Is ‘compassionate belt tightening’ in Alberta just another sign of our worldwide neoliberal derangement?

Posted on November 21, 2017, 12:42 am
10 mins

PHOTOS: The hopeful, celebratory crowd in front of the Alberta Legislature on May 24, 2015, as Premier Rachel Notley and her NDP Government were sworn in. Below: UBC geographer Dr. Jamie Peck and Ms. Notley.

On Friday, Alberta’s New Democratic Party premier warned a meeting of rural municipal officials to brace themselves for cuts in spending in the province’s 2018 budget.

“Now is the point in the plan where the same steady approach that saw us through the recession is going to see us carefully and compassionately tighten our belts, and ask others to tighten theirs,” Rachel Notley told delegates to the Alberta Association of Municipal Districts and Councils.

She also promised them the government will sign “common sense agreements” with unionized public sector employees – which could mean common sense agreements or could mean trying, as Conservative governments regularly do, to load the cost of austerity onto the backs of nurses, teachers, social workers and other public employees while allowing conditions that make more privatization look like a reasonable alternative to grow. We’ll have to wait and see.

Later, Premier Notley told reporters that her government spent money on infrastructure and services during the recession caused by the international collapse in oil prices, but now that the economy seems to be perking up at last, it’s time to alter course.

This seems to make sense in a classic John Maynard Keynes, Economics 101, sort of way – you know, spend in bad times, save in good. A couple of things are wrong with this explanation, however:

First, it’s too soon. The recession isn’t over. Spending is still needed to keep the economy off life support.

Second, and more important in the Alberta context, taxes here are artificially kept at nonsensically low levels – too low to run a modern economy in a jurisdiction of this size and complexity – because we refuse to tax individuals and corporations at a level that makes sense.

Everybody understands this. Certainly Ms. Notley does, as does her caucus. NDP supporters do too.

So do her Conservative opponents of various stripes, who daily excoriate the level of spending by her government that has helped Alberta start to emerge from this worldwide recession with its economy essentially intact. If elected, they promise even more cuts – with even worse results guaranteed.

After 30 years of the neoliberal project in Canada, the industrialized nations of the West, and eventually the rest of the world too but for a couple of places we blockade and boycott, we all know this doesn’t work.

If ever there was a discredited economic doctrine, it’s the harsh austerity, privatization, deregulation, government spending cuts, and lowest-common-denominator trade policies of the neoliberal counter-revolution that has sought to destroy the post-World-War-II welfare state, which resulted in the highest levels of prosperity in human history, and turn the clock back to the 19th Century.

And yet here we go again – led by an NDP government no less – down the rabbit hole of neoliberal prescriptions, which never work, always make things worse, and sow chaos and destruction for ordinary people while undermining democracy by making the uber-wealthy richer and more powerful.

It’s a tribute to the success of the international neoliberal propaganda machine, I suppose, that doing the sensible thing and implementing modest increases to Alberta’s taxes is simply not on, even for a well-intentioned social democratic government.

So the best thing Premier Notley can promise – and in this you can be certain she is completely sincere – is that she will do her level best to ensure that the painful, unpleasant and completely ineffective course of treatment we are about to undergo will be as ‘compassionate’ as possible.

Believe me when I say this, I recognize the political reality of this situation. We have all been so conditioned by constant repetition of the nauseating nostrums of neoliberalism that it’s very hard for any of us to think coherently any more. So while the economic prescription we are about to swallow – ever lower taxes, ever more discredited public services – will never work, it is unimaginable that any existing Canadian political party with even a slight chance of forming a government would or could contemplate anything else.

The result? In all likelihood, more crisis and chaos. That, after all, is what neoliberalism is designed to create.

For me, this was the most useful insight to come out of the Parkland Institute’s conference last weekend on the crisis of neoliberalism – you can play that any way you like, by the way, because neoliberalism is in crisis now that we all get it market fundamentalism is baloney, and we’re all in crisis because any approach except the neoliberal approach has become unthinkable to the people who make decisions in Canada.

That’s because “the stark utopia” of neoliberal economic ideas is designed to create chaos, and neoliberalism thrives on the ensuing crisis, University of British Columbia geographer Jamie Peck explained in the conference’s final session Sunday afternoon.

