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Farmers for economic freedom
Updates from the Prairie Centre/Centre for Prairie Agriculture in
web posted May 21, 2001
A tale of two provinces
By Kevin Avram
Most people realize that Saskatchewan and Alberta are different, but few people ask why. Some thoughtlessly go about saying that because Alberta has oil, it's rich, and therefore able to employ more people. They assume that Saskatchewan is resource poor. It isn't. Saskatchewan also has an abundance of oil -- and gas. In addition, it has some of the most significant uranium and potash deposits on earth. It's rich in timber, and there are deposits of diamonds, salt, sodium sulfite, copper, gold, kaolin, bentonite, coal, and calcium chloride. It also has many lesser-known rare earth elements. Some of them are extremely valuable.
Few people realize that seventy years ago Saskatchewan had almost the same population as it does today. It was the third largest province. A young and growing Regina is where many companies had decided to locate their operations because it was Regina, not Calgary, or Winnipeg, that was seen as the natural hub of the prairie region.
Alberta accelerated past Saskatchewan after the two provinces took distinctly different paths. Alberta embraced a business culture and the profit motive. Individual initiative was encouraged and esteemed. Saskatchewan's political leadership openly supported the idea that private profit was a cancer that was unjust and inhumane.* So unlike Alberta, Saskatchewan embraced crown corporations and a culture of collectivism as a means to development.
The actual turning point was in the 1940s when Saskatchewan's premier and foremost leader of collectivism, Tommy Douglas, decided to have it out with the profit oriented oil companies that were located in Saskatchewan. As reported in a documentary film that was made by the National Film Board, the result of the fight was that the oil companies packed up and left. They moved to Alberta. From that point on they, and other investment-oriented businesses, knew that the Saskatchewan government was hostile toward profit-oriented private business.
Rather than viewing the private sector as a means of investment and development, the Saskatchewan government viewed the private sector as competition. Successive governments maintained that hostility for most of the 20th century, even enjoying a type of revival in the 1970s, when Allan Blakeney was premier. Blakeney believed that the Saskatchewan Family of Crown Corporations was the heartbeat of the province.
Aside from Saskatchewan's anti-business attitude, there were two other impediments to the development of the province's economy -- the Canadian Wheat Board monopoly and the mandatory collectivist mentality that at one time was embodied in the Saskatchewan Wheat Pool. For years, Sask. Pool and the Saskatchewan government fought to ensure that the $650 million per year Crow Benefit Transportation Subsidy was paid directly to the railways. Just imagine what Saskatchewan farmers would have done if each year they had directly received their share of that $650 million, rather than paying that money to the railways.
Ironically, while the Saskatchewan government was openly promoting a "Pay the Crow to the Railway" policy, the Alberta government stated that such a policy was absurd because it significantly damaged the rural economy. The policy ensured a type of collectivist central control, but in the process, discouraged livestock feeding and rural diversification. In response to Ottawa's decision to listen to Sask. Pool, the Saskatchewan government, and like-minded others, Alberta implemented a provincial offset subsidy program that counteracted the negative effects of the federal subsidy. Arguably, that's what propelled the Alberta cattle industry to where it is today.
The truth is that the economic disparity that exists between Saskatchewan and Alberta is not a natural phenomenon, or an act of God. It exists because successive political administrations in Alberta have viewed the profit-oriented private sector as an asset that should be encouraged.
Successive governments in Saskatchewan have taken the opposite approach. They viewed the wealth creating, profit-oriented, private sector either as competition to their own crown corporations, or else something that needed to be controlled, regulated, and taxed.
* The policy document adopted at the CCF's Regina convention in 1933, stated that the profit oriented capitalist economic system is a cancer that is unjust and inhumane. See: www.saskndp.com/history/manifest.php3
Kevin Avram works as an independent consultant in the area of organization development with free market think tanks and non-profit organizations.
web posted May 14, 2001
By Kevin Avram
There is nothing mysterious about creating wealth. It's a straight forward response to the natural desire that all people have to better themselves. History has proven over and over again that whenever people are provided with an opportunity to prosper, and governments stay out of their way, it's surprising how much wealth can be created. The settlement of the Canadian prairies is testimony to that fact, as is the development and continued expansion of the world's free market economies.
