On Tuesday Premier Rachel Notley, in the Speech from the Throne laid out her government’s plan to bolster “the struggling economy”. It was filled with optimism and confidence about how the government will diversify the pattern of production and create jobs. This is the aim of Bill 1, the “Promoting Job Creation and Diversification Act” which will, among other things, provide production incentives and encourage provincial credit unions to lend money to small and medium sized businesses to create jobs. It was a veritable Vesuvius of empty rhetoric and economic illiteracy.
Low investment in Alberta is certainly not due to too high interest rates. It’s due to regulation, political uncertainty, provincially, nationally and globally. Interventionist policy pushes entrepreneurs and the owners of factors of production to use these means in a different way from what they would do under pressure of unhampered market processes. Whether the government should pursue such a course or not is a political question, not an economic one. As Mises pointed out in Interventionism (1940),”..if one thinks that the authority has to represent the interests of society against the conflicting interests of egotistical individuals, one will find this attitude [of market intervention] justified. If the authority is wiser than its subjects with their limited intelligence, if it knows better what furthers the happiness of the individual that he himself pretends to know, or if the authority feels called upon to sacrifice the welfare of the individual to the well-being of the whole, then it should not hesitate to set the aims for the actions of the individuals.” It would be difficult to find a better description of present day attitudes and opinions of elected officials who form the government in Alberta.
The provincial government has no resources of its own to carry out this program that it does first take from someone else. If a business is commercially viable, then government support is not needed and if a business is not commercially viable, no amount of government support will make it so. Elected officials cannot pick winners and losers, but they are able to legally plunder the pocket books of wealth generators. Legalized theft clearly makes one group worse off.
In her speech, the Premier said, “there is much that needs to be done here in Alberta in the face of the current economic shock. First, we must help the many Alberta families who are facing immediate financial hardship. Albertans are rightfully concerned about their livelihoods and their income security. At times like these, we must think of our children first.” Perhaps she should use the same standard of concern for the children of today and those of tomorrow. Her intention is clearly to provide ostensibly, some benefits today at the overt and large expense of individuals in future.
According the provincial government the projected operating deficit for 2015-16 is now $6.3 billion, up from the $6.1 billion four months ago. Next year likely will be even worse. Alberta Finance Minister Joe Ceci recently stated the operating deficit could climb as high as $10.4 billion in 2016-17, up from the $5.4 billion initially planned in the last budget. If the operating deficit does indeed climb to $10.4 billion next year, and the government does not adjust its capital spending plan, this would mean that Alberta’s net financial position can be expected to deteriorate by $23 billion over just two years. Compared to Alberta’s net financial position in 2007-08, there has been a swing of $45 billion within the span of less than a decade. Does the premier truly believe this burden her government is placing on adults later is to the advantage of these same people who are today kids or even yet unborn?
Facebook
YouTube
RSS