Heaven knows, the neoliberal project – bankrolled by the billionaire class and its retainers in corporations, media and elected office – has been adaptive. It can work its malign magic with fascists and social democrats alike. Nevertheless, it always trends, as Dr. Peck noted, toward “the destruction of the social and redistributive state, and the expansion of the punitive state.”

He asked: Do you remember the financial meltdown of 2008? “Remember how quickly what started as a banking crisis was re-narrated as a crisis of the social state?” What looked like a serious crisis for advocates of neoliberalization, “became a course correction, and a nastier neoliberalism quickly followed.”

“Neoliberalism is an adaptive creature of crisis,” he observed. It is never, and never will be, a completed project. “It’s a process, not a state of being. … It’s associated with endemic policy failure – but it tends to fail forward.”

That is, Dr. Peck explained, “it depends on the acceptance as ‘normal reality’ and ‘common sense’” of policies that are, in fact, often sheer lunacy.

Answering the question posed in his remarks – Neoliberalism: Dear or Alive? – Dr. Peck described government by neoliberals, as we have everywhere in Canada nowadays, as “Zombie Governance … dead, but dominant.”

It is a form of governance inseparable from “failure of moral leadership.” It is “tenacious as a crisis-driven mode of government” as each crisis it creates gives rise to new shock treatments that create more problems. When nothing works, we try to fix it with more of the same.

“Conservative politics have rotted from the head down in that zombie fashion,” Dr. Peck asserted.

Moreover, he said, there has been “a reciprocal failure on the part of democratic and labour parties to advocate an alternative economic vision.”

Who can forget the great outpouring of hope on the steps of the Alberta Legislature on the June day in 2015 when Ms. Notley’s NDP was sworn in? Hope, have no doubt, that we could leave behind neoliberalism’s quack remedies that made what in many ways the richest place on earth Ground Zero of a perpetual economic crisis.

Alas, the modest common-sense tax increases Alberta needed from the NDP never came. Instead, the best we can hope for now is compassionate austerity, which when it doesn’t work, risks becoming the conservative entrée to something harsher, and even less effective.

Dr. Peck argued the frustration of ordinary voters with that failure in the centre and on the left was what propelled the “racist and xenophobic cocktail” that resulted in the election of Donald Trump in the United States and the Brexit vote in Britain – each creating a new crisis on which neoliberalism’s beneficiaries can hope to thrive.

Preventing a similar development here is the difficult challenge we now face in Alberta.

27 Comments to: Is ‘compassionate belt tightening’ in Alberta just another sign of our worldwide neoliberal derangement?

  1. Death and Gravity

    November 21st, 2017

    Common sense, eh? That’s what allowed the Ontario Harris Clown Show to unseat Rae: Blame the NDP for doing what you are going to do, but much more so and harder? There is no end run to be had around the attacks that will come from Kenney. So if that’s the plan here, I think it’s a mistake.

    A sales tax would solve the problem of government finances for good, and should have been implemented on Day 1. I don’t like them either, but had rather impose one than live with what’s coming, and endless downward spiral.

    Reply
    • Sam Gunsch

      November 21st, 2017

      re: ‘it’s a mistake’
      Absolutely, a big mistake in reality. Austerity has been discredited excerpt for RW elites that are anti-government, anti-democratic and believe we citizens need to be thrown to the discipline of the market.

      But RW politics via RW media and politicians on the RW hold almost a monopoly over shaping public opinion.

      Here’s a quote below from one of Paul Krugman’s good overviews of the austerity voodoo. Based on actual review of economic evidence that Albertans will never read in Postmedia editorials or from Gunter-type columnists.

      ‘…the IMF now believes that it massively understated the damage that spending cuts inflict on a weak economy.

      Meanwhile, all of the economic research that allegedly supported the austerity push has been discredited. Widely touted statistical results were, it turned out, based on highly dubious assumptions and procedures – plus a few outright mistakes – and evaporated under closer scrutiny.