My great-grandfather arrived in Canada about one-hundred years ago. He came because he wanted to create new wealth. He knew that property and opportunity were available, so he sold what little he had back in Romania, packed up his family and bought passage on a freighter.
His first winter in Canada was a tough one. He was so poor that rather than building a house, he dug a hole in the ground, used willows that he cut from a nearby coulee to build an A-frame over top of it, and covered the whole thing with sod. He and his family shared the place with a couple of chickens that first winter.
He was fifty years old when he filed for his homestead. He farmed for twenty-two years, retiring in 1925. By the time that he retired, he'd built a brand new two-story house on his 640 acre farm. He had a full line of new machinery. He owned two houses in Regina, a brand new car, and he didn't owe anybody a nickel. He prospered because he was free to do so.
A businessman that opens a restaurant, motel, or construction supply business, is no different than my great-grandfather. People go into business because they want to prosper. They take risks, look after their property, work hard, and look for ways to improve their financial well-being.
Due to natural disasters, some people fail in their activity. In the case of a farmer or rancher that could be drought, grasshoppers, hail storms, or disease. Small businesses can fail due to poor management, bad planning, or an inferior product. But increasingly, a major factor for failing farmers and failing business is the cost of government.
One example of the way governments pile costs onto people is reflected in the price of fuel. In addition to the per-litre tax that we pay at the pumps, every nickel of tax paid by the oil company is also included in the prices. The same goes for the cost the oil company paid to satisfy literally thousands of government regulations. The people who buy gas pay for all the high-priced accountants, lawyers, and corporate administrators that the oil company keeps on staff in order to ensure that it satisfies the regulations. Like every other business, oil companies don't have any money that they don't get from their customers.
Even when one business sells a service to another business, it is still the customer who pays. Consider the fact that CN and CP are national rail carriers that pay millions in taxes each year. CN's source of income is the money it collects for hauling freight. The same is true for CP. It means that when either of them agrees to haul freight for the Canadian Wheat Board, a private grain company, or a company that wants to ship automobiles by rail, the cost of all taxes plus the cost of complying with government regulation, is figured into the freight rate.
When it's a railway that's shipping grain for the CWB, it's the farmer who pays the railway's taxes and compliance costs. In the case of automobiles that are shipped by rail, CN or CP's taxes and compliance costs are charged to the shipper and then included in the car's selling price. The result is that the end-user pays all the taxes and the cost of regulatory compliance.
Kevin Avram is a Saskatchewan native who works as an independent consultant in the area of organization development with free market think tanks and non-profit organizations.
web posted May 7, 2001
Thinking outside the box
By Craig Docksteader and Kevin Avram
The word paradigm (pronounced pair-a-dime) represents an interesting concept. A paradigm is the information we use to evaluate or judge something. It's like a ruler or yardstick, except instead of measuring distance, it measures opportunity and the way we do things. An inch is always an inch, but paradigms can and do change. When they do, it's called a paradigm shift.
A paradigm shift can collapse entire industries. An example of this is what happened to the Swiss watch-making industry. Prior to 1970, Swiss Timing was the world standard. It was a time when watches were made of small gears and precision springs. But when the electronic chip was developed, a paradigm shift resulted.
Story has it that the developers of the chip approached the Swiss in the hope they'd embrace this new bit of technology. Holding the majority of the world watch-making business however, the Swiss were not interested in these upstarts. Not finding any interest in Switzerland, the chip developers approached Texas Instruments and a few Japanese companies. By the time the Swiss realized the entire basis on which they'd previously measured things had changed, their precious industry was pretty well wiped out. This new electronic chip brought about a paradigm shift.
Paradigm shifts are always brought about by introducing new ideas and new information. No new information, no paradigm shift. No paradigm shift, no fundamental change. In order for change to happen, someone has to think outside the box and introduce new ideas into the public debate. When those ideas begin to influence how people evaluate things and what they believe, a paradigm shift has begun to take place.
What few people appreciate, is that the prairies were built by individuals who were prepared to challenge the paradigms of the day. The region was settled in spite of a pronouncement by Captain John Palliser that it wasn't fit for agriculture. Years later, prairie farmers rattled the status quo by establishing farmer-controlled grain marketing cooperatives. Eventually the prairies would become home to the first socialist government in North America and the birthplace of publicly-funded healthcare in Canada. Whether we agree with these initiatives or not, the fact is they represent a pioneering spirit which would not be contained by the conventional thinking of the day.
