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Lethbridge Herald, The (Newspaper) - November 20, 1974, Lethbridge, Alberta 4 LETHBRIDGE November 20, 1974 A serious constitutional issue Premier Peter Lougheed has called this week's federal budget the biggest assault by the federal government on any province in the history of the country. It is indeed a constitutional confrontation of major magnitude, and whether and how it is resolved will change the nature of the country and the future of every citizen. This is a modest attempt to try to ex- plain what it is all about. Most (but not all) of Canada's natural resources belong to the Crown, not to private individuals or companies. Constitutionally that means the provin- cial governments, not the federal government. As owner of most of the oil and gas in this province, the Alberta government leases it to private companies to find and to produce. Its charge, as owner, is a percentage of the production. This is called a royalty. Over the last couple of years the provincial government has forced up the price of gas produced in Alberta, and at the same time it has increased its percentage royalty. The crisis of a year ago left world oil prices greatly increased. That meant much higher values for Alberta oil, most of which is consumed in Canada, some in the U.S. The Alberta government, as owner of the oil, increased its royalties to get a much larger slice of the much higher price. The federal government's position was that Canadian consumers should not have to pay world prices for Canadian (Aiberta) oil. So it (a) put a ceiling on the price of oil sold in Canada, and (b) put a high tax on oil sold to the U.S., the revenue from this tax naturally benefitting all Canadians. This frustrated Alberta's plans to ex- tract most of the benefit of the higher prices. However a compromise arrangement was worked out between the two governments. Now, according to Mr. Lougheed, the federal government has adopted a new device to upset the arrangement and to rob Alberta. The device is to tax the royalties paid to the provincial government. The oil companies, in calculating their taxable incomes, will not be able to claim royalties as an expense. Up to now, royalties were considered an expense. Suppose, for instance, a company produces and sells worth of oil, on which the royalty is other expenses and the profit The company would now be taxed on not as was the case before this budget. This, of course, would quickly kill the company. (Mr. Turner, in Monday night's budget, gave some other concessions to the oil companies, but it is conceded these are not enough to save them from bankruptcy.) Mr. Lougheed complains that the federal government has no right to tax the provincial government's share of the oil revenue. Mr. Turner says if the provincial government is sincere about the companies not being taxed to death, let it reduce its royalty. Mr. Lougheed says the Turner tax on royalties is unconstitutional. That is for the courts to decide. What if it is not unconstitutional? The dispute seems more political than legal. How can such a political confrontation be resolved? The Saskatchewan and B.C. governments, less in the oil business than Alberta, take Alberta's position but with less vehemence. But the other provinces also have an interest. If Alberta's oil today, why not Manitoba's zinc or Ontario's copper or Quebec's gold or New Brunswick's forests tomorrow? If the provinces do indeed own their natural resources, what right has the federal government to tax them away from the provinces? On the other hand, says the federal government, if Canada is indeed "a nation, what right has any province to hold up the people of the other provinces by artificially pricing its resources sky high? Not only a serious constitutional issue but a tantalizing drama in which both the future of an industry and of the country, heavily dependent on it, are at stake. THE CASSEROLE Urging that 10 eastern House of Commons seats be re-allocated to Western Canada. M. P. Harvey Andre. Calgary Centre, said ''I know a lot of people of wealth who are active- ly talking of separatism." Referring to dis- putes over oil policy, long standing western complaints about freight rates, eastern bank- ing control, he warned that today's squabbl- ing is likely to intensify and could "create a much larger and more serious strain on Confederation." Threatening eastern Canadians with separatism isn't too helpful either. One of the virtues of Canada Savings Bonds, according to their promoters, is that they are "as good as cash." Anyone who has tried to spend a bill lately, knows how true that is. At first glance. B.C.'s decision to allow 15 year olds to work seems a retrograde step. But there's nothing backward about the pur- pose. The idea is to permit youngsters to learn something of the real world, acquire good work habits, and gain the experience employers are so insistent upon, while still attending school. RUSSELL BAKER Good times The economic history of the modern age begins with the crash of 1929 when stockbrokers jumped out of skyscrapers. The country learned its lesson, tore down the old skyscrapers and put up new ones with win- dows that couldn't be opened so that today stockbrokers have to be content with moving to smaller apartments. Economic progress was made on many other fronts. To make jobs, the government spent billions on road-building and Robert Moses, using New York as a model, showed America how to turn every city into a traffic jam by abolishing trolley cars and putting in expressways. Thus we progressed from the five-cent trolley ride to the S4.000 automobile, with the S550 insurance policy, the S5 parking