Quote:
Originally Posted by MrBigStuff
Too many anti business governments around - getting in the way of prosperity 
Need I name names??? |
All the talk of the economy, politics and who to blame / what to do has gotten me interested in starting a conversation to hear some opinions on the role that policy, business and perception has in the economy. The common rhetoric in Alberta is to blame the NDP or Trudeau or the NEP. Personally, I believe this gives politicians too much credit on their actions. Similarly, when times are good, government policy is also given too much credit (usually by the politicians in charge) for causing the great conditions. My comments I express below are from my research in spatial economic processes. They are generalizations - which always have exceptions - however I do believe support the current economic realities we can see in Alberta.
One common misunderstanding many people and politicians have is that they can impact where economic activity locates. In reality, they can tweak things, shift investment slightly, but are largely at the whims of global macro-forces. Only on the very, very long term does it appear that government actions can have a role.
This applies both to pro-business and anti-business policies. Alberta can give oil away for free and remove royalties entirely, but will not come close to erasing the transportation cost reality of having lots of oil in a place in the world that is far from markets. It could build all the pipelines that it wants and it won't erase the effect of the global macro-forces against our product.
Remember, similar forces are what propelled Alberta to the insane levels of prosperity that it witnessed from 2001 - 2015. Government policy did little to encourage the overall boom. Sure some policies helped shape where certain activities took place through infrastructure improvements, certain royalty changes that were on the margin, allowing new investment to be attracted. But on aggregate, Alberta's economy was just the lucky recipient of a global resource boom outside local control.
So while research suggests governments are not able to control economic forces, government policy does clearly have some tangible economic effects on the local scale (think zoning) and on the very long-run (think investing in the CPR back in the 1880s to make Western Canada). But zoning itself doesn't create development. Neither does a railroad, unless the underlying economic impetus was already there to justify building it.
This leads to the big question: What should the Alberta governments do? What can they do?
They could be very pro-oil and reduce taxes, build pipelines, cancel royalties, but if oil isn't over $50 / bbl, no one is investing in any oil sands regardless of all the money we spend. So we could waste huge amounts of money attracting an industry that doesn't want to invest here anyway. All this to attract investment in a industry that might have it's best years behind it.
They could promote green energy, invest in technology companies and other sectors with tax breaks and other incentives to attempt to diversify the economy. But Alberta is a high-cost workforce environment and lacks the brand/history of such a place to attract the right kind of workforce and attention that these industries require. Many places attempt to become another silicon valley, how many are successful? How many are actually created through government policy? Hint: not many.
It's because of this that I am always suspect of both diversification / supporting our oil strategies that both sides of the arguments.
I would love to hear some other opinions.
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