The Economics of Conservative Consolidation in Alberta

oilmoney

A great floor-crossing has occurred! Political betrayal! Promises broken! The opposition, neutralized!

A lot of ink is being spilled on the betrayal of values, voter’s wishes and intentions, political opportunism, etc. The affair is being individualized and personalized: what was Danielle Smith thinking? How could she do this? But this is all less interesting than the economics at work in Alberta’s political establishment.

The Wildrose has its beginnings in the Stelmach era, when milquetoast increases to the royalty regime were considered. This resource-royalty re-tooling was occurring at exactly the same time as a global economic recession in which the future and viability of capitalism itself was in question. The global economic recession was cast by certain oilpatch-aligned folks as caused primarily by Stelmach and his royalty-regime. This marks the beginning of the Wildrose’s electoral and funding success.

What was fascinating, over the course of the next few years, was the crisis of identity this right-wing faction caused in PC ranks. PCs had typically filled the right-wing side of the room, and their conservative cred was never questioned by the opposition, which before the Wildrose made up the centre-left wing of the political spectrum. Suddenly, though, the PCs had to be more conservative than the Wildrose, while also not alienating voters who were increasingly urban and socially liberal. It was also highly entertaining to see a party exploit any populist issue available (power lines!) to position itself as the party ‘of the people’ against the corrupt establishment — a trope that’s well-worn in Alberta’s political history.

It’s difficult not to see a relation between the threatened profitability of the oil sector and the rise of the Wildrose. Until recently, oil prices have tracked steadily upwards ever since the 2008 recession. So, too, did the popularity of the Wildrose. I suggest that the Wildrose’s function was to represent this economic interest provincially, preventing any further action on royalty rates or fiscally progressive policy from occurring.

It’s telling, also, that the rationale for this enormous floor-crossing is about “uncertain economic times” and needing to “pull together as conservatives.” Alberta’s oilpatch isn’t going to be the target of any redistributive policy from the PCs anytime soon: oil prices are sinking, projects are on hold, and government coffers are looking increasingly bare.

The major threat to industry is not from the PCs, in tinkering with royalty rates or what-have-you, but from the left side of the spectrum: the coming fiscal/budgetary crisis means seriously considering Alberta’s revenue problem. Running a province on oil revenue (instead coming up with sane taxation policy) is great for everyone when oil is flowing, but when prices drop suddenly the ability to fund everything dries up. The conservative consolidation we’re seeing is simply preparation for the substantial budget cuts we’re going to see — and it will likely hit the public sector hard. Healthcare, education, social services.

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