Tuesday, December 29, 2009

Saskatchewan Crazy Talk.

Diversifying the economy so that the Province isn't at the mercy of (horribly inaccurate) potash speculation?

...That's just plain insane!


8 comments:

Zach Bell said...

Our economy IS quite diverse. It's probably the only reason we survived the global meltdown to this point.

Bailouts provide for false inflation of the strength of an economic sector which, if you're not careful, (And governments rarely are) will eventually deflate unexpectedly or result in the industry of choice becoming dependant on government cash.

Audrey II said...

Zach,

Most of the diversity that you're referring to came about as a result of the careful planning and investment of previous regimes that employed decidedly un-Friedman-esque approaches to government involvement in the economy. The Wall government's "hand's off" approach (I'm familiar with Hayek et al. and the theory behind it) hasn't resulted in the magical self-regulating equilibrium. They've devested and gradually removed government (and the financial stability that it represents) from the market and confidence has reacted accordingly. This may be very good for some, but that kind of approach arguably tends to foster wealth concentration. The rising tide doesn't lift all boats.

I agree that bailouts come with potential risk, but that risk (as you acknowledge) can be mitigated through careful government activity. The fact that governments can be "not careful" doesn't alone justify an a priori assumption that all governments will be that way, to say nothing for the out of hand rejection of government involvement that follows from that premise, IMHO. Particularly when the risk is balanced against the likelihood of irreparable damage to entire provincial segments of industries.

BTW, it's nice to have an unabashed free-marketeer here to provide a counterargument . I hope you'll stick around and continue to contribute.

Zach Bell said...

Oh, I do enjoy the opportunity. My wit isn't exactely razor sharp, nor am I argumentativly practiced as I focus on trying to keep a business afloat among a myriad of government road blocks...but it's always nice to have some time for discussion.

I don't think that the wall government has taken a hands off approach and any limitation that have imposed on themselves in terms of meddling in the affairs of private business has been minimal. It would in my mnind be akin to comparing a 100 pound pile of rocks to a 99 pound pile of rocks arguing that the 99 pound pile is smaller and notably so. The Wall government has taken on an active role in all business matters in our province but perhaps in different ways. The rat union, CLAC for instance in now beginning to make inroads in the province as they did in Alberta under the Klein government.

I may be exceptionally jaded but I didn't mean to imply that governments can be careful when applying bail outs and other simmilar economic excercises to the private sector. It is my beliefe that government is inherently flawed as so long as it is involuntary in how it administers law, (Infrequent elections do not make a system voluntary) can not be careful about much of anything. Even if it is unjustified to make such a blanket assumption of coercive government, it is absolutely justifiable to assume that shoudl one government regime get it right, the next will almost certainly get it wrong and almost certainly the one after that and the one after that and so on.

But this is a different discussion I think with a much wider scope.

what this really comes down to for me is a cost benefit. I'm not the least bit convinced that bailouts have a long term beneficial effect and can only surmise that in fact, the long term effect is just the opposite. We do have a very well diversified economy here. While the government of the day is getting it wrong on potash (surprise surprise) it is still exceptionally important to our economy and very beneficial. Had the crown corporation not been sold in the past, we arguably would not have benefited to so great a degree from that particular resource. Today, oil is experiencing a great deal of expansion that has not yet been seen in the province. When I was on a contract near the American border months ago, I could see oilfield activity that I understand had never been so prevalent down there as it is today. Uranium is being lifted out of the ground at an exceptional rate and we're experiencing very notable benefit from precious metals such as gold being mined.

In fact, most all of our sectiors are doing quite well in comparison to other jurisdictions. Not that I think government deserves the credit for that but to say the economy should be further diversified as if some one has dropped the ball is unfair I think.

have you ever owned a business? I think most people have no idea how much government is involved.

Patrick Ross said...

Interestingly, a good deal of the economic diversification of this province was actually accomplished under whose government, again?

Why, I believe that would have actually been Grant Devine.

And while we're on the subject of Potash, as I recall Alan Blakeney's approach to the volatility of Potash prices was actually to shut down the Saskatchewan Potash Corporation -- despite having borrowed millions of dollars to invest in its creation (oh, and the NDP would later mislead the Legislative Assembly in regards to that).

Audrey II said...

I actually have run a business (albeit a very, very small one) and understand that there is a fair bit of government involvement at every level. The "hands off" reference above was meant to be relative, not objective. And while I can understand a libertarian perspective deeming even the Wall government as being insignificantly less intrusive than other Sask provincial governments have been, it is the marginal differences that make the distinctions between various governments and parties and their (rightly or wrongly) perceived successes and failures.