lot and 60-cent gasoline. The automobile industry boomed, along with the concrete, asphalt, insurance, parking-lot and oil businesses. Thus, economics discovered the secret of overcom- ing hard times growth. Unfortunately, however, people still did not trust bankers and so. by 1937. the economy was still in bad shape This was because bankers had a bad image They wore high silk hats, cutaways and and they kept their money in forbidding concrete banks with iron bars on tiny windows and laughed contemp- tuously at peopie who offered them a plastic card in exchange for Then Adolf Hitler started the Second World War It was growth's finest hour and ended ihc depression once and for all During the war the cent-ration of backers was wiped oui by the exert son of making 50 many low-interest loans to beat the Axis, and by the late 1940's there was a new generation of bankers These bankers wore dtirJdail haircuts and pegged trousers and set up shop m display windows and made people come in of) the street to borrow monev that didn't exist could h" repaid from salaries for work that hadn't >el been This was railed easy credit It was a giant advance in economics, because it allowed people to buy things immediately with money they wouldn't earn until live vears later, if ever Soon industrv everywhere was roaring away to make things people f-ould bir. im- morifv thev to earn after the things they bought had worn out. First it made two cars for every family, and then an electronic garage-door opener, and then the outdoor barbecue grill. When industry had finished making everything people wanted, people still had so much ready money left over from future salary that it started making things people didn't want and hired advertising agencies to make people want them anyhow. And so. economic progress gave us the hula hoop, the electric toothbrush and the mustache comb. Even these were not enough to soak up all the money that was expected to be made one of these days, and so. to keep the growth from stopping, everybody was urged to have babies, and we grew a bumper crop of brand new consumers. Then one day. people who lived at the seashore noticed there were so many people coming to the beach that there was no place to lie down for a sunburn. "This growth idea has gotten out of said economists as they sat immobilized in cars in traffic jams wondering how they could ever possibly earn the money to meet the installment payments nn their sons" new mustache combs, which were already wearing out on account of the planned obsolescence which kept the mustache-comb industry growing. The upshot of this, and several other simultaneous events, was the discovery that growth was destroying the economy. Soon there were hard times again, but all the new buildings had windows that couldn't be jmnTvd out of. so there was nothing 1n -do but go on paying a pound for lamb chops Onre again economic wisdom was ex- panded The president announced that all the peoplf who had indulged in growth were to blame for the hard limes Their selfish in- dulgence and waste would have to stop, he ex- plained That was the way to end hard times and bring back the good old days when "vrybody would once again be able to dine on 15-reni gravied on bread heels and happily put their shoulders to the wheel that would someday bring us grander expressways than we had ever known before In brie) economics had revealed its ul- timate sTrM fiood lime.- are brought aboiit rv, of our and ]c.-jderc hard iiin "ouvfd nv oisr own stupidity m listening to them Letters Dubious economic wisdom By Bruce Hutchison, Herald special commentator WASHINGTON A certain solemn, or comic, grandeur il- luminates, or blurs, the of- ficial mind of Washington when it expounds the economic policies of the United States government. Here it is possible only to summarize and over-simplify the dubious conventional wisdom as recited by a person uniquely qualified to interpret it. (And in fairness it should be added that the conventional wisdom of Ottawa looks even more According to the govern- ment spokesman, the great inflationary push of the last year has passed its peak in the United States. By next spring prices will be rising at an an- nual rate of only about eight per cent instead of about 12 per cent now. The main factor in slowing the rate is the softening of the world commodity market, and with next year's expected big crops that process will accelerate (weather permit- While demand-pull inflation too much money chasing too few goods has largely disappeared, and now is replaced by the cost-push inflation of rising wages, the problem will solve itself, gradually, over several years, unless the politicians of the Congress insist on some hasty, unworkable solution. Given that no such fool- ishness is committed against the sound strategy of Presi- dent Ford, the United States, and hence the world, must en- dure, for about a year, what the experts now call, in charming imagery, "a V- shaped recession." That is to say, the red-hot American economy will slide quite fast down one side of the V until next autumn and. cooled off by then, will rise on the other side before the end of 1975. If. however. the government's cautious policies are not allowed to work, if they are cancelled by a new round of monetary stimulus, or if wage settlements run wild, the en- tire scenario will be consumed in a roaring inflationary bon- fire, not immediately, but by 1976. The government is thus try- ing to manage a planned, long- term program in place of the unplanned, short-term programs that bedevilled its predecessors since President Johnson unloosed the original worldwide inflation of printing press money to finance the Vietnam war. This