Are the Liberals losing the Progressive Primary?

Are the Liberals in trouble? Recent developments—including not only the recent NDP win in Alberta, but also the continuing opposition to Bill C51—suggest it’s a question worth asking, as does a new poll putting the NDP in first place.

In Canada’s present federal political configuration, dating from the emergence of a united Conservative alternative, it is convenient (if oversimplistic) to think of Canadian politics as consisting of two simultaneous competitions: the progressive primary and the main event. That dual campaign gives contemporary Canadian federal party politics much of its character.

With the Conservatives apparently able to capture a sturdy but limited 30-40% share of the vote, a big win in the progressive primary is a necessary prerequisite for either the Liberals or the NDP to have a shot at winning an election. That is, one or the other must convince progressives who dislike the incumbent that they stand the better chance of unseating them. If neither does so decisively, Continue reading

Advertisements

All bias, no information: on the market’s (over)reaction to the NDP victory.

Here we are in day two of the Glorious New Albertastani revolution. The buildings are still standing, but markets are apparently nervous. Headline after headline notes the fear gripping the petroleum industry about what this “leftist” government will do. One analyst described the situation to Bloomberg using phrases like “completely devastating” and “extremely dangerous.” Executives and analysts dropped the dreaded u-word—uncertainty—yesterday, and oil prices rose slightly even as oil sands producers’ stocks fell somewhat as the market digested the news. Whether they processed it correctly is another matter, of course.

At base, all a market does is aggregate the perceptions of a self-selected set of monied actors, which in turn are based on the information available combined with their own intellectual biases. Right now, it’s collecting almost all bias, and no information. Simply put, markets are aggregating collective misperception at the moment.

Indeed, the market actors—and even more so the market analysts predicting doom—seem to be unduly discounting the information that is available. Rachel Notley and the NDP have pledged to hold off on a royalty review until prices have recovered. They have also committed to an independent review, which is more than the Conservatives managed under Ed Stelmach. If royalty rates do go up—and that’s an open question—they will do so in a manner that ensures Alberta remains comparable with other oil-producing regions with which it competes.

The promised corporate tax increase to 12% is actually lower than the rate was in 2003. It’s on par with Saskatchewan and 1% above BC—in other words, it’s a very competitive, reasonable rate for a left-of-centre government in a business-friendly province. Max Fawcett writes convincingly about the overall reasonableness of the NDP’s approach to business, albeit in that notorious lefty rag Alberta Oil Magazine.

Alberta has elected an eclectic new government to be sure, but the signals it has sent out mark it also as a pragmatic one—they would not have won otherwise, and stand no chance of winning again unless they stick to that pragmatism. Indeed, I have a hunch that Albertans, even some deeply suspicious of the new government, may be pleasantly surprised how nice it is to have a government that knows it has to listen and be responsive to the concerns that people express if it hopes to stay in power.

Basically, the only way this doesn’t work out is if market fears become self-fulfilling, and business goes to war with the new government rather than work with it, as happened in Ontario twenty years ago (h/t to Geoff Solomons for that link). Don Braid writes well about that possibility in the Herald. My hunch is that will not happen in this case however, given how much value it would leave on the table for businesses so heavily invested in the province already. Sunk costs and all that, sure, but there are only so many places with oil in the ground in the world, and very few of them are more hospitable to business—a fact that really won’t change much.

It’s probably true that profitability will decrease marginally under an NDP government. They are raising corporate taxes, after all. It’s also true that a cautious approach is sensible in the face of the unknown.  The key word is marginal, however. If markets continue to price in a significant risk factor going forwards, I have two words: buy now.  Once more information becomes available in the form of concrete actions, the market will eventually correct itself.  The market is not always right, but it usually gets there sooner or later.

photo credit: pump jack southeastern New Mexico via photopin (license)

Last night I had the strangest dream…

[Note: I wanted to write something about the NDP’s stunning win last night in Alberta, but don’t really have the time. So, I’ve done the lazy next best thing and compressed a couple of exchanges I had on social media this morning.]

Man, I had the craziest dream last night. There was this big election in Alberta, and the NDP won!

Q: So tell me, will/can this spell into a NDP majority in the next federal election?

A: No. It’s important not to read too much into what happened here. Alberta didn’t turn socialist overnight, any more than it was ever the Conservative monolith that outsiders saw. At its simplest, this election is the story of a province that got tired of a 40-year-old government, a government that had been around longer than most Albertans have been alive. Once a collapse in prices stripped the PCs of their oil-fueled incumbency powers, Albertans didn’t like the look of what was left. They turned to the best option available. Rachel Notley and the NDP, in what will be remembered as one of the great campaigns in Canadian history—not to mention one of the worst by an incumbent—convinced Albertans that they were that best option. The PCAA offered Albertans a CEO, and they elected a leader instead. (And what a leader! If you haven’t seen Notley’s acceptance speech yet, do yourself a favour and watch.)

An NDP win at the federal level, let alone a majority, really also requires a collapse of the Liberals, and I don’t see that happening. If anything, this might slightly help the Conservatives insofar as it’ll cause the NDP to dig in, and make strategic voting among progressives even less likely.

