Air Horn Politics

“We’re all seriously suffering from a kind of Trump derangement syndrome…he uses up so much of the oxygen and it’s like having…a big air horn installed in your head and you just can’t get away from it.”— Garry Trudeau, the Pulitzer Prize winning creator of Doonsbury  

Sadly, Albertans have their own version of air horn politics and it’s interfering with our ability to understand the economic challenges we face.

But we can try.

160118134132-donald-trump-nigel-parry-large-169

Donald Trump: He’s YUGE

Let’s start by reviewing the big (or in Donald Trump’s vernacular “yuge”) news of the week.

Saving the economy 

Finance Minister Ceci anticipates a modest recovery in 2017 (the Conference Board of Canada agrees with him) and announced more loans to small businesses through ATB Financial.

Rob Horricks, CEO of Blush Lane Organics is grateful for the government’s help and says “this is the perfect time to be opening new stores and new businesses.”

Wildrose finance critic Derek Fildebrant says Mr Ceci is nuts.

He says (cue the air horn) ratings agencies won’t have confidence in Alberta unless the government gets over its concern that “cutting a single dime of public spending” will be catastrophic to the economy.

Hmmmm.

Recently the government cut spending by $3 million (that’s a lot of dimes) by not mailing reminders to people whose vehicle registrations were expiring…and was lambasted by car owners who got fined for driving with expired vehicle registrations.  So much for getting rid of the “nanny state”.     

More importantly, Mr Fildebrant ignored the fact that on Sept 7, 2016 DBRS expressed its confidence in Alberta by confirming its bond rating at AA high (stable).

DBRS said Alberta has “moderate flexibility” at this rating and with these oil prices to withstand even more “economic and fiscal deterioration” and that Alberta’s “debt burden is expected to remain relatively low” when compared to the other provinces.

derekfildebrandthires5-2013-size-xxlarge-promo

Derek Fildebrant: not quite so YUGE

The point Mr Fildebrant should put his mind to is DBRS’s conclusion that if oil prices don’t recover and stabilize Alberta may need to make further spending cuts and impose higher taxes.

Fildebrant’s solution to the economic downturn is (cue the air horn) (1) roll back personal and corporate tax hikes, (2) ditch the carbon tax and (3) stop the minimum wage hike to $15/hour by 2018. Apparently these three measures will rescue the economy.

Which brings us to the Western Feedlots example.

Western Feedlots

Western Feedlots Ltd (WFL) will close its doors in 2017.

WFL’s CEO says the carbon tax and Bill 6, the farm safety legislation, are “prohibitive to competitiveness”.

Oh, and precipitous drop in cattle prices over the last year didn’t help any.

It’s difficult to get detailed financial information about WFL because it stopped filing public documents when the majority shareholders bought out the minority shareholders in Aug 2000.   However we do have access to the PwC valuation report* which provides a snapshot of the business up to that time.

WFL buys cattle, feeds them and markets them to beef packers, primarily Cargill Ltd.  It also feeds and markets cattle owned by ranchers.  Its profits are “extremely sensitive to fluctuations in feed, calf and finished cattle prices.”   In 1998 sky-rocketing feed costs cut gross margin to 5.5%, roughly half the gross margin of the previous year.  (5.44, 5.45 PwC Report).

Did the new carbon tax sound the death knell?

In a recent tweet U of C economics prof Trevor Tombe (@trevor tombe) compared the impact of the carbon tax with the 25% drop in prices.  The impact was less than $1 per one hundred pounds of cattle ($1/cwt).

$1/cwt is small compared to the drop in price, but is it small in absolute terms?

PwC says WFL charged cattlemen a fee of $1/cwt to participate in a program to get better prices from Cargill for better beef (more marbling for example).  The program was called Value Based Marketing (VBM).

The purpose of VBM wasn’t to make a profit.  It was more like a loss leader to give WFL information about the quality of the herds running through its feedlots so that WFL could make better cattle buying decisions in the future.  (para 5.18 PwC Report).

