You could drive one of those tar sands heavy haulers through the gaping holes in the latest Fraser Institute ‘study’ of Alberta’s finances

Posted on July 25, 2014, 1:26 am
9 mins

A worker in Fort McMurray prepares to drive this truck through the holes in the Fraser Institute’s “report,” which claims Alberta’s finances are in worse shape than those of places like Texas, North Dakota and Louisiana. Below: The Norwegian oil port of Stavanger, which, according to the Fraser Institute, doesn’t exist!

Alberta should adopt a sales tax, according to the latest press release from the Fraser Institute.

But don’t worry, the latest piece of far-right puffery from the market-fundamentalist “think tank” – which prefers to refer to this bumpf as a “study” or a “report” – only advocates a consumption tax like those in Texas and Wyoming so that income and business taxes can be eliminated for the very rich people who bankroll the legal charity to the tune of $11 million a year.

Both of those known-to-be-enlightened states have eliminated income taxes and taxes on businesses in favour of sales taxes, the Fraser Institute says, so we Albertans should hurry up and do the same thing.

Just thought I’d start with this point because there’s bound to be plenty of uncritical media coverage of the Fraser Institute’s “findings” in the morning that fails to mention it.

Indeed, the Edmonton Journal was first out the gate with just such a report, complete with the predicted omission. It did, however, gloomily proclaim that “Alberta’s finances are in worse shape than other energy-producing provinces and states,” while quoting Progressive Conservative spokespeople who meekly accepted many of the Fraser Institute’s dubious claims while maintaining they’ve already done much of what the group demanded.

The Fraser Institute’s media statement about its conclusions emphasized, however, that Alberta’s recent deficits were not caused by “lack of revenues” – a point that is contentious to say the least given that Alberta taxpayers, as the province’s resource royalty review stated, in 2007, “do not receive their fair share from energy development and they have not, in fact, been receiving their fair share for some time.”

The government of premier Ed Stelmach timorously implemented some of the independent government panel’s recommendations, and then ran screaming from what it had done in 2010 when resource companies threatened a capital strike and began seriously funding the market-fundamentalist Wildrose Party, which was named after Alberta’s popular licence plate slogan.

That retreat got Alberta back in the race to the bottom advocated by groups like the Fraser Institute. Speaking of which, in fairness to the organization, its “study” released yesterday barely deals with the important question of resource royalties, which is only mentioned once, in passing, in its 66 pages. Nor is this the effort’s only significant oversight.

Quite naturally given that omission, this latest pronouncement from the group reaches conclusions other than that a modest increase in oil revenues might be part of the solution to the province’s budgeting conundrum. No, no, it’s all about too much spending!

So, the Fraserites argued: “Had the government simply maintained spending rates based on inflation and population growth, Alberta would have enjoyed successive balanced budgets,” thus passing over the huge infrastructure deficit left by the regime of premier Ralph Klein, not to mention the need for a growing province to plan for continued population growth.

Also strangely – or, perhaps not so strangely given what has already been noted – the Fraser Institute compared Alberta only with nine other North American jurisdictions said by the group’s propagandists to be “energy rich.”

So the Fraserites conveniently only looked at Alberta, Saskatchewan and Newfoundland in Canada, and Alaska, Colorado, Louisiana, Oklahoma, North Dakota, Texas and Wyoming south of the Medicine Line.

None of the jurisdictions cherry-picked for comparison have resource extraction development on the scale of Alberta’s. Several have their extraction industries concentrated in sectors like offshore drilling that are far less labour intensive than Bitumen Sands extraction.

Moreover, the Fraser Institute’s North American focus is highly convenient – and obviously quite intentional – because it effectively allows the authors to concentrate on low-tax jurisdictions with mostly smaller energy sectors in which many other economic factors are at play. This lets their “research” jostle the pinball machine in favour of the group’s predetermined conclusions.

But the Fraser Institute document also ignores North American jurisdictions that do not meet its not-so-mysterious criteria. To wit: California, No. 3 among U.S. states in current proved onshore oil reserves, after only Alaska (No. 2) and Texas (No.1) in this category. Also missed by the Fraserites, New Mexico (No. 6).

Moreover, according to a USA Today summary of U.S. states’ oil reserves published last year, in addition to proved onshore oil reserves in 2011 of more than three billion barrels, shale deposits in the southwest part of the state could mean California will soon surpass Texas in oil production.

