Oversimplified Tuesday #1

What this is all about:

I have the pleasure of a job that helps people but also forces allows me to read newspapers all day. News reporting used to be my day-to-day so I also have a feel for this kind of stuff.

Basically I now read about city and municipal councils across Alberta all doing the same things and making the same mistakes. I also get to read all kinds of different takes on the same provincial stories.

Sometimes you may find reading one story leaves you asking questions, or not really getting the whole picture. It really does feel like most times you've got to tackle multiple stories to get some context.

You are not alone. My wife is right there with you. She tells me she can't spend all day reading newspapers and looking at other news sources to figure out what's actually going on. She tells me it's because she has a job. Apparently other people may be in same boat.

So, we're going to try and chat each Tuesday about one story in very plain terms and see if we can't figure out what the heck is really going on.


This is one of those stories:

Sally: so i need you to explain something to me.
i read this article and i don't really get it. i mean, i get the obvious stuff, like that the premier is down with the idea of going into debt to do infrastructure stuff, but i don't get how i'm supposed to know if this is a good idea or not. because in all of the artcles i have read, it's just one talking head pitted against another.
so i guess i'm asking, is the premier right? is this a good idea?

Jeff: If the question is simply one of whether or not it's a good idea to spend (and maybe borrow to do so) in bad economic times, the answer is usually yes.
At least for anybody following old JMK.
That's John Maynard Keynes for non-economic nerds.
That tends to be what everyone running a government is doing right now, spending on infrastructure (schools, roads, buildings) to keep some jobs going.
The idea is to then tax people when times are good.

Sally: i was just about to ask that. okay, but so why then is the guys from the tax association mad about it?

Jeff: The Canadian Taxpayers Federation (CTF) usually is upset. They aren't fans of taxes and don't like to see government waste. So...in a province that was rife with cash they think it's kinda dumb to be going into debt all of the sudden. Also a fair argument.

Sally: But isn't that a moot point? Like, regardless of what the government should or shouldn't have done with oil royalties and budgets, it's over. The screwed up, they didn't save enough, and now we have to deal with the realities of the situation we're faced with? I guess the federation of texpayers' arguments doesn't seem like a real argument.

Jeff: And that would make the Premier's comments about spending and borrowing now somewhat "spin." Yes, most people agree to do it, yes it would offer some construction jobs and keep the economy moving but it lets the Alberta government gloss over the fact they spent everything they had.

The Taxpayers Federation is right to call for cuts to government waste. I bet you could find some in just about every department. They're also ideologically against government spending for the sake of it, so this is kind of their usual mantra.
Plus...they're an easy quote for reporters.
You find me a story that involves taxes, or government spending that the Canadian Taxpayers Federation DOESN'T want to comment on and I'll eat my hat.

Sally: Ok, which brings me to my next point, which is, isn't this article addressing two separate issues?
Like argument 1) we are broke and should we provide economic stimulus by going into debt for infrastructure.
and argument 2) well you guys really boned our economy by not demanding better royalities from oil companies, and ostensibly pissing away billions of dollars.

Jeff: Yes, the story here is two-fold. 1-The Alberta government wants to use its good credit rating to borrow some money and wants to spend its way into deficit to create jobs and make up for infrastructure it didn't build while it cut, cut, cut away the debt in the 90s.
2 - What boom? We didn't have a boom that showered us with cash. You must be mistaken. That's why we have to spend, spend, spend.
2a - Yay! We can blame the rest of the world economies for not saving squat.

Sally: But i guess my point here, and don't get me wrong, I think the conservatives should all be in jail, is that what's done is done. So should this article not be more focused on the actual reality of infrastructure spending; featuring things like numbers to substantiate the Premier's claim that labour costs are down? Or maybe somebody could look into whether his brother in law owns a contracting firm or something? I just find the additional opinions from the Taxpayers federation and Brian Mason unneccessary and ultimately irrelevant.
not to mention confusing to simple dullards like myself.

Jeff: Costs likely will be down for most projects because oil is down and that makes transportation costs cheaper, the big energy projects are stalled or just about cancelled and that frees up construction firms (which means less bidding-up).
Also, I don't know the Premier's personal connections but if a government has been in power for 40 years, it's going to be tough to find someone who building big projects and has not benefited before.
In terms of the paper also needing Brian Mason and the Taxpayers Federation, you need more than one voice in a story. Plus...opposition politicians and lobbying groups are really easy to get. I bet I could call them for a comment on this conversation.

Sally: I understand that you need more than one voice. But my problem is that in this instance, you failed to follow through on the central argument. To me, I should have seen actual proof that labour costs are down. Basically, what I took away from this article on the first reading was one guy says "we have no money, let's go into debt to build infrastructure." and another guy saying "no, you're a douchebag." but nobody saying, given the current economic state we are in, REGARDLESS of how we got there, this is or is not a good idea.
does that make sense? am i total simpleton for not getting this?

Jeff: Oh, I forgot to mention the other key to the Keynesian plan. You should probably save some money during good times to spend during the bad. So...yeah, somebody out there could probably say "Don't spend and borrow if you've never shown yourself to be able to manage money succesfully." Some may point to the slaying of the debt as successful money management but since the same guys are in power, umm, kind of nobody else to blame. I bet the CTF was trying to go somewhere near this idea but either got caught up in easier ideological statements or it got edited in a different way.
Oh...and the story was from Sunday, so don't expect anybody to be around to offer stats/info/comment on labour costs. Also, probably shouldn't expect many newsroom resources to be available for such on a Sunday.

Sally: Well-played, sir. Well, thank you for clearing that up. To review: 1) me, not an imbecile. 2) Government infrastructure spending, acceptable method of stimulating the economy. 3) We wouldn't even be having this discussion if the current government hadn't pissed away all the boom money.
Oh, and 4) newspapers is hard.

Jeff: I would clarify 2 - Acceptable, but REALLY acceptable if you have some money.
Which this province did. I swear I saw some money, like, last year or 2006 or something.
4 - breaking down a story beyond "here's guy A, here's what guy B says about guy A" = rare.

Sally: Okay, but the many flaws of the fiscal policies of the Alberta government is a discussion for another day.
When we have A LOT more time.

Jeff: You mean, when we run the place.

Sally: Yes, that's right. I mean when hell freezes over. Alberta boom: third time's the charm.


* links added post-chat