Alberta's Budget Woes Began When Free Trade Forced MORE Resource Exports

Alberta's finances have been in the headlines lately in part because it's hard to believe that a place so rich in natural resources could be unable to balance their books. Of course some of Alberta's problems are homegrown but not all of them. Back in the days before Mulroney, before Free Trade, Alberta had a much broader based economy, just like the rest of Canada. Back then Albertans didn't just export stuff they made stuff and most of the stuff they didn't make they bought from other places in Canada that made that stuff. In exchange the other folks in Canada bought stuff from Alberta.

For sure mosta that stuff could be made cheaper in Mexico or China or India, and for sure the industrialists would make lots more money by eliminating the duties that protected Canada's jobs. In rode Mulroney's Conservatives on approximately the same 40% mandate Harpo has now. Despite losing the election by 60%-40%, despite the howls of protest from 'the people', the industrialists who backed Mulroney got what they'd paid for - Free Trade.

Almost immediately factories starting closing, good paying manufacturing jobs started going south and jobs at Mickey D's and Starbucks started replacing them. As government revenues from both employers and employees headed south along with the jobs governments, even Alberta's were feeling the pinch so they turned to Canada's embedded wealth - its resources - which had always provided a portion of their revenues. Now the revenue pressure was on and the only solution offered by governments, the extraction industries and capitalism itself was, and still is, MORE.

Along came the cash cow called the Tar Sands, surely if the extractors could just extract MORE of it fast enough [with the help of government subsidies of course] and export MORE of it fast enough all would be well. As the manufacturing jobs turned into 'service' jobs the price of oil climbed and the Tar Sands expended as fast as possible because everybody knew MORE was better. Alberta dumped Peter Lougheed's Norway like long term resource revenue fund and started living off the immediate proceeds of resource exports.

MORE once again turned out to be worth-less when instead of the dwindling supply predicted by Peak Oil instead became new types of energy  being found in new places. Alberta was trapped, it was addicted to MORE, its only solution was MORE MORE. Now Alberta has developed and exported so much MORE that it has flooded the US market with its sickly, expensive to refine, crud and the price for it is so low that the Alberta government is in financial trouble. Of course some might suggest raising royalties which are among the world's lowest, or raising taxes on the assets of the already rich, but no, Alberta's solution is...you guessed it...MORE.

To summarize, in the good old days Canada had a relatively strong and stable economy then it adopted 'Free Trade' which cut thousands of manufacturing jobs which in turn cut governments revenues. In response Canada opted for all out natural resource exploitation and export which caused their currency value to jump which meant even larger job loses and lower government revenue. In response Canada, and especially Alberta, doubled down and exported even more resources resulting in a flooded market and has sent the price of their Tar Sands crud into the toilet and their budget into a deficit. Those conservatives and Conservatives sure know how to handle the economy eh!

Canada's Dutch Disease inflated currency makes it easier for those who still have a middle class lifestyle to buy needless imported crap but overall the quality of life in Canada has gone south along with the manufacturing base that used to provide decent jobs, that used to make the vast majority of Canada's people secure. Now Canadians have more folks lined up at Starbuck's for a job, more poverty, more stress, more, more, MORE of everything, except common sense.