      It is rare, in the history of economic thought, for debates to get resolved this decisively. The austerian ideology that dominated elite discourse five years ago has collapsed, to the point where hardly anyone still believes it. Hardly anyone, that is, except the coalition that still rules Britain – and most of the British media. ‘

      https://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion

      Reply
  2. Farmer B

    November 21st, 2017

    Statscan recently did a study comparing income growth per household by province from 2005-2015. For the sake of brevity I chose 3 provinces. I will compare income growth and present day tax rates. In Alberta there was a 24% growth in median household income to an average of $93835. Top Alberta income tax rate is 15% over$300k, corporate tax rate is 12% and we have no sales tax. In Ontario over the same period median household income rose 3.8% to $74287. Top personal tax rate in Ontario is 13.16% over $220K, provincial corporate tax rate is 11.5% and Ontario has a 8% provincial sales tax. In NewBrunswick median household income rose 10.5% to $59347. Top personal tax rate is 20.3% over $152K. Provincial corporate tax rate is 14% and NewBrunswick has a 10% sales tax. Keep in mind the top federal personal tax rate is 33%, so as an example in NewBrunswick a high income earner would pay a top tax rate of 53.3%. Also the federal corporate tax rate is 15% which must also be added to the provincial rate.
    One last point quoting Statscan”low income rates fell fastest in metropolitan areas related to the resource boom and rose fastest in manufacturing intensive Ontario metropolitan areas”.

    So what is my point? Dave believes Neoliberalism is a failure. I believe Albertans are really to blame. As you can see comparatively speaking Albertans have it pretty good. Thanks to the resource sector in Alberta we have the 3rd highest median household income in Canada. The problem is we would rather accumulate large government deficits than accept tax changes that would more adequately fund our government services. Now no doubt the left will say tax the corporations, just another way of passing the buck and an easier sell. Look at Norway, Denmark and Sweden corporate tax rates of 24%, lower than every province in Canada when both federal and provincial rates are included. Premier Notley already raised both personal and corporate tax rates, revenues actually declined due to economic circumstances. Realistically our Premier has 2 options, reduce spending or bring in a sales tax, she has already made her choice.

    One other thought, if those who wrote the leap manifesto have their way Alberta’s future will more closely mirror Ontario’s or NewBrunswick’s. Lower incomes, higher taxes. Enjoy your day

    Reply
    • Expat Albertan

      November 21st, 2017

      Neoliberalism is not to blame for all economic downturns, Farmer. But Neoliberalism is to blame for the lack of real income growth since the late 1970’s. And it is to blame for the growth of income inequality.

      With regard to NDP-style austerity, I would be interested to see how the more well heeled among us like it, so I would start with cuts to the following: expensive government jaunts abroad to drum up business, paying to clean up abandoned oil wells, any money spent promoting pipelines, corporate welfare for things like stadiums and Olympics bids (yes, I know it is municipal budgets but the money comes from somewhere)…. come on everyone, join in the fun.

      As for the Leap manifesto, you want the nasty medicine now or the terminal disease next week?

      Reply
      • Farmer B

        November 22nd, 2017

        Expat this is the issue I have with the leap manifesto. If I understand it correctly no more exploration for oil, no more pipeline construction, just continue with existing wells until they are depleted. Now I believe it proposes new jobs will come in health, education, and social welfare as well as community ownership of green energy infrastructure. Shortfall in revenue is to be filled with higher taxes on business(I addressed this in my reply to Sassy below). Judging by your response above you believe if we do this we can have an effect on our global climate and if we don’t do this we are finished. The issue I have is this, Canada produces 1.6% of global C02 emissions. We could produce 0 emissions(which would be difficult unless we all ceased to exist) and it wouldn’t change the global climate. If all the countries in the world agreed to do this I would have no problem. But that is not the case, even Germany didn’t meet its emission reduction targets this year. The U.S. Produced 4 million bpd of oil in 2008 when Obama became president, today they are closing in on 10 million bpd per day! Do I think we need to be efficient as possible with our resource use? Absolutely! But putting a lot of people out of work in Canada isn’t going to change the climate, it will just make producers in other countries more money. Enjoy your day

        Reply
        • Expat Albertan

          November 22nd, 2017

          The larger issue, Farmer, is that the consequences of climate change will be severe. The evidence from dubious organizations like NASA just keeps piling up. I doesn’t appear your grandkids will have much of economy if we just ignore it and do nothing. Pissing on the LEAP is fine, as long as you at least try and suggest a sensible alternative.

          Reply
    • Machine Man

      November 21st, 2017

      Hear, hear!

