As the inept and increasingly corrupt Redford government marches Alberta back into debt, apologists are trying to say that government debt it a good thing and is like a mortgage. That statement is utter hogwash and it is tiring.
To begin with a mortgage is taken out by individuals (or families), to purchase what will likely be an appreciating asset. Equity (most likely) will build in the purchase that can be used to borrow against in the future in possible hard times or the home may simply be sold outright later. Barring either of the above, the home and it’s value will eventually be handed down to heirs.
Government capital projects while providing value are not typically transferable and only lead to future maintenance costs as opposed to appreciating in future value. Can we use a hospital as collateral in a future loan? Can we sell an overpass if we need extra cash? Increasing long-term value makes incurring debt for a home purchase a good idea. That growing value simply does not exist in government capital projects.
A mortgage is usually a once in a lifetime debt. People may move from home to home while building equity and transferring the mortgage but a person will generally only have one mortgage at any one time and the goal will be to pay it off. When government begins borrowing in good times as Redford plans to do now, it is akin to taking out a new mortgage every year. No appreciating asset is being purchased and debt simply keeps growing and growing. There is no equity offsetting the loan.
While a personal mortgage will eventually end, capital expenditures never will. There will always be more roads needed and hospitals demanded. Will future generations not need such expenditures too? They will have to pay for that infrastructure while paying debt off along with interest. Is this principled or fair?
We hear the dwindling Progressive Conservative supporters trying to paint things as if it is some sort of zero-sum game with idiotic questions such as: “Don’t you want schools, hospitals and roads?”. Of course we do and we will still have all of those damned things without borrowing to get them.
People keep speaking of an infrastructure deficit. By who’s measure is there a deficit? Is there ever enough hospitals? Will roads ever be wide enough? Will kids have enough schools close to home? Will there be enough libraries? The demand for spending is truly infinite. The capacity to spend is finite though and we have to draw a line somewhere.
If we need to borrow while the government is receiving record revenues as it is now, it is clear that there is no way that this administration will stop borrowing down the road no matter what energy prices do. We will borrow and borrow and borrow until an inevitable fiscal collapse that our children and grandchildren will have to endure.
All around the developed world we are seeing governments collapsing under their own debt. Most of Europe is in fiscal shambles and the USA is soon to either hit the wall or have some terribly heavy austerity measures come into place as their government debt overwhelms them. Why on earth do we want to continue to keep digging ourselves into that unsustainable hole when such clear examples of the futility of that path are in front of us?
We are lucky in Alberta to have the means for some of the best infrastructure and development in the entire world. For us to threaten this with such a gross addiction to spending and lazy government is almost obscene.
The excuses and rationalizations will be coming hard and heavy as the 2013 budget looms and Redford presents Albertans with a massive budgetary deficit. To be sure, the mortgage comparison with government borrowing is simply bunk. Be sure to remind Redford’s small social media army of that as they ramp up their unprincipled rhetoric in the next few months.