California, Here We Come

November 3rd, 2009
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My Open Range column from the November 2009 issue of Alberta Venture magazine:

Alberta’s heading down a dangerous road, but it’s not too late to turn around

Locked in a spiral of runaway spending and crumbling revenue bases, undermined by interest-group politics, paralyzed by politically correct fetishes, sapped by the departure of taxpayers and business owners, today’s California is a cautionary tale. It’s a dispiriting example of what another writer described as the tendency of postmodern elites to assume that the figurative roof protecting our civilization will continue hovering magically even as they knock down the pillars holding it up.

A couple of columns back I argued that it was unlikely we’d see another western political protest movement on the Canadian federal scene – but that getting our own house in order was another matter. Alberta’s still only a shimmering reflection in California’s rear-view mirror. But it’s scary that we’re even on the same strip of political pavement. Our once lightly taxed, business-friendly, sensibly regulated and can-do province is showing symptoms of the California disease. It could be that Premier Ed Stelmach is our version of California’s Gray Davis, the low-key former governor who sought solace in paralyzing bureaucratic process. When the deluge broke, he was swept aside.

The oil and natural gas royalty debacle provided clear warning. But there’s much more. It took nine years to gain authorization to expand an already-operating oilsands facility that itself had required 300 permits. Eight years of regulatory warfare are still not enough to build a power line from the central Alberta producing area to the consuming south. Alberta is now considered a worse place to invest than nearly any other province, and among worldwide jurisdictions we’re ranked 92nd. We’ve had a $15-billion fiscal reversal in one year. We need to act before our provincial government starts paying its employees with IOUs, as California is doing, while imposing massive but chimerical tax increases on hollowed-out industries and exhausted ratepayers.

Political scientist Tom Flanagan has commented that the Stelmach government’s problems are the result of Utopianism coming to Alberta – in this version, the notion that commodity prices, economic output and tax revenues can move forever in one direction. A mentality takes hold that singular conditions are the norm and you can openly abuse your lead industry without adverse effects. It’s a variant of that roof-and-pillar analogy. Utopianism can generate unspeakable violence in a totalitarian setting; in a democracy it creates opportunity for a party that offers to restore sense once the public spell is broken.

It’s possible we’re at such a crossroads. Most intriguing is that two parties appear to be switching roles. A decade of Utopianism has virtually immobilized the Progressive Conservatives. Vast and unwieldy, they occupy the allegedly enviable centre, actually a political death trap that has seduced them into attempting to be all things to everyone. Meanwhile, the allegedly ultra-far-right, ideological, unstable, missionary and moralistic Wildrose Alliance Party is reinventing itself with astonishing speed.
You’ll have heard of the stunning September byelection victory by Wildrose’s former leader, Paul Hinman, in Calgary-Glenmore, routinely described as the PCs’ absolute bastion. In an act of remarkable selflessness, Hinman had previously relinquished the leadership, recognizing that he wasn’t suited to take it to the next level.

Under Danielle Smith, who was elected the party’s new leader on October 17, Wildrose’s transformation will accelerate. Smith’s candidacy embodies the “new West”: urban, optimistic, fiscally conservative and pro-freedom, but not socially conservative. Even should they shake themselves out of their fabulist reverie, the Stelmach PCs will face an appealing, credible alternative.

Pundits have pounced on the historical analogy to the dying years of Alberta’s Social Credit government under its hapless final premier, Harry Strom, swept away in 1971 by the PCs of Peter Lougheed. Having researched Lougheed’s ascent for a history book some years ago, I believe the deciding factor wasn’t ideological, but sociological or even aesthetic. To encapsulate terribly, Lougheed was good-looking, cool and urban; the Socreds were dour, wrinkled, thin-lipped townies. Notice any parallels? Seen any pictures of Danielle Smith? Says one supporter: “Albertans want to think their premier is a bit of a neat guy [or gal], and Ed just embarrasses them.”

Should she go all the way, Smith will have a plateful of challenges, yet also a feast of opportunities and a vast menu of ideas. A top priority would be restoring the mutually supportive relationship between oilpatch and government that delivered five decades of stunning progress. “The PCs have shattered investor confidence,” says Smith. “It’s the kind of thing you expect from Venezuela.” The first task, she says, “is to fundamentally repair the oil and gas royalty framework.”

Smith rejects Stelmach’s impulse to centralize and bureaucratize decision-making. She would curtail the bureaucracy and show greater concern for private property rights. The health-care system is also crying out for reform. Not privatization, but sensible ideas like public funding following the patient, and contracting out of support services. And balancing the budget, well, that’s a given. Smith believes the deficit, huge as it is, is something we do control, because spending is so high. She says we’ll need to renegotiate public-sector union contracts and subject the “vast public monopolies” to competitive forces. Public-sector compensation packages are 50% higher than for comparable private-sector workers – yet it’s the private sector doing all the cutting.

It’s not as if nobody has thought this stuff over. It’s that nobody has had the combination of impulse, urgency and courage to get on with it. Perhaps Smith does. Then we can prove Albertans aren’t as loopy as those Californians.

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By George Koch
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