Lloyd was a small businessman. As he approached 50, he decided to reshape his future. He enrolled in university to obtain a law degree, completed the articling process, was admitted to the bar, and then opened a one-man law office in his hometown. He worked as a lawyer for more than 20 years, loving every minute of it.
“The future doesn’t just happen,” Lloyd often said. To young people, he talked about shaping the future. To older people, he talked about reshaping it.
Lloyd was active in politics. He said that whether we like it or not, politics is the vehicle that shapes a country or province. “No province has a future apart from politics,” he’d say, adding that elected officials are like legislative traffic cops who point the way.
Regardless of the political party we choose to shape our future, there are a number of things common-sense Albertans can agree on. The first is debt. Every adult with a credit card, mortgage, or car loan understands debt. We also know the difference between debt from an appreciating asset (like a house or farm), and debt from a credit card bill after a month of too much beer and pizza.
Most Albertans can agree that wealth never mysteriously shows up on its own. It must be created before it can be consumed or redistributed. Despite what some people believe, even oil in the ground isn’t wealth. Only after investment, transportation, labour, and processing are completed and essentially paid for does it become wealth. Someone must invest their own money (risk capital) and then add good management and effective labour to the process – extracting, transporting, and processing the oil. This is what gives it value.
All wealth is created in much the same way, whether it’s growing a new crop of calves, a field of canola, or manufacturing a useful gizmo people can buy at a local hardware. Someone invests their savings (essentially their saved-up labour) and then adds creative labour that increases the value of the resource or product.
It’s important to note the crucial distinction between economic activity and wealth creation. The two are not the same. Using a credit card to buy something you don’t need is economic activity. Adding value to something and increasing its worth is wealth creation.
When a government borrows, overspends, or uses money in a cavalier fashion, it engages in economic activity, but it’s not creating wealth. Governments that overtax, borrow, and run deficits actually hinder wealth creation.
Think of it this way: Contrary to what the prime minister says, budgets don’t balance themselves. Albertans will owe $70-$80 billion by 2020. The yearly interest (and repayment of the principal) is money that will be funnelled away from Alberta’s own wealth creation process – sent to moneylenders on Bay Street or elsewhere. Every dollar will come from the pockets of Albertans, who will be unable to use that money for personal savings, investing, creating new wealth, or financing schools and hospitals.
As Lloyd said: “The future is shaped. It doesn’t just happen.” To be sure, there will always be immediate problems that the government and legislature must address. Yet at the same time, what Alberta will be 10, 15, and 20 years from now will be shaped by government policies that we establish today.