This is a story about vote splitting above all else, and the crazy ways that First Past the Post voting systems can mangle their representation of voters’ preferences. As my former professor Max Cameron said, that is not a good news story for either the NDP or the Liberals at the federal level.

(Incidentally, my favourite subplot to watch for in the coming months is the sudden conversion of Albertan conservatives to PR supporters. If PC/WR can’t manage a merger by next election, we may hear some loud calls for institutional change coming out of my home province.)

If you want to read more on this subject, my friend and colleague Daniel Westlake wrote a very good analysis of what changed, and what did not, in the election last night.

Q: Ok, so will Alberta go fully blue again in the next federal elections? apparently the NDP can take the seats from the Conservatives and not just the Liberals.

A: Not to take anything away from Notley’s team’s campaign, which was dynamite, but had Danielle Smith not defected, I think it’s more likely than not we’d be looking at a WR government in Alberta this morning.

I bet the NDP carries a handful of federal ridings in Edmonton and Calgary. The Liberals are looking at another generation in the wilderness after this. Their brand has never been particularly welcome in Alberta because of that thing Pierre Trudeau did back in 1980, and this is about as clear a signal as you could ask for for voters to coordinate around.

I normally think momentum is bunk, but this is organization-changing momentum in Alberta. Suddenly, there’s a progressive provincial party with the potential to build a local political machine (something else Alberta has never had in my lifetime). While the national and provincial NDP have their significant differences—this piece touches on some of the most important areas of convergence and divergence—the NDP is now the team to play for among among Alberta progressives. In consequence, in urban areas at least, the NDP will be a force in the federal election.

There’s one final point that’s hard to capture pithily, because it goes to the very basics of social identity. Growing up in rural Alberta, I remember it being actually embarrassing to talk about supporting a party other than the PCs—and really, to show an interest in politics in general. It immediately marked you as a weirdo. That may be gone now. Being NDP is suddenly a legitimate choice. It may not change much, but then again, it might be the thing that matters most in the long run, particularly if the NDP manages competent, pragmatic governance throughout the coming term, no mean feat giving their newness and the stiff economic headwinds facing the province.

For the short term however, the best the NDP can hope for is to push the Liberals out of the way completely in the province. 52% of Albertans voted for a right-of-centre party in this election, and a similar number will do so in the coming federal election.

The bottom line is that the Alberta party system shifted dramatically last night. We saw the dramatic rise of one party, and the decline or demise of several others. That will have huge implications in the province, and some significant effects beyond its borders as well.

The people of the province however, are just the same as they were yesterday.

Politics come back to Alberta

With just two days until the Alberta election, polls incredibly continue to project a majority NDP government. Albertans themselves are considerably less bold, with many apparently believing the Tories will come out on top once again.

I understand their scepticism. The Tories, like the Damn Yankees, always seem to come out on top. For more than a generation (including my first twenty-odd years growing up there), they have been the province’s natural governing party. Placed in that context, the astonishing rise of the NDP seems too good to be true. As with the  dizzying ascent of the Wildrose party four years before, and indeed every one of the last twelve—12!—provincial elections, the eventual triumph of the PCs seems all but inevitable.

And yet, polls aside, there are solid reasons to believe that change is finally possible, perhaps probable. Indeed, in one sense, it doesn’t matter who wins on Tuesday. No matter the victor, we already know the most basic outcome: competitive politics have returned to Alberta. Unless and until oil prices return to their former lofty heights, they’re not going away—and perhaps not even then. The transition from one-party dominant to multipary system that began in 2012 has now been confirmed and completed in 2015.

What’s driving this change? In a word, it’s oil. Other factors matter, but we forget at our peril just how central it has been in shaping Alberta’s politics right down to the nature of its party system.

At their height, the Tories were not really a political party competing with other similar parties. It was a crucial link between the politics of the province and its dominant industry. Present in government at the start of the oil boom more or less by happenstance under Peter Lougheed, it was always seen as a reliable partner for the oil industry, a vocal proponent for the sector within Canada and internationally, one willing to keep royalty rates among the lowest in the world.

At the same time, with revenues flowing from the industry, the PCs could afford a big, roomy, comfortable tent capable of accommodating Albertans of almost any political stripe. From 2002-2014 for instance, resource revenue constituted 29% of the province’s income, or nearly a third of the total. A party can buy a lot of good will with that kind of money, and it allowed the PCs to fund robust public spending while maintaining the country’s lowest tax rates—something for everyone to love.

In consequence, many who would otherwise gravitate to another party under other circumstances talked themselves into the status quo, and opted to step into the tent rather than rock the boat and challenge a party with such a massive incumbent advantage. Those who did challenge the government tended to exist on the fringes of provincial political life, while the real discussions took place inside that big, comfy tent.

It is no coincidence that, prior to 2012, the last time the PC party was seriously challenged, way back in 1993, it came after a significant decline in energy prices wreaked havoc with the province’s finances, producing a spiraling debt and ultimately forcing the resignation of Don Getty. Then, it was the energetic leadership and personal popularity of his successor, Ralph Klein that staved off Laurence Decore’s charging Liberal party, essentially by campaigning against the Getty era even more effectively than Decore did. As oil prices and the province’s finances recovered, so too did the Tory stranglehold on power.

