You may be an ambassador to England or France
You may like to gamble, you might like to dance
You may be the heavyweight champion of the world
You may be a socialite with a long string of pearls
[Chorus]
But you’re going to have to serve somebody, yes indeed
You’re going to have to serve somebody
Well, it may be the devil or it may be the Lord
But you’re going to have to serve somebody
Bob Dylan-1979 Slow Train Coming
We are a province of free riders- free riders on the periodic gusher of oil, bitumen, and natural gas revenues. As such, this bargain has made us, inured us, to low taxes and good public services. And public buildings too, testaments to Alberta’s engineering prowess. When I say “we,” that includes me. I was lured to Alberta by money a decent research assistant-ship stipend and have stayed for 44 years- well remunerated with few regrets. Yet the spoils of extraction, the ghosts of living relatively high on the hog are now starting to make me uneasy as I watch the planet burn, flood and lose its biodiversity so critical to the planet’s health.
This bargain is a form of addiction, the crack cocaine that Alberta governments resort to when needing the next re-election fix. But the free ride, this devil’s bargain comes with horrendous costs. Many of these costs are not visible to millions of urban Albertans:-the toxic tailing ponds, set to burst and already leaking. Hundreds of First Nations people fearful of drinking water from the Athabasca. Hundreds of thousands of well sites, tens of thousands in the “back forty” unattended to. This means tens of thousands of acres sterilized.
Free rider problem is defined by Wikipedia as a type of market failure that occurs when those who benefit from resources, public goods and common pool resources do not pay for them or under-pay. Examples of such goods are public roads or public libraries or services or other goods of a communal nature. Free riders are a problem for common pool resources because they may overuse it by not paying for the good (either directly through fees or tolls or indirectly through taxes). |
The devil’s bargain has also meant that weak-kneed Alberta governments in awe of the money gushing in from oil and gas development have over the past 70 years collected 10 per cent of the rents leaving 90 per cent to the industry. (Go to Canadian Association of Petroleum Producers Statistics to find the data from 1947- https://www.capp.ca/resources/statistics/). To be sure, companies pay corporate income tax and well remunerated executives, employees, contractors and their service providers like accountants and lawyers and engineers pay Alberta’s low personal income taxes. So yes, we are dependent on the golden goose and the provincial state wants to extend this bargain in a never-never land fantasy of carbon capture to 2050.
Our premier Danielle Smith knows and understands this devil’s bargain. Smith has written that the province’s fiscal plight is not about economic diversification, it is fundamentally about fiscal diversification and who exercises power in this province.
This is the fundamental conundrum of Alberta. We want gold-plated services and we don’t want to pay more taxes for them. Politicians are to blame for maintaining the fiction that this was sustainable. Anyone who proposes an alternative to raise taxes the sales tax is the most obvious source of long-term revenue the province could adopt to solve this structural shortfall – it is instantly shot down by politicians fearing they won’t be re-elected.
Danielle Smith, “Alberta’s Key Challenges and Opportunities,” School of Public Policy, June 2021.
As I have written, the big four provide about 20 per cent of the provinces total revenues giving these mostly American owned corporations and their public relations firm- Pathways Alliance high influence in Alberta society. This influence ranges from lite regulation of the Alberta Energy Regulator, the Alberta Securities Commission, and influence through funding of Alberta’s universities and arts organizations.
Any corporate CEO or small business owner knows that when they rely on four customers for 20 per cent of its revenue, especially customers whose revenues are affected by volatile commodity prices outside their control, is not fiscally independent.
Albertans continue to remain free riders, unconscious of the perils underneath the thin fiscal ice we are skating on. Albertans remain both big spenders on large homes and huge trucks and SUVs- this is a badge of being a “have” province – low taxes. The fiscal cracks appear but there are few questions about how to address our revenue dependency. Our politicians’ heads remain in the sand truly believing that the words “sales tax” shall never be spoken.
The bills however are coming due. The Smith administration and their sycophantic provincial agencies fear monger about electricity blackouts while forests burn. The government dawdles on using sun as a power source and asserts federal emissions/production caps will invoke Alberta’s Sovereignty Act– the first stage in a choreographed slip into separation and annexation. Will free riding Albertans wake up before it’s too late? Will Albertans understand the endgame here leads to joining the meth lab that is our neighbour to the south- a neighbour slowly disintegrating into selfish buffoonery?
“The federal government has claimed that these regulations prioritize ‘reliability, affordability and sustainability.’ This is a falsehood. In fact, the opposite is true. These regulations compromise the reliability of Alberta’s grid, drive up costs for families and businesses, and will be impossible to implement in the next 12 years. The federal government is on a path that will lead to failure and Canadians who are already struggling will be the victims.”
Faust
Christopher Marlowe’s Doctor Faustus was written about 400 years ago. It is a classic tale of the trade-offs we all make when we seek to advance our individual fortunes over others. Often, we do not realize what we have got ourselves into until our life becomes too comfortable and the temptations of office and advancement present themselves. Faustus is an immortal and cautionary tale – a warning to a complacent society wishing to carry on partying without recognizing the massive cleanup job ahead.