Ironically, however, these same ideas which were once cutting edge, now comprise the sacred cows of today's paradigm. In some circles, suggesting changes to healthcare or the government-controlled grain marketing system is tantamount to blasphemy. In our efforts to preserve the policies of our forefathers, we are in danger of sacrificing the very thing they struggled for -- a land of opportunity and prosperity that their children could call home.
Study after study has identified the problems that are looming on our horizon. The baby-boomers are aging. As they do it will impact the size of the labour force. This in turn will result in a diminished tax base and place unsustainable pressure on government programs. Add to this the fact that the aboriginal population is growing rapidly, yet native unemployment rates remain tragically higher than the rest of the region. Then note our uncompetitive tax rates, the brain drain phenomenon, the continual slide of private property rights, and we've only compiled a partial list.
If the prairies are to be a vibrant, competitive region in tomorrow's global marketplace, these challenges need to be addressed. Although some would prefer to hold on to the status quo, the reality is, we cannot fix today's problems with yesterday's solutions. If we insist on trying, we will be making the same mistake the Swiss made -- just before their watch-making industry collapsed.
Craig Docksteader is Coordinator with the Prairie Centre. Kevin Avram is a Saskatchewan native who works as an independent consultant in the area of organization development with free market think tanks and non-profit organizations.
web posted April 30, 2001
By Craig Docksteader
When it comes time for change, there are usually two extremes: those who promise quick fixes, and those who say nothing can be done. Both are wrong. When changes in public policy are necessary, something can be done, but it rarely happens overnight.
This is because long-term, sustainable change at the political level must be preceded by a change in people's thinking at the grassroots level. If you try to promote change before people are ready for it, it is unlikely to succeed even if you manage to ram it through the corridors of Parliament. On the other hand, when there is broad-based support for change, it is difficult for even the most determined politician to resist it.
The unfortunate reality, however, is that poor public policy can be established in this same manner. If there is broad support for a bad idea, politicians will run with it and implement laws accordingly. Take gun control, for instance. In spite of the fact that gun control will have no impact on crime rates and will not increase the safety and security of law-abiding citizens, the idea makes many Canadians feel good and so they have chosen to support the concept. The result is a national gun registry, fees, fines and confiscation of personal property for law-abiding Canadians.
The same cycle is now running its course with a proposed law to protect endangered species. For years, misguided environmental groups have been doggedly promoting the idea that in order to protect endangered species you must have a heavy-handed law which restricts property rights and penalizes land owners. Nevermind that the approach will not work and has proven so when tried in the U.S., many people have now chosen to believe it will work. Unless the misinformation that conceived these convictions is countered and people change their minds on the issue, Canada will soon have an endangered species law which will do more harm than good.
For those who wish to see reform in the prairie wheat and barley marketing system, understanding this process is critical. For too long, change has been promoted as attainable through a demonstration, a protest, a lobbying effort, a rally, a court challenge, or the right media stunt, rather than being viewed as a process. While these things may be valuable in focusing public attention on the issue, they do not promote change because they do not influence people's beliefs. In fact, often they inadvertently polarize the issue further, hardening the opposition and making sustainable change even more difficult to achieve.
Ironically enough, the ones who have understood the process of change and capitalized on it the best are the ardent defenders of the status quo. As early as the 1920's, those who recognized this truth and wanted to promote change in Canada established a weekly newspaper that went on to play a dominant role in shaping the opinions and beliefs of prairie farmers. Keith Dryden, former editor of the Western Producer, documents how the founders of this newspaper viewed it as an important instrument for effecting change in society. Through it, the proponents of compulsory pooling and government regulation wielded significant influence in shaping the wheat and barley marketing system which is in place today.
Although it would be overly simplistic to credit the existence of the
current system to this development alone, it clearly illustrates that
those who would promote change in any area of public policy would do well
to understand the process of change and direct their efforts accordingly.
The only other alternative is to become discouraged by misdirecting time
and resources and then despondently insist that nothing can be changed
-- in which case, nothing will.
Craig Docksteader is Coordinator with the Prairie Centre/Centre for
Prairie Agriculture, Inc.
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