Politics

In the Vancouver Sun, Scott Hennig leads the chorus of Alberta-centric hatery with an accusation that Alberta’s spending is way out of line. Alberta tops the provinces in government spending per capita. So what? Alberta also tops the provinces in GDP income per capita. This is another example of misinterpretation of economic data in journalism, and I’ll show you how he’s committed a massive error of omission that leads his readers astray.

Let’s start with this:

Alberta’s right-wing, fiscally responsible, red-tape hating, big government-loathing, strong and free “Conservative” government will spend $37.8-billion on government programs in fiscal 2008-09. What makes this figure exceptional is that it is higher than spending in British Columbia, where the government is slated to spend “only” $37.7-billion this year and they have nearly a million more citizens than Alberta.

If you break down provincial program spending per citizen, Alberta has held the top spot in Canada for a couple of years. It is now pulling away from the pack. In the West, Alberta spends $10,771 per person each year. That’s about one-third more than B.C.’s $8,001, Saskatchewan’s $8,090, and Manitoba’s $8,026. If a foreign academic was given this information and asked to determine which province is governed by a political party favouring ever-bigger government, Alberta would sadly win the contest.

This is how Mr. Henning is looking at the data: simple spending per capita.

This is using planned 2008 expenditures and 2007 population numbers. My numbers differ from Hennig’s because he hasn’t cited his sources.

Of course Alberta’s spending per capita is 35% higher than British Columbia, Saskatchewan and Manitoba. That’s because Alberta’s GDP per capita is at least that much larger than other provinces. Using expenditure-based data, (I’ll address that in a minute), Alberta’s GDP per capita in 2007 was nearly $75,000 per person. That’s 45% larger than Saskatchewan’s, 72% larger than British Columbia’s and 80% higher than Manitoba’s.

Here’s how the provinces stack up:

Alberta has quite a high level of GDP per capita. However, these are expenditure-based numbers, which include Alberta’s presumably high levels of government spending. So, let’s look at Alberta’s provincial government spending (planned, for 2008), as a percentage of last year’s gross domestic product. This tells us how much of that GDP is made up of ‘gubmnt’ spending:

When we look at Alberta’s level of spending in relation to its GDP, it becomes evident that Alberta’s total spending makes up a very small fraction of overall economic expenditures.

Simple logic: the reason Alberta can spend $10,000 per capita is because it earns $75,000 per capita.

Let’s look at it this way: for every dollar in the economy, how much is made up of government dollars? Here’s how it stacks up:

Alberta has the lowest level of government expenditures relative to the size of total expenditures in the economy. For every dollar spent into the Alberta economy, government spending accounts for roughly 13 cents. In BC, it’s 19 cents per dollar.

Let’s get back to hennig’s article, wherein he lambastes this ‘wasteful’ spending:

Alberta’s program expenditures do not include all of its capital expenditures for the year, which also rank first in the nation when measured by citizen or by total dollars spent. The figures are striking: Ontario, home to 13 million Canadians, will spend $7.5 billion on capital projects this year. Alberta, with a population slightly more than a quarter of Ontario’s, has budgeted $9 billion. Edmonton is tossing around cash like it will be pumped from the ground forever. This policy has already cost Albertans more than they will ever know.

Of course it costs an arm and a leg to build anything in Alberta: the government has to compete with private industry demand for construction personnel, equipment and materials. Have a look at Alberta’s inventory of major projects (pdf). Alberta has $274 billion in planned, progressing or proposed projects on its slate. Planned infrastructure improvements account for roughly $20 billion, which is less than 10% of total planned expenditures province-wide.

Alberta’s infrastructure needs this spending. In their effort to eliminate the provincial debt, the Kleinsters put the province into an infrastructure deficit. Traffic in Calgary and Edmonton is becoming more insane by the day, not to mention the LRT transit system. Edmonton’s roads are abysmal to say the least, and the Highway to Hell (HWY 63) - the main artery for oil sands-related equipment, personnel and materials - is a weekly nightmare for many working Albertans. This lack of infrastructure actually costs Albertans lost potential as deliveries wait in congested traffic, drivers get killed on HWY 63, and potholes put semis out of commission.

So where the heck is Hennig right? I don’t agree with how he gets there, but I do agree with his point: Alberta needs to think about the future. I don’t mind government spending here in Alberta, as long as that spending will diversify Alberta’s economy in the long run. As an economist, I realize there’s a trade-off between saving for tomorrow and spending for today. It’s all fine to build roads and schools. Those will serve us long into the future. But we’re far behind Alaska and Norway when it comes to investing those resource revenues outside the country, where they are less prone to drive up living costs. If Alberta is falling behind, it’s in this specific area. We have $17 billion in the Heritage Fund. Norway has $400 billion.

There’s something wrong with that picture.