Returning to the present day, once more the goodwill funded by oil revenues has significantly diminished due to a fall in global energy prices. Like 1993, suddenly viable opposition parties have emerged as genuine alternatives to the suddenly vulnerable Conservatives. The post-Ralph years have not been kind to the PCs’ image however, and the present leadership is saddled not only with a gaping hole in the province’s finances, but lasting perceptions of arrogance and even venality in its approach to politics, a residue perhaps inevitable after four decades in power.

Of course, other factors matter too, though many of them relate to oil as well either directly or indirectly. For instance, the implications of climate change have become inescapable even in a province as dependent on fossil fuels as Alberta. This has led to an increasing number to question the province’s role in aggravating what is arguably the defining problem of the present era, even if it proves economically damaging in the short run to do so.

Other voters have simply grown tired of 40 years of government by the same party. Some take issue with the Conservatives’  uninspiring and/or overly entitled leaders since Klein’s departure. Danielle Smith in particular made profitable use of that discontent, though even she was unable to triumph in 2012 largely due to that resilient and adaptive Tory big tent coalition.

With oil revenues significantly down however, the big tent is finally collapsing. Alberta now faces the same hard choices that other districts have always faced: not just who gets what, but more importantly, how to pay for it. Those are hard questions for any democracy to deal with, and harder still in the context of a sudden and significant deficit.

They are questions best debated and answered out in the open for all to see rather than within the confines of a single party, however big. The province’s voters will encounter a meaningful choice on election day, the opportunity to select between multiple distinct and viable visions for the province’s future.

That’s why, no matter who comes out on top on Tuesday, Albertans are the real winners. Multiparty democracy has returned to the province, and seems unlikely to depart in the near future.

Are the Greens an “issue based” party?

(Note: what follows is premised on the idea that Canada will not be adopting proportional representation any time soon. If Canada were to switch to PR, much of what follows would go out the window.)

In response to my recent op-ed in the Citizen, one of the negative responses I heard concerns the question whether the Green Party of Canada (GPC) is an “issue-based” party or not. Obviously, it’s an issue that’s been debated elsewhere; for my purposes, I think it important to to draw a line between two different ways to understand the assertion.

The strong version of that statement, that the Greens have positions on environmental issues and nothing else, is clearly false. The GPC have long shown a willingness and ability to stake out positions on issues other than the environment. However, a second understanding, the one that I am focusing on, concerns what I would refer to as the party’s core identity, particularly in the minds of voters.  Here I think the statement is true. That is, in the minds of voters, the Green Party remains associated with environmental issues, with no clear associations on other key issues.

To the extent that this is the case, it’s easy (and I would argue incorrect) to blame this on voters’ lack of understanding. Again, to me the base problem is structural: to win an election in a first past the post (FPTP) system like ours, the Greens essentially have to come to embody a distinct way of thinking about the world, one that is a) relatively easy for voters to grasp, giving them a clear idea of what the Greens would do on any given issue WITHOUT having to refer to the most recent platform, and b) relatively stable from election to election.

Not only that—and this is a key point—the identity they create must be viewed as better than that of existing competitive parties for all issues that concern would-be supporters. Electoral politics, particularly in FPTP, is zero-sum. Your success comes at the expense of (indeed is synonymous with) someone else’s failure. (For instance, it is no accident that the Reform Party emerged in the wake of a Conservative collapse, or that NDP’s current strength comes at a time of historic Liberal weakness. Even those cases are not great models for the Greens; despite its regional popularity, the Reform Party eventually felt compelled to merge with its competitor on the right, and the jury clearly remains out on the NDP-Liberal competition to become champion of the centre-left.)

Greens can’t do either of those things better than their direct competition for base voters (the Libs and the NDP). A typical voter who cares about the environment and a lot of other things isn’t likely to know what the Green Party is likely to do on health care, or day care, or treaty rights—or for that matter even on the environment—without checking their platform, and is equally unlikely to have a strong sense of the positions the Greens will adopt a similar position four years from now. For all she knows, a different leadership might take the party in a very different direction. So long as there are other options with longer track records that the voter feels more familiar with—and again, for the Greens’ target audience, that’s still the Libs or the NDP—she is going to prefer to stick with those parties more often than not, and hope they get more serious about the environment, rather than adopt a new party that clearly cares about the environment, but remains fuzzy to her on all the other issues that she care about, particularly the key questions of who gets what, and how.

Party identities and voter trust in them can change over time, but it’s a very slow process, with no guarantee of success. The NDP have been a party in waiting for two generations now, and still have not clearly become Canadians’ preferred non-Conservative option.  Given the current and mounting pressures on the environment, I don’t feel comfortable wait for the Greens’ turn, if it ever comes. Far better, to me, is to pursue a strategy that pushes all parties in the direction of a greener policy, and holds the possibility of immediate returns in the form of green-committed MPs, regardless of the party they represent. Given the choice between that, and a faint hope of a Green Party in government (or heck, even in Parliament with any significant presence) some time in the distant future, I’ll choose the former.