If the $1/cwt VBM fee didn’t break the bank in 2000 it’s unlikely that the $1/cwt carbon tax would do so now.

What about expenses related to Bill 6?

Economics and agriculture prof Sven Anders says the government’s decisions (like Bill 6) will increase expenses but the real problem is that two large beef packers, Cargill and JBS USA Holdings, dominate the market leaving feedlot owners with very few options when prices fall.  This structural problem is very much like Alberta oil being at the mercy of one major buyer, the US. 

The challenges facing Alberta’s economy are complex.

They deserve a better response from the Official Opposition than simply cranking up the volume on the air horn and blasting whoever comes within range.

*The PwC report report is available at http://www.sedar.com/DisplayCompanyDocuments.do?lang=EN&issuerNo=00011585

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22 Responses to Air Horn Politics

  1. jiwillia says:

    http://calgaryherald.com/business/local-business/varcoe-alarm-bells-ring-over-demise-of-one-of-canadas-biggest-feedlots This story quotes estimate of about $2 cwt. for WCB payments. I think your observation about costs still holds, though. Excellent read.

  2. Einar Davison says:

    Western Feedlot in Strathmore has been virtually empty for more than two years or more, I have been driving by it at least once a week for the last five years. Absolutely it was virtually empty (I think I saw maybe one pen of steers at the most) before the last election. So I concur it’s not the NDP’s who caused them to close up shop and pardon the pun but BS Derek. Once again it’s a case of if beef prices go up, people will start raising beef again. If oil goes up well Bernard will go back to “roughnecking”. We have benefited from globalization, but there is a down size too when global production of commodities increase beyond demand and lower the prices of those commodities we sell.
    Imagine how I feel with him as my MLA…he doesn’t lie, but he makes the truth whatever he wants it to be and he tells people what they want to hear, not what they should hear. Far be it from the Wildrose to use facts instead of rubber rulers and refusing to use the correct time frame.
    But of course Mr. Fildebrandt knows everything about farming as much as he knows about the military because he has lived on farms (acreages) and near military bases all across Canada. That is all the knowledge a Wildroser/Right Winger needs, because they were touched by the hand of God and received divine knowledge. Sorry I guess I became a bit of an air horn too.

    • Brent McFadyen says:

      Love your comment, you must be learning from Susan with your subtle use of snark. Please carry on.

    • Einar, I loved your comment, as Brent says it’s got that subtle snark element that comes from sheer frustration. I wonder whether Mr Fildebrant checked with WFL about the status of its Strathmore operation before he blamed the company closure on the NDP…nah, why would he.
      You mentioned he’s your MLA, does this mean you had the pleasure of running against him in the last election. Now that would have been interesting!

      • Einar Davison says:

        Susan, Yes I must admit that I failed to stop Derek during the election and yes it might sound like sour grapes on my part, it isn’t. I can say even the former Wildrose/PC MLA and the former PC MLA before him worked harder for our constituency and I respect them for that. Mr Fildebrandt is all about stroking his own ego and using Strathmore-Brooks as a stepping stone. I found him such a despicable person that I was actually hoping that the PC candidate would win, and in the end she had the experience and the community service background that made her the best choice. We needed a person who cares about this constituency and will advocate for it not just rabble rouse or embarrass us.
        All the other candidates (ND, Green, none of the others showed up) I ran against were also people who would work for their constituents, Derek was not one of them, and he is proving this. In fact I’d really like to see his calendar to see how many days he actually spends at his constituency office and in the constituency doing constituency work. I bet it is not a lot and I bet he is anywhere but Strathmore-Brooks for most of his time. I have had the greatest honour to have met many MLA’s who cared about doing the best job they could for their constituents. Muriel Abdurahman, Grant Mitchell, Nick Taylor, Stan Schumacher and many more, these people are my heroes and how they served is how we should expect our MLA’s to act.
        Yes I’m frustrated in the fact that the rural public forums are always set-up to ensure front runners or incumbants aren’t challenged. I would have loved to have been able to debate him on the things he said because they were long on populism and lean on actual realism. I’m frustrated that Derek called for Ms Drever to resign for things she did before she was even elected, yet Derek can stand up and insult a guest of our province (whether you like the Premier of Ontario or not is besides the point) and basically applauds a homophobic tweet and then gets a pass. I guess the rules are different for the rest of us though, because we are not right winger. I’ve blown my air horn enough, as I suspect I’m preaching to the choir. Thank you again for your patience with me and I appreciate the work you do and this great blog. Einar

