Recently Todd Hirsch, vice president and chief economist at ATB Financial, was featured on a webinar sponsored by the alumni at the Augustana Campus of the University of Alberta. His talk was about the five truths Albertans need to unlearn.
His first truth to unlearn is ‘growing the Gross Domestic Product (GDP) is always good’. The forest fire in Fort McMurray, floods in Calgary and destructive tornadoes grow the GDP, but they’re bad for taxpayers and those families and communities directly affected.
Government leaders are always bragging about aggregate GDP, but it, too, is irrelevant.
Hirsch said more focus should be put on the direction and quality of GDP. Are we creating goods and services beneficial to society’s well-being, or are we creating those that harm society such as weapons, gambling and illicit drugs?
Does our GDP growth create opportunities that can be equally shared by all or just a select few? “Everyone shouldn’t be guaranteed the same outcomes but everyone should have the same opportunity”, said Hirsch.
The second truth to unlearn is the “need to diversify Alberta’s economy”.
University of Calgary Associate Professor of Economics, Trevor Tombe, argues Alberta’s economy doesn’t need diversity, it needs stability and prosperity. Every economy has a unique dominant industry. It’s just that Alberta’s dominant industry, oil and gas, is far more volatile than those in other provinces. That explains why Alberta leads the country in recessions, seven since 1987.
“If we’re looking solely at diversity”, said Hirsch, “Manitoba wins hands down but it is neither dynamic nor prosperous.”
The third truth to unlearn is “grow the economy by lowering taxes”.
This is a throwback to 20th century economics. Hirsch argues a low-tax regime is one factor to attract businesses but reputation and transportation are often more important.
High tech and other new growth industries, employing young and highly mobile workers, are far more likely to join companies located in jurisdictions that offer good quality of life, including culture, arts, sports, recreation, early childhood education and affordable childcare spaces.
Green options and mass transportation are also important considerations for young urban workers.
The Kenney government isn’t very good at branding Alberta. In fact, too many of the UCP’s missteps have been negatively reported and mocked on the world stage.
Going after the beloved teenager, Greta Thunberg, ramping up coal mining in our iconic Rocky Mountains, attacking the Netflix family movie, BigFoot, or even our recently announced 1960’s primary school curriculum does little to boost our international reputation.
The fourth truth to unlearn is “the need to balance the environment and the economy”.
Hirsch argues instead of ‘balance’, we need to ‘harmonize’ the environment and the economy. He used the analogy of music. Notes in a chord enhance each other, they don’t work against each other.
The best example of harmonizing the environment and economy would be utilizing carbon capture and storage in the oil sands. Our oil could then be produced at net zero carbon—a win for our reputation, economy and the environment.
Finally, the last truth to unlearn is “free trade is always beneficial”.
The benefactors of 50 years of trade liberation have been national economies (gross GDP increases) and a small number of multi-billionaires, leaving the majority of world citizens far behind.
Populism emanated from the dismal failure of liberalized free trade for ordinary citizens. But populism is not a solution, it’s an expression of extreme dissatisfaction.
Changing up what governments did wrong in the 20th century and re-focussing on future industries and young workers is today’s solution.
Unlearning these five truths would be a great start. Unfortunately, Alberta is ruled by a government that has double-downed on dated economic theory and dreams of re-creating the past.