[META OFF] ELI5 How the Alberta NDP are to blame for the economic downturn in Alberta

In general, probably the most worrisome trend in canada's economy is the lack of business investment (BI) and BI has been low for some time [http://www.statcan.gc.ca/daily-quotidien/150901/cg-a003-eng.htm]. The Bank of Canada has tried to increase business investment by reducing interest rates but the response from the business community hasn't really been what they were expecting.

Business investment is a problem especially in the oil and gas industry when the price of oil has dropped so much. The effect is seen in the statscan numbers as oil in gas contracted 5.7%. Furthermore the supporting industries around mining, oil and gas dropped 18%. Oil and gas companies are not considering even investing anymore and just thinking about how they can reduce their costs and remove themselves from the market.

Acknowledging that there is a problem with respect to BI in the oil and gas industry, what has the response been by the Alberta NDP? To review the royalties of the oil and gas companies and implement higher corporate taxes. These policies reduce the economic incentive for businesses to invest and lead to contractions on GDP. The policies are not actually bad and are very important to use in times of economic booms, not busts.

What should have been the response of the Alberta NDP government? Well according to Keynesian economics they should impose policies that promote and support business investment in the oil and gas industry for a limited time. It's important to note that this won't stop job losses, it would only soften the blow. Job losses will still be had and projects will still be cancelled only not as severely.

Kevin O'leary is right with his analysis whether or not you find him partisan by economic standards he is right.

/r/metacanada Thread