      Reply
  3. GregH

    November 21st, 2017

    So should we prefer the NDP because we agree with their politics, even though they don’t have the political capital to raise taxes? Or should we let Mr. Kenney take the reins and hope that his frank obeisance to his neoliberal masters will demonstrate to Albertans the folly of voting for oleaginous opportunists? If the latter, we can hope his socially conservative legacy will only last a couple of generations.

    Either way we’re kind of fucked.

    Reply
  4. Albertan

    November 21st, 2017

    Yes, agreed. There still is, unfortunately, neoliberalism streaks in Canadian NDP politics. Perhaps it will take time to move away from neoliberalism policies. As has been said, there could be a big difference between being in opposition and actually governing. I would still hold hope that the AB Notley NDP would gradually move away from neoliberalism and they would still get my vote. I, as an older Albertan, have had my fill of AB Conservative neoliberalsim. I would never, ever vote for the UCP or the Alberta Party.
    Perhaps we could hold hope for moving away, more, from neoliberalism in the future. It could come from our now, some progressive millenial leaders such as Jagmeet Singh.

    Reply
  5. ronmac

    November 21st, 2017

    Hmmm…maybe Premier Notley is no longer being channelled by the spirit of Peter Lougheed. Maybe she has been taken over by a much more malicious entity, one eminating from the outermost edges of the dark side…Ralph Klien.

    A SOS call to all exorcists and witchcraft practioners out there who may be in this readership range. Your services are urgently needed at the Alberta Ledge. ASAP

    Reply
  6. political ranger

    November 21st, 2017

    Ahhh! … reality intrudes onto our little provincial fantasy.

    A couple quick thought on this mind-swirling piece:

    It amazes me how interchangeable the phrases ‘neoliberalism’ and ‘evil’ are.
    Take this for example; “Neoliberalism is an adaptive creature of crisis,” he observed. It is never, and never will be, a completed project. “It’s a process, not a state of being. … It’s associated with endemic policy failure – but it tends to fail forward.”
    Just switch out ‘Neoliberalism’ for evil and ‘policy’ for personal and you have an accurate description.

    Now, about reality; there is only one reality. There is no political reality – that actually exists. It’s all part of a collective fantasy. Reality is real, all else is fantasy.
    For Notley to push back against her new masters will take courage. It would’ve taken courage in the first instance to push the petro-corps away from her policy table and hold them accountable; it will take courage, and then some, to navigate a policy solution to today’s issues. The reality is that every time she concedes to the petro-lobby she loses more of her ability.

    Reply
    • Murphy

      November 23rd, 2017

      It was a doomed prospect from the start. No government, in a state where the dominant religion is capitalism, can go against the will of the masters. The inherent contradictions in capitalism had run the whole thing aground by 1930. The Second World War gave the masters a reset, and they have spent the last forty years on the offensive in the class war. It’s not much different from the elites acquiescing in the Peasant’s revolt, and then butchering Wat Tyler before repealing their concessions, made under duress.

      Reply
  7. Andy M.

    November 21st, 2017

    There’s a widely circulated drawing of an old hag. Relax your gaze, though, and you see a glamorous woman instead. Life, and especially politics, being a relative process, I suggest we just relax a bit and see the better picture. It’s especially easier to do that when we read about the alternative ugliness coming out of the recent UCP gathering in Red Deer. 2019 is not going to be pretty. At least, the Notley government is girding itself for the battle. In a perfect world, maybe we wouldn’t have austerity. And, I appreciate the notion of austerity looks worse from the perspective of being a government employee or the union protecting their interests. But, in the spirit of all things being relative, review once more the long list of positive changes our government has made since 2015. As Death and Gravity notes, it is frustrating that a plan for a sales tax was dismissed so unequivocally. But, let’s remember the overall improvements, too.

    Reply
  8. Sassy

    November 21st, 2017

    I hope you’re wrong, but Notley’s comments worry me too. Who do we vote for if NDP embraces neoliberalism?

    I believe, politically, the NDP must make some cuts. Because of decades of brainwashing, the populace expects it. Edmonton city hall is no exception when it comes to allowing management bullying, incompetence, etc. Weeding out these types of managers and executives from the Alberta government should be a priority. If the NDP lays off 600 staff (a rough estimate of 10 percent of management in the government and it’s agencies, boards, and commissions (including Alberta Health Services)), they will save close to 100 million annually. Reducing the ridiculous private school subsidies from 70% to 35% might save a similar amount. If the NDP makes a number of these types of small, strategic cuts, there will be more acceptance of tax increases.

