Commentary
In 1980, I was struggling MBA student. The University of Toronto exposed me to the radical, for the times, ideas of the Chicago school economic thinkers like Milton Friedman and George Stigler, and Austrian school giants like Ludwig von Mises and Friedrich Hayek.
These two “schools” of economic thinking championed individual freedom and capitalism and challenged the Keynesian orthodoxy of constantly meddling in the economy. To this day, a core strategy of economic decision-makers influenced by Keynesian pragmatists has been for the government to pick the winners and losers in various industries and businesses. They have continued to do so with varying degrees of commitment and with limited success. In fact, the strategy almost always ends up being harmful eventually.
The National Energy Program was passed in 1980 by the Liberal government led by Pierre Trudeau. The program was basically a de-facto partial nationalization of the oil and gas industry, with the stated intent of ensuring that Canada would become energy self-sufficient by 1990. Given that Canada is a major fossil fuels exporter, this goal seems ludicrous in hindsight.The NEP also had the goal of increasing Canadian participation in, and ownership of, oil and gas resources, which was used to justify nationalization and more government control. The advocates of the program assured us that consumers would enjoy “fair” energy pricing, which all too many Canadians defined as “artificially cheap.”
The context of the times is crucial to understand how a government and most Canadians would rejoice at obviously foolish and maladaptive policies and strategies. Oil prices were soaring and inflation was high. Few of us saw that, right around the corner, we would return to cheap energy, inflation would be defeated, and Canada would become an energy powerhouse.
Some of our U of T professors were outraged over the NEP and explained that the program would end up being an economic debacle. History soon proved them right as oil prices plunged. The economy of Western Canada had to simultaneously cope with a serious global recession, collapsing oil prices, and a government that, in the opinion of many, intentionally damaged the economy of the West. This created Western alienation which continues to this day. As an easterner and economics junkie, I believed what the Pierre Trudeau government did to Alberta was appalling.
A luck would have it, the then minister of Energy, Mines and Resources Marc Lalonde was speaking next door to our faculty on the NEP. He was being hosted by prominent Canadian nationalist and socialist Mel Hurtig and a group he was head of at the time. Lalonde was greeted with the adulation of the entire audience except for a few of us students. Listening to Lalonde, it was obvious, even to our young minds, that the NEP made no sense economically and was based on very shoddy and almost childish thinking.
This was my first exposure to the fact that very powerful political leaders are often completely wrong and really have no idea what they are advocating. I have seen little evidence over the last four decades that contradicts this belief. Yet, the crowd at Lalonde’s talk loved it, and most Canadians thought the NEP was a great idea. This was especially true of elites in central Canada who saw the program as a massive wealth transfer from Alberta to Montreal, Toronto, and Ottawa.
Fast forward to 2023. Yet again, Canada has a Trudeau as prime minister who also seems eager to work to the detriment of the important resource economy. Again, we have an inflation problem. And sadly, yet again, despite abundant evidence proving the folly of government interference, the government is choosing winners and losers.
The NEP has been replaced by the “just transition” initiative which, the government assures us, will stimulate economic growth by destroying a crucial industry with highly productive workers in favour of more government spending in order to expand the parasite class and an increasingly large and destructive environmental industrial complex. Oil and gas workers will be magically transitioned to green jobs. Climate activists will have more access to taxpayer funds. Despite intentions, this initiative will not get us to the government’s goal of “net-zero.”
Like his father before him, the younger Trudeau has made a serious miscalculation. He is attempting to defy economic reality and reason by having the government dictate to the private sector on the basis of misguided and irrational beliefs about economics. As with the NEP, his timing could not be worse. The climate industrial complex is getting major pushback by a public that literally lives on cheap and abundant fossil fuels. More and more data is demonstrating that the climate models, already decades old, have dramatically overestimated the degree to which the globe has warmed. More and more consumers are taking the economic red pill and realizing that the misguided efforts of a corrupt and mediocre elite to reshape the world, will create more deadly harm than even the pessimistic climate models predict.
The climate industrial complex, as we define it, is simply the NGOs, companies, and people who make money driving climate hysteria. If there was no crisis, they would have no justification to exist in the same way the U.S. military industrial complex justifies the hundreds of trillions of dollars spent by frequently exaggerating the risks to the U.S. homeland. There are many millions of people making money off climate change anxiety, and they must justify their lucrative cash flows. Consequently, they are not going away any time soon.
The “just transition” initiative is a boondoggle for the climate industrial complex and another attack on the oil and gas industry. The economic consequences of this and the government’s climate policy will have serious negative effects on the lives of Canadians and those who rely on the nation’s exports. Trudeau, however, is determined to implement his green agenda regardless of the consequences.
