how to be a corporatist change agent".

    For your own self-study guide to corporatism, authoritarian-style, see Mark Lisac's "The Corporate Province" Chapter 9 in The Klein Revolution. Or Rich Vivonne's R.K. coulda' been a "Great Leader". All primary references for lessons learned/imposed by R.K. and R.L. circa 1990's.

    —————-
    first three paragraphs of Pratt's story below

    U of A head preaches quiet diplomacy
    By Sheila Pratt, Edmonton Journal January 31, 2012

    Working behind the scenes with the provincial government is more effective than public advocacy to make the case for better university funding, University of Alberta president Indira Samarasekera says.

    A group of professors in the arts and science faculties who last month publicly protested cuts to staff and faculty in the coming year are free to do so, but such "negative advocacy" is not effective and could send the wrong message about the quality of education at the university, Samarasekera told a meeting Monday of the general faculties council.

    "It has been our strategic choice to have these conversations with government directly, not through the media, and the government is listening," Samarasekera said.

    http://www.edmontonjournal.com/head+preaches+quiet+diplomacy/6076467/story.html

    ========
    some days it just gets worse.

    Sam Gunsch

  5. Ronmac says:

    "Corporate profits help us all. 2/3 of people are shareholders of companies through their investments or public pension funds. Only the Wildrose gets this."

    The problem with this analogy is that we are robbing Peter to pay Paul, or to put it more accurately, robbing Paul to pay Paul.

    If we allow ourselves to be gouged in order to pump up corporate profits/pension funds how are we better off.

    The only contstant in all this is the 1 percenters who skimmed off their management fees and are laughing all the way to the bank (assuming of course that bank is soundly regulated)

  6. Unknown says:

    "Only the Wildrose gets this. The other parties are all varying versions of left wing."

    So basically the Wildrose Party is promising more of the same? Plus c'est la même chose! (pardon my French Anonymous 8:31).

  7. Anonymous says:

    Taft forgot to mention, its also going to also pad collective wage earners. Secretaries are earning $27/hour, other are earning $20-$30/hr for menial jobs that really only deserve 10-15$/hr based on skill sets, education and brain power usage.

    Nice Try DJC, never willing to clean the dust from under your own sofa, but always willing to call the fault out of others. You should be made premier or prime minister, you definitely have what it takes.

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