    I agree the NDP has to do most of its heavy lifting on the revenue side. I’m not in favour of a sales tax, but hope they would consider: adding new personal tax brackets beyond the median household income and raising rates in those higher brackets; raising corporate taxes by another couple of percentage points; closing tax loopholes for corporations who do business here; and reintroducing some type of provincial savings bonds/capital bonds so ordinary Alberta savers can invest in public infrastructure projects. Stelmach created the last bond in 2010 – http://edmonton.ctvnews.ca/provincial-bonds-go-on-sale-feb-16-1.478817

    Reply
    • Expat Albertan

      November 21st, 2017

      Exactly my point in my reply to Farmer B, above; that there is quite a bit of fat we could cut from the welfare we have forever bestowed upon the wealthy and well-connected. Your point about public support to private schools is an excellent idea. In fact, just like the neo-liberal have done, let’s not let a good crisis go to waste… time for some strategic cutting and reestablishing of public resources.

      Reply
      • Farmer B

        November 22nd, 2017

        First, for 2017-2018 we have a projected deficit including capital spending of $15 billion. One suggestion Saasy makes is to raise corporate taxes a couple of percentage points. At present according to the budget corporate taxes bring in just under $4 billion of revenue. If we raise it 2 points from 12 to 14% an increase of 16.7%, this would in theory generate $670 million dollars in revenue or 4.45% of the revenue shortfall. A 5% sales tax would generate in theory $5 billion of revenue or 33% of the revenue shortfall. As for education I think the funding should follow the child. This in my opinion would inspire schools to improve results as they would essentially have to compete to have your children in their school.

        The long and short of it is with a 15$ billion dollar shortfall in revenue a $100 million here or there really won’t solve the problem.

        Reply
        • Albertan

          November 22nd, 2017

          Then there’s the little speed bump of the Tax Payers Protection Act to consider. You didn’t actually think that the Carbon “Levy” really had anything to do with GHG reductions now did you Expat? It’s a sales tax, plain and simple.

          NDP could cut funding to private schools, If they really wanted to slit their own political throats.

          We don’t need Greek economic policies in Alberta tyvm. That doesn’t even work for the Greeks.

          Reply
          • Expat Albertan

            November 23rd, 2017

            First of all, if the carbon levy really is a sales tax in disguise, then it’s a darn good one and much better for us. Second, if cutting funding to private schools slits their political throats, then at least it shows us all the lie that is the obsession with balanced budgets in Alberta… it’s really about cutting funding to those areas of spending that one is ideologically opposed to…. otherwise, one cut would be as good as another. Finally, don’t use Greece as your ideological whipping boy…you have no idea what that situation is REALLY about (but I’ll give you a hint: it is really about bailing out Duetschebank that made bad loans to the PIGS but lost its shirt after the financial collapse and had to go begging to the Bundesbank and ECB for a bailout… which was funneled through Greece so as not to piss off the German taxpayer for bailing out the banks. Read Mark Blyth’s work for a more fulsome discussion).

        • Expat Albertan

          November 22nd, 2017

          Farmer, I’m sure there are a lot more ideas than those we’ve suggested here. How about tolling highways so that only users pay? How about cutting any number of tax expenditures we give away? I’m just one person and I’m just getting warmed up. .

          Reply
  9. David

    November 21st, 2017

    My first thought about compassionate belt tightening is, how compassionate and how much tightening will be involved. I think we will have to wait for more details on exactly what the government has in mind before we can really pass judgement on this. My second thought is that compassionate is the feeling of those making the belt tightening, it is not necessarily felt the same way by the recipients of the belt tightening. Not to pick on medical people, but it reminds me somewhat of the “this will only hurt a bit” as they stick the needle in you.

    However, I don’t think this is part of a neoliberal agenda. This comes from a real political and economic problem in Alberta. First, most Albertan voters are concerned about the level of the deficit. While some understand it was a reasonable response to the collapse in oil prices, they do not want deficits to continue at the level they are. If it does continue at the current level, voters will judge the government’s economic performance in a very negative way. Secondly, and somewhat related, the current level of deficits are not felt by most Albertans to be sustainable in the long run. I suppose the Government instead could increase taxes again, but there is also little political appetite in Alberta for this at the moment.