Your right to acknowledge that an a priori position that government cannot successfully intervene in the economy is a matter of much larger scope than the topic at hand here. I would suggest that a good deal of the electorate not only grasps the marginal differences between the Sask NDP's involvement in economic planning / action and that of the Sask. Party, but also considers those differences to be of import.

I don't think it's unfair to point out that the current government hasn't done the same kinds of things that its predecessors successfully did in order to assist and protect important industries within the province. You're certainly welcome to disagree, but lets be clear about what that disagreement is rooted in: ("It is my beliefe that government is inherently flawed as so long as it is involuntary in how it administers law, (Infrequent elections do not make a system voluntary) can not be careful about much of anything."). Once one adopts that particular premise, further discussion about the cost/benefits of marginal changes to the way governments ought to influence the economy becomes moot.

I guess we're stuck with a premise-level disagreement over what government can, with any degree of success, accomplish.

I guess my question to you would then be "Do you consider the current level of economic stability that exists in Saskatchewan to exist without influence of the relatively heavy amount of influence exercised over the economy by decades of central-planning NDP governments? If so, how then do you account for the current level of economic diversity?".

Audrey II said...

The interesting thing about belief, Pat, is that it doesn't turn octagons into triangles, erase deficits, or re-write history.

I would wager that most Saskatchewanians are acutely aware of what governments have successfully contributed to Saskatchewan's economic strength and which governments have had a disastrous record in that regard.

Please do come to Saskatchewan some time and share your theory of the Devine government being responsible for Saskatchewan's strong economy. As well, document the reactions you get.

I'm not certain I see the relevance of your continual flogging of Blakeney's ghost, but I do hope that the Sask Party adopts that kind of terribly compelling rhetoric. What year did these events you're referring to occur in?

Zach Bell said...

The interesting thing about belief, Pat, is that it doesn't turn octagons into triangles, erase deficits, or re-write history.

I have a trangletigon that would beg to differ...well actually I don't but I can't just bash Pat all the time even if he does invoke the nightmare...err...memory of Grant Devine.

I guess my question to you would then be "Do you consider the current level of economic stability that exists in Saskatchewan to exist without influence of the relatively heavy amount of influence exercised over the economy by decades of central-planning NDP governments? If so, how then do you account for the current level of economic diversity?".

I hate to do this so I'm not going to simply answer your question with another question. However; before going on, I would ask you if you think that the economic activity seen today or even better could not be achieved without a voluntary central authority or centralized authorities seeking out some sort of constructive framework within which they could mutually operate.

Erm...whether or not people could do this without a coercive government structure I guess.

My answer to your question is that I think previous centralized planning on the part of government has had an incredibly significant impact on our economy today. I must wonder though if that centralized planning was a hindrance or not. How the government managed potash is a very demonstrative example of how political management of a business may stagnate its development. Apply political management to society and I can't help but bring myself to think that our own development may be stagnated as well.

Our good economy today is not of course the result of good stewardship by the Wall government. An explosion of business interest in the province could probably be chalked up to a change in perception (especially in Alberta) after the exit of the Calvert administration but I think that had that change of perception occurred under the Calvert government earlier, it would have been much the same situation. In short, the most recent historic developments in the legislature have little to do with the good times we're riding on today.

the further you go back of course, the greater exponential effect you'll see on the economics of today. I think what will dwarf that however is the exponential effect that business related decisions in the private sector have on the economy.

You may see a law created that finds a 1% increase on taxes for some company. It's easy to say that this is the government's fault for raising taxes but ultimately, it's the decision of the business that will see jobs lost or created, buildings developed or left for others and how the people who work with that business are effected locally. This isn't to say that the company is at fault for making a beneficial decision, the government certainly motivates it but the point is that the impact had on the economy is determined much more so by the actions of the private sector than any bureaucrat.

Patrick Ross said...

"The interesting thing about belief, Pat, is that it doesn't turn octagons into triangles, erase deficits, or re-write history."

Who's re-writing history now? Not only did the Devine government secure the Saskatchewan potash industry for generations to come when the NDP was ready to throw in the towel and simply shut down the province's multi-million investment in that industry, but they also brought significant manufacturing and resource processing to the province.

You should think about taking a trip up to Prince Albert and asking people there how much the pulp and paper mill meant to their community.

Then ask yourself which party's finger was on the button when that mill was shut down.

What attempts do the NDP have to their credit, again? Box and shoe factories? And they failed?

Yep, the NDP truly are the agents of "economic diversity" in Canada, Audrey.

Love that historical revisionism.

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