It was inevitable.

http://vpilf.com/

feministing.com

Comedy Central

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McCain knows what he’s doing. When he said on Leno that he wants to drill for oil ASAP, he wasn’t kidding.

I wonder if we’ll be hearing more of the Lindsey Williams meme.

VIDEO

BOOK

As the oil industry advances with every cut line, pipeline right-of-way and oil sands moonscape, the cumulative effects may manifest in Albertan’s psyches as mental illnesses. How’s that possible?

What do you see?

While reading THIS post at BLDG Blog on the psychological effects of construction in cities, I came across the following sentence:

. . . [I]f a new highway can have a measurable, and easily detected, impact on a city’s economic health and administrative well-being, then could a new highway – or bridge, or tunnel, or flood wall, or, for that matter, sewage treatment plant – have a detectable impact on the city’s mental health? After all, these sorts of massive public works “may carry a psychological burden . . .

An Environmental Impact Assessment is conducted for each and every oil sands project in this province as part of its approvals process. These approvals encompass all manner of impacts, from groundwater to traffic to noise, pollution and economic variables such as housing, jobs and tax revenue. Each project is not discreet; it must be considered in light of other projects in the area. This is the cumulative impact of oil sands development.

But what’s not considered is the psychological impact a development has on the well-being of individuals. So I’ve decided to look into this some more.

WorldChanging.com:

Solastalgia describes a palpable sense of dislocation and loss that people feel when they perceive changes to their local environment as harmful. It’s a neologism that Glenn Albrecht, an environmental philosopher at the University of Newcastle’s School of Environmental and Life Sciences, created in 2003.

Albrecht’s work among communities distraught by black-coal strip mining in New South Wales’ Upper Hunter Region convinced him that the English language needed a new term to connect the experience of ecosystem loss to mental health concerns.

“The sense of a home landscape being violated [by strip mining-related environmental damage] seemed to have disturbed the region’s social ecology so much that the psychic or mental health of many people living in the zone of high impact was being affected,” he says.

Wired follows up:

“What’s more, Albrecht has noticed that the more quickly environmental change occurs, the more intense the solastalgia. The mental-health effects can be powerful. In the Australian outback, industrial activity — notably open-pit coal mining — has turned verdant areas into moonscapes seemingly overnight, and the suicide rate in the region has skyrocketed.

There doesn’t seem to be much recent research published on suicide in Alberta, and my recent forays into the topic found that the data are reserved for insurance and emergency workers. There seems to be a lid on the subject in this province after the Calgary suicide fiasco, where suicide was revealed to be the number one cause of death amongst young males in the city.

Imagine your house. Now imagine me parking a dragline behind your house. How do you feel?

First, I’m no psychologist, but I would imagine that one must establish how changes in one’s environment can affect their mental state. This can be shown subjectively through a person’s own observations. Imagine you are hiking through the back woods, in a very isolated area, where bears fear to tread. You smell the crisp air, you hear the chickadees, and you can sense the cool breeze coming off the glaciers in the region. As you reach the summit of the mountain you are ascending, you stop to enjoy the scenic vista spread out before you. It’s the most breath taking thing you can imagine.

Using this as a baseline scenario, now imagine a nuclear cooling tower or an open-pit mine in the valley below. Does it seem as pristine and wild? Look through some Burtynsky photos to get an idea of what I mean. Industrial landscapes might be compelling, but it’s all about the contrast and juxtaposition.

Ceteris paribus, if it holds that the perceived natural wildness of nature increases as the presence of industrial activity decreases, one would probably rate the preceding vignette as “less wild” in the presence of a nuclear cooling tower, and vice versa. Central Park would generally be rated by humans as less wild than Jasper National Park, for example.

Moreover, the difference between the two is associated with a sense of loss. It’s a sense that the ecosystem is not as undeveloped as previously thought. This sense of loss comes from the shattering of one’s expectations. Again, I’m not a psychologist, but I have a hunch that cognitive dissonance comes into play here.

I know many Albertans who have experienced this sense of loss. In my own experience, it has happened twice. The first time, I was fly fishing in a remote area and came across an oil slick on a stream. The sense of loss led me into a state of anger. The second time, I was in an industrial environment (petro chemical facility) and found a dead baby goose in an alki (alkaline) pond. In essence, the two scenarios were as far apart in terms of the environment, but in both scenarios, I was observing something that didn’t belong in the particular environment. One doesn’t expect to see oil slicks on pristine mountain creeks any more than one expects to find a baby goose swimming in a substance that can only be neutralized with battery acid. Both episodes evoked a sense of loss, followed by anger and a search for someone to pin the blame on.

Albertans are an angry lot, as a recent Angus Reid poll suggests. We have many reasons to be angry, from long lineups in a labour-crunched economy, to governments that vote themselves pay increases while shortchanging us on energy royalties. But are these just targets of our deep-seated anger, as opposed to the roots of it?