So why these peculiar and glaring North American omissions? Most likely because both states’ governments are in the hands of the Democratic Party, which is ideologically impure from the Fraser Institute’s perspective.

Of the seven states considered for this comparison by the Fraser institute, all are controlled by the Republican Party, now dominated by the market-fundamentalist right, but for Colorado

Simply ignoring higher-tax, higher-royalty jurisdictions like Norway, the United Kingdom and elsewhere allows the Fraser Institute’s “researchers” to avoid having to confront the obvious – that as long as oil prices are high, corporations will extract the stuff, regardless of the tax rate or structure.

In other words, a modest increase in royalties in Alberta, just like a modest increase in taxes and a fair progressive income tax system, would not harm the economy and might do a lot of good. They are simply policy choices, which the Fraser Institute doesn’t like because the people they work for don’t like them – their oft-repeated claims to produce independent, peer-reviewed research notwithstanding.

Look, one can’t blame oil companies and other corporations for financing the kind of drivel put out by the Fraser Institute – which is certainly not an “institute,” by the way, and is not “non-partisan” either, as it claims, just because the political activities it engages in constantly and in violation of Canada Revenue Agency rules are not declared in either its press releases or its tax returns.

By the way, this lack of accurate information in its tax data is apparently not a problem for the CRA, which nowadays only goes after charities that say things in opposition to the Harper Government’s preferred policies.

In fact, it’s hard to get all that worked up about this nonsense. The Fraser Institute is not a serious research organization. Indeed, it is not a serious organization al all, except in the sense it pursues its market-fundamentalist propaganda mission quite seriously.

But we need to keep in mind that all the Fraser Institute produces is market-fundamentalist propaganda, and we are dangerously deluded when we to treat it as if it were serious economic research, as the mainstream media habitually does for reasons of its own.

NOTE: This story has been updated with information on U.S. jurisdictions left out of the Fraser Institute’s “research.” This post also appears on Rabble.ca.

7 Comments to: You could drive one of those tar sands heavy haulers through the gaping holes in the latest Fraser Institute ‘study’ of Alberta’s finances

  1. Joe

    July 25th, 2014

    What’s wrong with being “market fundamentalist”?

    Reply
    • PIGL

      July 25th, 2014

      Well, at best it’s evidence of being impervious to data and reason. But in this case, it’s really evidence of a lick-spittle pseudo-libertarianism that always, by some mysterious coincidence, favours the interests of the shadowy billionaires who finance the operation. The entire web of right wing think tanks in North America was created out of whole cloth by these arch-villains, as part of a 30+ year campaign to subvert democratic governance and re-establish a plutocratic rent-based economy. They have very nearly succeeded. The bogus economic arguments they concoct should not be taken seriously. They are meant to distract and obfuscate the transfer of wealth and power to the owners.

      Reply
  2. Horace

    July 25th, 2014

    PIGL has described all of the things that has made Canada great. Danielle Smith used to work for the Fraser Institute – this is what we can expect with her as Premier.

    Reply
  3. Alex P

    July 25th, 2014

    The Fraser Institute would love to see Alberta model itself on Texas, whose moto is, “We could be better than Mississippi, but why bother?” I can imagine that somewhere in America, a similarly minded think tank is lobbying to turn Texas into Nigeria.

    On the subject of market fundamentalism and California, I hand you over to Professor Krugman. http://goo.gl/JUeNZ4 The horror: minor raise in minimum wage and minor bump in taxes! Will these terrible social experiments ever cease?

    Reply
  4. Reim Way

    July 26th, 2014

    Canada’s right are always trying to emulate Murica but we rarely hear about places like Norway.

    Why can’t Alberta be more like Norway with their Oil revenue.

    Should Norway Be the Canadian Way?

    How did Norwegians get so petro-smart?

    http://thetyee.ca/News/2012/07/25/Norway-Oil-Wealth/

    ‘Canada Is Being Outplayed’ at Oil Wealth Game

    But we can win says economist Robyn Allan.

    http://thetyee.ca/News/2012/10/03/Canada-Oil-Wealth/

    PS: This look at Norway and their Oil money is a 9 article series, long but worth the read……

    http://thetyee.ca/Series/2012/08/01/Norway-Petro-Wealth-Series/

    Reply

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