      • Einar, how unfortunate that you weren’t able to engage with Derek Fildebrandt in a debate. I can’t help but think it would have gone a lot like the presidential candidates debate we witnessed last night with Fildebrandt (like Trump) taking up a lot of air time but not saying anything of substance. Someone should tell Trump that yelling something doesn’t make it right. And someone should tell Fildebrandt that repeating the same three things (no taxes, no carbon levy, no minimum wage hike) doesn’t make it a plan.

        PS I think you’re absolutely right about Mr Fildebrandt being ambitious. I wonder if he’s figured out how to use Jason Kenney’s effort to become the leader of the combined WR/PC party to his advantage.

      • Einar Davison says:

        Hi Susan, I suspect he would see it as a threat to his ambitions. I believe he feels he should have Brian Jean’s job, and I think the Wildrose fiasco almost set the ball rolling. Better be a big fish in a small pond than a minnow in Jason Kenney’s pond. You know the radical right wing is usually their own worst enemy. However I don’t think we can rely on that anymore. If the US can elect Donald Trump and that has to be the worst ever nightmare scenario…then anything could be possible. Hopefully that will never happen as I’m sure that would put more wind into the sails of our homegrown right radicals. I notice Carlos use the term neo-liberals, is he not talking about the libertarians “we don’t want no damn government telling us what to do”…except they do like the stuff government does for them. I remember you quoted Brian Jean about government help during the Fort Mac fire. I forget how it went but that is the logic they use. “we want government help we just don’t want to be seen needing it” or words to that effect.
        Your right…I need a shirt that says “Derek just because you keep saying it, doesn’t make it so”

      • Carlos Beca says:

        Einar I did use the term neo-liberal but referring to Hillary Clinton not Donald Trump.
        We can call them radicals and extreme right wing or whatever but the fact is that people are turning to them because the status quo is actually worse. I personally believe that voting for Hillary Clinton in the long run is as bad as voting Donald Trump. Politicians just cannot shake their addiction to power and greed. Look at the Trudeau government. It is starting the same old same old of previous governments in terms of abuses of the public purse and I just read this morning that each person on the plane with Justin Trudeau visits cost us $1300 dollars per day. What are they eating golden manure? There is no shame and there is no change. First of all why do we have all these people on vacation with the Prime Minister’s delegation? Politics has to change and it will either by choice or by force. I believe it will be by force.

      • Carlos and Einar, I must admit I’m a little confused about what neo-liberalism is. I googled it and found this definition on Investopedia: “neoliberalism takes from the basic principles of neoclassical economics, suggesting that governments must limit subsidies, make reforms to tax law in order to expand the tax base, reduce deficit spending, limit protectionism, and open markets up to trade. It also seeks to abolish fixed exchange rates, back deregulation, permit private property, and privatize businesses run by the state.” I’m not sure that the definition fits either Trump or Clinton all that well. Both of them are against TPP, Trump wants to reduce taxes across the board but especially for the rich and corporations while at the same time penalizing companies that move out of the US with a tax on any products they import back into the US, Clinton wants to subsidize college debt and tax the rich. I suspect Clinton picked up a lot of Bernie Sander’s platform in an effort to attract his supporters and Trump is all over the map so who knows what they really believe. But I do agree that the people are becoming more and more dissatisfied with the political process, both in the US and here in Canada and as Carlos said in his earlier post we can’t afford to be complacent.