The New Republic is discussing the demographic inversion of Chicago, and I wonder if the same can be applied to Vancouver, Edmonton and Calgary.

TNR writes:

In the past three decades, Chicago has undergone changes that are routinely described as gentrification, but are in fact more complicated and more profound than the process that term suggests. A better description would be “demographic inversion.” Chicago is gradually coming to resemble a traditional European city–Vienna or Paris in the nineteenth century, or, for that matter, Paris today. The poor and the newcomers are living on the outskirts. The people who live near the center–some of them black or Hispanic but most of them white–are those who can afford to do so.

I don’t know why this is the case, but my general impression of Vancouver, Edmonton and Calgary is that the three cities share a similar layout. You have Chinatown bordering the scuzzy areas just off the east/northeast regions of downtown, and the cities become progressively more affluent as one travels westward. West Van is akin to Jasper West in Edmonton (affluent urbanites), and even Calgary’s downtown west end is full of condos. I suppose Vancouver doesn’t have a comparable northeast region of the city, but Surrey is comparable to northeast Calgary.

I was going through the City of Calgary’s community profiles index, and came across several communities in northeast Calgary that are declining in population (see p. 119 of the civic census - pdf). As can be seen from the graph, many of the increases in population are happening near the city core and south of Calgary, although not concentrated in any one area of Calgary.

Nevertheless, it’s interesting to think that, as energy prices climb higher, the suburbs could become the new ghettoes. Right now, it’s the granola-eating DINK yuppies who have the bucks to spend on things like Net Zero Energy homes in Edmonton’s brickyard, or Calgary’s Ramsey area.

I’m not so sure the racial component of the demogrpahic argument will hold so much in Calgary and Edmonton as much as it does in the US. The racial divide down there is much more in-your-face than we see up here. Arguably, though, city-wide migration patterns may follow income. Mid-to-upper class Boomers will settle closer to downtown in an attempt to downsize, with the ultra-rich people living in their enclaves like Priddis, St. Albert and similar areas.

A Nova Scotia municipality is steamed because a group of students were able to find funding to attend The FIRST Lego league World Festival. The municipality isn’t angry over the fact that the kids were able to attend on taxpayer’s money; rather, the complainant fuming because that’s money that could otherwise have gone to fixing sidewalks. Also, it was from a fund originally intended to finance small business development.

http://thechronicleherald.ca

“ACOA’s mandate is regional economic development, not Lego-building,” said Mr. Williamson. “This is a question of federal priorities and the federal government putting money into Lego building blocks as opposed to infrastructure in this part of the country.

Mr. Williamson said it was “absurd” to spend money on a Lego contest when there are wharfs and sidewalks that need repairing. “There are so many areas in which the government could spend money here in Atlantic Canada,” he said. “And $10,000 to $15,000 handed to a municipality for infrastructure could be meaningful.”

Mr. Williamson said he doesn’t blame the teachers for finding funding for the students, but ACOA should have different priorities.

I am all for taxpayer funding of lego tournaments. Mr. Williamson is short-sighted in his approach to this situation. Sure, these kids are off gallivanting the globe, building lego structures partially funded by the federal government, but you can’t blame them for being more entreprenurial than Nova Scotia’s small business sector when it comes to financing options.

Mr. Williamson should consider the long-term, big picture. The alternative is to take that money and build a sidewalk that won’t get used because the kids will all be inside their homes, glued to the X-box, and fattening like diabetic lambs on cheeze-its and Dr. Pepper. Without any creative outlets for their energies, they’ll resort to burning down the wharves Mr. Williamson wants to see replaced.

Mr. Williamson, please stop being such a scrooge. The Atlantic Canada Opportunities Agency is all well and right in its decision to fund this venture. Eligible activities include: “business studies, capital investment, training, marketing, quality assurance, and not-for-profit activities that support business in the region’, and this clearly falls under training.

How many future engineers, urban planners, architects and construction managers will be shaped by this school’s lego program? While it’s not certain, I believe Lego building blocks wire kids’ brains for these occupations, and these are the people your province will need when the oil boom finally comes out East.

I recall THIS graphic being passed around the blogosphere like a right-wing reefer. It shows that Fox News does not make any political contributions to the Republican party, with the implicit assumption being that since it does not make political donations to the party, it must indeed be fair and balanced.

It’s not the money that matters.

Remember Scott McLelland? He has a different take. YouTube

This controversy is not going away any time soon. I wonder how Fox will respond to McLelland’s allegation.

What would Alberta’s GDP be if it had no oil? So many jobs are dependent on this sector of our economy - from equipment manufacturing to construction to engineering and financial services. It’d be hard to envision what Alberta would be like if it did not have oil. But how would our democratic institutions fare? Is there merit in the thought that affluence breeds apathy in this province, as reflected in our recently abysmal showing at the polls? Are Albertans too happy to care about any sort of difference a good government might be able to make when it comes to everyday life?