    In some ways we should not be surprised this is coming now. The Alberta recession is over and oil prices have rebounded somewhat, perhaps as much as they will for the foreseeable future. The immediate need for a large amount of infrastructure spending to stabilize the economy is over. The current government has a few years of experience now, so may have a better idea of where it would be best to trim spending and what should be left alone. It may be an opportunity for the current government to put more of a stamp on how government is run, as opposed to just managing what was inherited from the PC’s. In some respects, the government has already been doing this for a while, but just not taking credit (or blame) for it.

    It is likely the next election will be a referendum between two choices – compassionate belt tightening and big cuts. If we do not give the first option a chance, it is more likely we will end up with having the second one, which really is neoliberal, foisted on us a few years down the road instead.

    Reply
    • Machine Man

      November 22nd, 2017

      Agreed.

      Reply
  10. Machine Man

    November 21st, 2017

    This is the problem with making statements that are incomplete and too early for specific information: they lead to speculation and uncertainty; which are antithetical to success. We really don’t know much about what she meant. She didn’t use the word “cuts” and I’ve certainly seen no evidence to date that there is any will by this government to make any substantive reduction to jobs in either education or healthcare. In fact, there are several new schools that by necessity must have staff.

    What makes far more sense its that her statement to the rural politician meeting was a precursor to a negotiating strategy with public sector unions whose contracts are about to expire. More than once she has said that they cannot reasonably expect any significant increase in funding from negotiations while the province is running a substantial deficit. For the sake of future funding and job security they had better be willing to ride out the remainder of the recession with the rest of us, rather than undermine the current government and end up with true austerity under the UCP.

    Reply
    • Bob Raynard

      November 22nd, 2017

      Machine Man, your comment reminds me of the Ontario public workers’ comment during the Mike Harris regime, when they lamented that at least a Rae Day was only one day a week.

      NDP implementing an austerity program is similar to the UCP implementing a tax increase. Both are a betrayal of their support base, but both come with little political consequence simply because there is no place else for their support to go.

      That said, where can this belt tightening occur? Governments have been promising us they will eliminate inefficiencies for decades – can any still exist? Has two and a half years of NDP spending eliminated the infrastructure deficit decades of Conservative governments have left us?

      Reply
  11. Mike Butler

    November 22nd, 2017

    Why are we not investing in crown corporations to create jobs of the future and financial return instead of taxes. Northern Europe has done it and so can we.

    Reply
  12. David B

    November 22nd, 2017

    My first thought is that the NDP should implement a sales tax. That would challenge a possible future UCP government to either keep it in place or have to implement even stronger cuts which would alienate most thinking Albertans. Call things the way they are. Alberta doesn’t so much have a spending problem as it has an aversion to raising provincial revenues. Until the Alberta government starts to address the real problem it can’t get out of its made in Alberta dilemma.

    I had hoped that Notley would chart a different course than Neoliberalism that created the situation in the first place.

    Reply
  13. David B

    November 22nd, 2017

    In an earlier post on this subject, I said I had hoped that Notley would have implemented a sales tax to deal with its revenue problem.

    When the CCF implemented a sales tax to fund education and their new hospitalization plan (E&H Tax) in the mid nineteen forties, they won the next four elections. People accepted it as being a realistic way of paying for those valuable programs. If the Alberta NDP implemented a sales tax targeted toward keeping social programs that people value, I think Albertans would realize that as a common sense approach to fair play in government.

    Reply
  14. PJP

    November 24th, 2017

    Rumour has it the province has signaled to all post-secondaries to negotiate understanding the province will only fund a hard 0% (ie not even cost of living +0%, true 0%).
    And
    only to negotiate 1 year contracts,
    and to ‘centralize’ some aspects of the bargaining units.

    Damn. Looks like https://www.youtube.com/watch?v=zYMD_W_r3Fg

    Perhaps I’ll have to vote UFA
    or organize my own reverse takeover of the NDP from the left side of the political spectrum.

    Reply

Leave a Reply

  • (not be published)