      • Einar Davison says:

        Sorry to have misunderstood Carlos. My dad always said it usually takes twice as long to undo stuff than it takes to do it in the first place. I have found that to be true. We always seems to be face with the lessor of two evils and in the US with the two party system it is even worse. However I do ask is Hillary so bad or is it her press is so bad? Unfortunately, well no not unfortunately life should be about compromise, finding the best solutions, doing the best job and getting things done. I remember Hillary tried to get medicare for all Americans…it didn’t work but she tried, so that gets points with me. She’s not perfect granted, but if your choice is her or Trump, I’d vote for her and pray she does half of what she promises.
        Justin continuing Conservative largesse is not good either and yes we need to hold all governments feet to the fire and not give them a pass. However we should also praise governments when they do right. They have done more good than they have done bad. It’s the same in Alberta, I cannot condemn the NDP (even though they are not my party) because to date they are doing better than the former government did. Equally I may support the more progressive of conservatives in their upcoming leadership because I have hope that we will find a balance and that balance will keep governments honest and serving the people of Alberta (or Canada) and not just their friends and supporters. However there is also a realization that political systems are self sustaining. I have watch for over 40 years governments promise much, deliver little and abuse the “rewards” of the system. On the otherhand politics isn’t the best paying job in the world and a lot of people “do it” not because of wanting to serve, but because they don’t have a better gig. That too is unfortunate. Absolutes don’t work, we had 10 years of right wing neo cons running the country, that didn’t work, we’ve also had years of quasi “socialism” and that didn’t work. Maybe we need to stop with idealism and do what is in the best interest of the people not because it fits our party ideology but because it is in the best interest of the people. So far even though the NDP are the “most hated evil” people in the universe or at least Alberta, they seem to be trying and the loyal opposition is just lying. My last comment is that if the government does nothing else, but provide excellent public education, the best possible health care (that is ran efficient and serves the patient before policy) and protects our seniors and our children. Then I will be able to put up with the rest. Sorry Susan I did it again!

      • Carlos Beca says:

        Susan neo-liberalism is the definition you used except that it does not tell the story. It is like saying communism is when the state owns all the means of production for the benefit of the people but we do know that has not been the case at all. Neo-liberalism or neo-conservatism is what we have had for the last 3 decades. Summarizing, use all tricks to make corporations and the elites powerful and very rich. Destroy the middle class if that is necessary in order to achieve that. This is my definition.
        Einar, I agree with most of what you said but I just add that the most successful societies in the world right now are social democrat.

  3. Erin Hickman says:

    It’s clear to me that the official opposition’s goal is to gin up the support of those susceptible to “air horn” politics in order to gain power. If they had any research that shows that their policies have worked anywhere in the world, they would be throwing that at us. Instead, we get nothing but the airhorn. Thanks for the research!!

    • Erin you raise a very important point. It’s time for the Wildrose to put down the “air horn” and tell us how they would govern if given the chance. They can’t control commodity prices (oil, beef, natural gas, etc) which are set by the global economy, we get that, but what would they do about the things they can control? Would they provide incentives to certain sectors? Cut spending? If so where and how? By off-loading more public services to the private sector? Raise taxes to make up the short fall (okay, I threw that one in for a laugh). You can’t rip apart the government’s ideas without offering a better alternative.

  4. Carlos Beca says:

    I love the term air horn politics. We have a lot of that in Alberta. Derek is one of our best trained players..
    I am not sure that Trump did as bad as most journalists seem to have concluded. The fact is that the people that suggest that he was ‘trounced’ are the ones that believe in neo-liberalism which is exactly what Hillary Clinton is going to deliver. All the talk about progressivism is just that, cheap talk. Remember Obama? He even wrote a book that would do well in the Scandinavian countries.
    Now the facts:
    Donald Trump is seating at 46% versus 54% for Hillary Clinton. So almost half of Americans think that politics are corrupt and that electing Donald Trump could make a difference. Like he said, for 30 years politicians have been promoting corporate interests through free trade deals that only work for the very rich and where was Hillary Clinton? I despise Donald Trump but I am on the side that we can no longer continue electing the status quo. We are marching ever faster into a world collapse and if we vote this people in we will not be able to avoid it.
    Rather than focus on Donald Trump I would turn to Europe where Jeremy Corbyn for the second time in a year was re-elected to the labour party leadership with 300 thousand votes. People tried hard to disgrace him including accusing him of sympathizing with the Hamas group. Not sure why this is so terrible. Is it better to sympathize with the American foreign policy of invading countries by choice? The labour party is back in the left and the war to break it including the neo-liberal side of the party is tremendous. Europe is in turmoil and North America is next. Canada is not immune we just are too polite to stir the pot.