Remember this Calgary Herald Survey from last month? (h/t Werner)

In a Leger Marketing opinion poll of 900 Albertans provided exclusively to the Herald, only 337 people — 37.5 per cent — said they didn’t vote, a situation often encountered by pollsters asking about voting. They speculate non-voters are less likely to respond to surveys and some are reluctant to admit they failed to vote.

The main reason cited by 21 per cent of non-voters in the Leger survey was they didn’t have time to get to the polls.

One in 10 of the people surveyed between March 12 and 25 said they weren’t allowed to vote, either because they were not on the voters’ list or weren’t Canadian citizens.

A similar-sized group said they weren’t interested or don’t know much about politics. Others didn’t know who to vote for or didn’t like any of the candidates. Some simply boycotted in protest.

Too busy to vote. Too busy turning oil into cash.

Does this idea of affluenza hold up in any other data?

From Cowboy Economics: Economists find no correlation between nations’ resource endowments and the quality of their institutions

A paper co-written by an Indiana University economics professor takes issue with the widespread idea that there is a “natural resource curse” that puts countries with oil or mineral wealth at a disadvantage when it comes to economic growth.

The paper also shows that a common explanation for the curse — that an abundance of oil or other point-source resources causes countries to have lower-quality civic institutions — isn’t true.

However, that’s not the essence of what the authors of the paper are trying to say. It goes a little more like this (from pages 13-14, pdf):

We do not claim, of course, that good institutions hurt long-term growth. Instead, we conclude that countries with good institutions that would have been rich anyway, tend to benefit less from the positive effect of natural resources while countries with weak institutions that would have been poor in the absence of substantial natural endowment reap relatively large benefits from their natural resource wealth. In other words, Norway would have done well with or without oil, but Kuwait without oil would have been poor.

. . .

Various authors have claimed that either oil or mineral wealth in general exert a negative influence on the quality of institutions, income inequality, investment rate, and so on. While some of these links may indeed be present, we think that all of these studies are flawed due to the relationship between oil wealth and per capita GDP that we established earlier.

Hey, Alberta might not have the most ideal democracy. I mean, we suppose that having a higher percentage of voter turnout is a good thing. But is it, really? If people are too busy making money to stay informed, they value other things more than showing up to vote. And if they can’t see the value in voting, do we really want them doing it? Moreover, is it fair to make voting compulsory, and thereby increase the proportion of uninformed voters? I’m making an assumption here - that most of the people who don’t vote in Alberta are ill-informed; I’m sure some well-informed voters stayed home during this year’s election, and I’m betting they were in the minority.

In a way, the ‘too busy to vote’ theory holds up, especially from an economist’s (admittedly simplified) worldview of utility maximization. Voters see the benefit of voting, whereas non-voters simply abstain. It is certainly possible that the majority of Albertans receive a greater benefit on the economic side of resource development, and so they devote their time and energy to said resource. As a result, democratic institutions suffer. But this isn’t necessarily a bad thing. Dare I say that Ed Stelmach may have been right on the money when he said:

“They’re just happy with life, most of them,”

The cancer stage of capitalism is not a metaphor. It is a rigorous description of where we are.The current financial stripping of economies and environments across the world exhibits, in fact, all the hallmark characteristics of a carcinogenc invasion. As on the cellular level, an uncontrolled rogue sequence of reproduction invades and self-multiplies across social borders with no committed function to life-hosts. As on the cellular level, the cancer advances by not being recognised by surrounding life communities.

- John McMurtry

Growth for growth’s sake is the ideology of the cancer cell

- Edward Abbey
Let’s see, America. As Scott Lehigh has said, you’ve got to face an inconvenient truth: $50 trillion in unfunded liabilities. The ACSE has been harping on and on about your ailing infrastructure. T. Boone Pickens claims you’re transferring $700 billion per year to the Middle East in exchange for oil, and you’re borrowing from Japan and China to do it. To hide your money-printing ways, you’ve stopped reporting M3. Over the past two years, 268 of your major financial institutions have failed. And that’s just the start of it. We haven’t even addressed the expenses of your military incursions. Yes, I know Japan and China keep lending you money, and in that sense they’re enabling your oil and war addiction. But try to see it from their angle - they have no other choice but to spend the money you give them on T-Bills because debt and funny money are your exports. It’s co-dependency at its finest.

America, I know you’ve been through a Civil War, two World Wars, a depression and several monetary inflations, but those were all caused by minor-flareups stemming from the banker infestation Jefferson warned you about. Kennedy tried to offer a cure, but we know what became of him. What began as a benign tumor has metastasized into a full-blown growth that’s sucking the life right out of you.