Albertans stated in a recent poll that they were happy and satisfied with the Notley government’s investment into social programs. In another survey, however, Albertans were also enamoured by the idea of paying less tax and reducing our deficit spending. When one looks at these positions, one cannot help but notice their inconsistencies: it is tax dollars that are used to make these social investments in society; less tax dollars would therefore mean either fewer investments into these programs or the need to take on more deficits to maintain them. Why do we hold such contradictory positions?
This issue is not just restricted to Alberta, and we are seeing similar debates occur elsewhere within Canada and the world. This is exploited by our politicians: economic investment into the province versus austerity measures is used to polarize the debate. And it would seem that austerity measures are winning this contest.
Are we being too myopic with the economic importance of investing within social programs (which include health and education)?
The Klein government took an austerity approach in the 1990s, which led to it achieving its goal of eliminating Alberta’s debt. This was a remarkable achievement for any government, but it did come with a cost to taxpayers. It created a deficit in investing into infrastructure, among other areas of governmental responsibilities, which were costs to be borne by those premiers who would follow. The selling off of government utilities also created its own issues down the road for Albertans, though one could see the logic of the time.
Saskatchewan recently emulated these ideals of the Klein government, in direct contrast to Alberta’s government of today, in response to the latest recession. It, unfortunately, is still struggling to recover from this economic downturn, which Alberta is now emerging from. And the difference is that Alberta did not follow the same path of austerity, but rather it invested into social programs. Yes, things are different this time round, but Alberta is on track to diversifying its economy for the future.
The point is that there may be some economic values inherent within social spending that we are overlooking. Maybe this is a new form of Keynesianism that offers a different approach on government spending and deficits, something for economists to study. There are also tangential benefits by investing in education and health, which create a more positive environment for investment, which we may be undervaluing. In either case, we may be asking the wrong question when to comes to austerity measures: these may have some short-term gains, which look great for politicians, but what are the long-term costs to a society?
It is impossible to truly predict the future, but it is not difficult to learn from the mistakes of the past. We should take this opportunity to learn from previous governments, including those that used austerity measures, to see if there are lessons to be learned to truly estimate the costs of their economic policies, because some of these costs will be borne by future Albertans.
