| Did you miss it? Some of you people just about missed it. Ralph Klein asked Albertans to tell him one more time how to run his debt-free province. Fill out your It’s Your Future brochure by Friday, September 24 so that your considered responses may be packaged into the latest "he listens, he cares" motto.
As limited as its predecessors, Future’s leading and predictable questions leave no room for innovative ideas. Unless the provincial elite come up with something compelling, your future will be the same as your past – living from one oil and gas boom to the next, hoping to save enough money to die in a nice nursing home, and wondering what your kids or grandkids will do when it all runs out.
The Kleinites’ debt-free propaganda does touch the truth when it says this is Alberta’s chance to change the lives of its children. Sadly, we will fail. The failure is predictable not because Ralph Klein is in charge, but because the answer is not on the political map.
Change can happen if more Albertans hold real assets. Like the rest of North America, 10 per cent of Albertans control 50 per cent of the wealth in this province. The gap in wealth, the assets a person or family can use to start or expand a business, fund an education or fall back on in hard times, is much larger than the gap in income the media occasionally highlights as another CEO appears in court for fraud. This narrow distribution of assets means most Albertans, no matter how hard they work or how much they earn, will end up with little wealth to rely on or pass on to their children. It is a problem economists have wrestled with since Adam Smith was in short pants.
Alberta is in a unique position. Without taking any wealth away, we can give the province’s youth a chance to change their lives in a way that both right- and left-wing fanatics could accept if they can get past their shock and fear.
The Klein government’s $500 centennial baby bonus is a baby step towards sharing the Alberta advantage. You can dismiss the bonus as electioneering, or you can see it as a first step towards diverting the $300 million in Heritage Fund money that still goes into operating funds each year into an $8,500 bond for each child born in Alberta (38,000 births last year). The government invests the money at a five per cent annual return and $24,000 is waiting for each child who still resides in Alberta 21 years later. The bond uses the wealth generated by our oil and gas resources before 1987 – wealth that belongs to all Albertans equally – to give all Albertans a chance to build their own wealth without unleashing the liberal economic bogeyman of redistributing wealth from the rich down.
Try to suppress your visceral reaction to the idea of giving everyone money. Those are nasty stereotypes leaping into your mind. The truth is, some people will waste it all on VLTs, booze, drugs and sex. Most will waste some, but less than you think, on the same charitable vices and use the rest to buy a home, start a business, or pursue an education, a job or a dream that would otherwise be out of reach. The whole point is to put the money beyond government control so that the almighty market can decide where it goes. Trying to prevent the money from being wasted will defeat the liberal purpose of simply widening the access to assets without distorting the economy. Besides, the kids can be forced to spend a few days in financial management courses before being given their silver spoon dripping with oil.
The gap between the highest and lowest earned incomes in Canada pales in comparison with the gap in wealth. According to Statistics Canada’s study of the wealth of Canadians, the 1999 Survey of Financial Security, we are a country with the same disparity of wealth as our U.S. neighbours. Half the country controls six per cent of our net worth, while the top 10 per cent control 53 per cent.
For all but that top 10 per cent, Canadians’ assets are tied up in their homes and pension plans. Unless a family moves into a cheaper house, the family home can only be used to leverage more debt. Pension plans can be used to pay only for retirement. Despite having some of the highest earnings in the world, most Canadians will work through debt to pay for a home and save for retirement and then spend most of their assets before dying. Few of us will actually create any wealth to pass on to our children.
For those conservatives who might still be twitching, consider the following. No money is being redistributed here. There are no new taxes. The Kleinites will have to adjust the budget to find a real source of revenue instead of the Heritage Fund for the $300-million subsidy, but that is what the Sustainability Fund is meant for anyway. This program has every chance of improving the lives of many and reducing the need for the current redistribution of income carried out through the income-tax system. Finally, even the godfather of liberal economists, Friedrich Hayek, felt strongly enough about expanding wealth that he suggested one in 100 people be given large sums of money if no other way could be found. Fortunately, Alberta has another way.
For those centrists and lefties who might still be twitching, I leave you with one thought. A century of reforms designed to expand the income of the poor so they can afford the necessities of life has failed to reduce the gap between rich and poor. They have succeeded by many social and economic measures, but they have not changed people’s status in the economic hierarchy. In the meantime, the middle class has wasted away on an economic hamster wheel.
Resources
It’s Your Future news release: http://www.gov.ab.ca/acn/200408/16959572938EC-C417-4120-B3B06A1DECAC7F8C.html
Statistics Canada’s Assets and Debt of Canadians: http://www.statcan.ca/english/freepub/13-595-XIE/9900113-595-XIE.pdf
A host of links on asset distribution: http://www.policylibrary.com/redistribution/stakeholdergrants.htm
Facts on the Heritage Fund: http://www.revenue.gov.ab.ca/business/ahstf/faqs.html
Assets for All by Samuel Brittan: http://www.prospect-magazine.co.uk/ArticleView.asp?P_Article=12069 |
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