  5. GoinFawr says:

    “Doonesbury”

    .
    Bearing in mind who ultimately calls the shots in any creditor/debtor relationship, here is my version of ‘Air Horn’ politics regarding Canada’s sovereignty, featuring Elizabeth May, the late Jack Layton, and more:

    In my opinion, until Canada regains (for ~7 decades it did, and the middle class grew) sovereignty over it’s financial responsibilities, any pretense of its politics possessing elements of democracy is farcical.

    • Carlos Beca says:

      RIGHT ON – that is why I am such a big fan of the late Mel Hurtig. He warned all of us.

    • carlosbeca says:

      And then …. we call Donald Trump a nut !!!
      The problem like I said before is that we are all suffering from mental deficit disorder!! 🙂
      This movie is just a very good example of the kind of world we the ‘created’ species have developed and continue to sell as reality. Why worry about the American election. Maybe they will do us a favour and collapse this castle of doom faster. It will feel like doctor assisted suicide.
      I feel embarrassed when my kids watch a movie like this one and there are a ton of them out there.

      • GoinFawr says:

        I agree, that piece shames the mainstream media completely; on what must have been the most threadbare, shoe-string budget young Dan Mathews talks to a litany of pertinent pols, including former prime ministers, sitting (at the time) and former finance ministers, opposition and minor party leaders, and other authorities actually having jurisdiction He plies them with questions regarding a critical subject that directly, insidiously, and adversely affects every last Canadian taxpayer, and all but a few of those interviewed stumble, with those whose tongues were not tied making some pretty salient observations.

        OTOH we have the ‘mainstream media’, equipped with its billions of dollars, refusing time and time again to adequately address the crucial matter (along with others), instead constantly parading out paid, biased ‘pundits’ and self-purported ‘experts’ to tow an established line, rather than directing relevant questions at those who are in the positions to make the decisions. Sure their ‘production value’ leaves “Oh Canada” in the dust, but anyone who really cares can usually do without all the bells and whistles, thanks.

        That said, I am not as hopeless as Mr.Mathews comes off in that film, nor do I think that simply refusing to participate provides any feasible solution ,if that is in fact the (in)action he is promoting.

        Why?

        Because of tried and true McGeer’s monetary policy. Proven success for over 7 decades.

        But I have absolutely no explanation as to why there isn’t a raging, ongoing public debate about Canada’s current national borrowing policy, as day by day the taxpayers’ labour is being increasingly bled to feed the bloated Mammon machine and less and less of it goes towards getting the things done the hoi poloi needs done, especially when, constitutionally, Canadians never even had to go down this path in the first place.

      • Carlos Beca says:

        Well GoinFawr we are an incompetent society and we have been for far too long. The newest money making activity is now Syria, after the men made disasters of Iraq and Afghanistan. While thousands die and millions get displaced, the United Nations discuss whether this could be classified as a genocide.
        Are we all still not tired of this fantasy we live in? The fantasy that is now creating people like Donald Trump, a man that wants to be president and has not paid one dollar in taxes since 1977, A man that despises the society he wants to be president of.
        Is this not enough? I think that we all need a serious wake up call. Donald Trump is a clear reflection of who we have become.

    • Thanks for this GoinFawr. It’s a long clip but worth watching.

  6. david says:

    I agree with this analysis of tedious ‘opposition politics’, without evidence, including the impacts of Bill 6, one of which is to ensure that the international community will continue to buy our products based on their adoption of Ethical and Sustainable Practices standards (including child labor standards, still pending here) which come into effect starting next year.

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