Thursday, September 01, 2005

Diversify the economy?

I receive many interesting interjections to the philosophy of freedom which I preach (usually bases on socialist fallacies) and the response to my article on Alberta’s oil was no different, in particular I received an urgent plea to quit being so naïve about oil as I was sincerely reminded that Alberta’s Natural gas and oil will run out in 20 -30 years
and that if I wanted to prevent economic collapse Alberta should be focused on diversifying the economy instead of momentary monetary gain (Tax cuts)

Now I’ll address both fallacies…

1) Sometime people pick up books and read things like “the worlds oil supply will run out by 2026” and then they go around telling everyone about this scientific “truth” they’ve discovered, never once thinking it relevant that the book was written in 1967, and the people who hear it don’t know any better so the myth is passed on again and again, almost becoming a fact by default. And in a bizarre sense they are right. If technology never progressed, remained constant (as if we were completely socialist and incapable of progress—a historical fact) and we were still using 1958 drilling technologies, yes we would run out of oil by 2026. But in a free world technology advance and is constantly adapting I.E you improve your ability to recover reservoirs. For instance, instead of picking a heavy spearheaded piece of steel and dropping it from hundreds of feet to create, over a significant piece of time, a shallow hole that burps black gold, you now use hydraulically driven technology to drill 6000 meters sideways underneath a mountain base to reach your target. Still to this day it is only economically feasible to recover 20% of a reservoir. In short as science improves we are able to access greater quantities of energy that were previously believed to unrecoverable. (Hence the oil sands)

2) The second fallacy is more grievous and manipulative. People are constantly lamenting the fact that Alberta needs to diversify their economy. Truthfully, I think most of these people are motivated by a hatred of success—a pathetic envy which typifies a large number of lefties, but exactly what does it mean to diversify the economy? Oh you say diversification means to expand your economic interests, so you are less dependent on the unstable commodity oil and gas. Fine but how do you it? Well they all think by spending taxes and public imitative. Are you kidding me? A Canadian that thinks government can expand economic interest. We never learn in this country. After all the Bombardiers, Air Canadas Ontario Hydros (any Quebec business… ha ha) and we still believe in economic planning. You think that we should limit oil profits (profits which are used for R&D and expansion—the creation of more jobs) and invest in arbitrary government whims, whims like the 100% useless hydroelectric damn in Newfoundland. Public expenditure is always a colossal failure in business and anyone that doesn’t think so should read the underground royal commission (series of books about Canadian government). Government spending for business purposes only transfers wealth from productive resources to unproductive ones. Businesses that are successful are punished for that very virtue while inefficient businesses are rewarded for their lack of virtue.

You want to diversify the economy do the exact opposite. Lower taxes! You can’t just make a mandate to diversify business—it’s impossible to force the creative. But what a government can do to help diversify it economic interests is lower taxes, making it more attractive to innovators, companies and citizens. Do this and the population, and consequently business will diversify. Primary industry diversifies into secondary industry and secondary industry eventually diversifies into tertiary businesses…etc. Lower taxes and there will be more companies and interests.

And I know what the hardcore leftists are saying now. “Huh, imbecile, sure Alberta will expand, but only at our expense, you will simply be stealing our best minds and businesses”. Well you know what? The rest of the country offers gifts of cash to businesses if they relocate, they guarantee interest free loans, they offer welfare and massive subsidy to attract companies, as well as individuals. Alberta (for the most part) outlawed these practices in the 90’s, so what Alberta offers is lower taxes and freedom. And yet our tax cuts are attacked as immoral while are Quebec’s corporate welfare is lauded as commendable and necessary?

-Angry Roughneck


At 12:10 PM, Blogger McGuire said...

while the people who are preaching diversification are not in the least bit driven by anything other than their own personal interests they are right. Speaking as a Nova Scotian, my province 100 years ago was as economic powerful as Alberta is today thanks to our fish, coal & maritime industries like shipbuilding. Today our economy is the shits. The fish are gone, the mines are closed & shipbuilding is mainly now a craft industry. Learn from what happened to us & don't make our mistakes

At 3:39 PM, Blogger angryroughneck said...

The point is outside of roads, expanding the university there is little the government can do to legitimately expand business interests other than make it a friendly place to do business-- i.e lower taxes

At 8:47 PM, Anonymous Anonymous said...

angry roughneck, from what i understand of peak oil, it isn't that we are going to run out of oil ( theres still 2 trillion barrels left), it's that
1 oil is getting more and more expensive to get out and in harder to reach places

2 will our supply of oil equal demand in the future. sure oil will increase in price to make it worthwile to drill but that just means will have less to spend on anything else.

i hope you're againt the oil sands after what you just wrote (u know the billions of tax breaks oil companies get)


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