strategy sounds con- vincing when explained by its authors but, as they candidly admit, it is a desperate gamble. For the government, with all its improved exper- tise and computerized statistics, finds itself suddenly trapped in the ultimate riddle and ironic parody of the Keynesian theories now dominating, and distorting, the economy of the whole Western world. The tantalizing trap, and the posthumous caricature of the famous British economist, are easy to see but very hard to escape, for an obvious reason. If the Ford scenario of gradual deflation, through well-timed fiscal and monetary measures, should deepen the imaginary V- shaped recession too far the strategy will have to be reversed because neither the nation nor the Congress will accept it. Indeed, there are signs of some reversal already. A puzzled president, assailed by the wildly conflicting advice of those fine tuners who have tuned the economy to its present state of boom and threatened bust, obviously is entertaining second thoughts. No wonder, when he suffered the crushing rebuke of the re- cent Congressional election. He knows, anyhow, that the new Congress will never approve his anti-inflation program submitted to it before election day and ridiculed by the Democrats in the political campaign. What alternatives will he offer? And if they also die in the Congress what will it propose as a sub- stitute? That is the question awaiting an early answer in practical politics. The only point clear at the moment is that the official "I'm pleased to be the first American president to visit Japan, and I thank you for these beau- tiful gifts'" mind has been split by the op- posite horrors of a new inflationary explosion or a recession which fails to rise from the bottom of the V, or both. The unofficial mind of the public has swung over- night, like a pendulum, to the latter possibility. If the final horror and economic reductio ad absurdum is inflation and recession combined, the final achievement of the fine tuners would be returning prosperity and stable prices a neat trick if anyone knew how to do it. In these foreseeable but un- foreseen circumstances a basic decision of some sort cannot be delayed much longer in Washington or Ot- tawa but neither seems ready to make it yet. Meanwhile, among all the confused voices in the American capital one at least is plain and under- standable. It comes from a good and simple man who claims no expert knowledge but has never lost his head when those around him were often losing theirs. Senator Mike Mansfield's views were fully stated in a recent blunt speech which, un- fortunately, received little attention in Canada where its contents are directly relevant. The respected Senate majori- ty leader dismissed the conventional wisdom as an ob- solete mish-mash or "micro- economics, macro-economics, econometics and what not." He rejected both inflation and recession as "social dynamite" and concluded that "the laissez-faire application of the laws of demand and supply no longer correct the economic ills of a society bound by a massive complex of intervention built up over decades. The clock cannot be turned back to Adam Smith's 18th-century England." With full knowledge of their difficulties. Senator Mansfield comes down flatly for man- datory wage, price, rent and profit controls as the only method of restimulating the economy without launching a disastrous, hyperbolic inflation. And in the end this may well become the policy of the United States and Canada no matter what their governments are saying to the contrary. Whether the Congress and the nation agree with the senator or not, he is one of (he few practising politicians of America who have levelled with the public by declaring that "sacrifices are needed across the board if the nation's economy is to be re- stored In my judgment the people of Jhis nation are prepared to make those sacrifices." Perhaps they are, or will be, once they understand the facts. In any rase the facts will enforce the sacrifices in some form before the next year has passed. But you would never suspect it from the conventional wisdom of Washington and Ottawa. Moreover, that wisdom is bas- ed on a fragile and shifting foundation far outside the authority of either capital, as Another report will try to ex- plain (Second in a series) Doctor's salaries I read with great enthusiasm, the article in The Herald entitled: Clinic employees root for doctors' fee increase, by George Stephenson. The reason I read this article with such enthusiasm is because I was considering coming back to Alberta and Lethbridge to practice. To some people, 15 dollars an hour might seem like an ex- orbitant amount of money; but really, it isn't. For ex- ample, I have been in univer- sity for seven years of un- dergraduate and medical training plus three years of specialized postgraduate work in pediatrics and cardiology, all at considerable expense to myself. I have taken one holi- day in those 10 years. I know that it will take me many, many years to work up to that magic mythical "average salary" of doctors when 1 am actually out in practice. 1 have great debts, great responsibilities, and for- tunately or unfortunately, a great love of medicine. But I seriously doubt my economic sensibilities in considering medicine in this age. A lawyer in Virginia after just five years of university can go into practice and very soon make yes an hour. He even gets paid for his phone calls (You can't even imagine how many phone calls a doctor makes every day for Such are the economic vicissitudes of our times. I hope the people recognize the sacrifices. CASS VAN NOSTRAND Charlottesville. Virginia Defending the poor With regard to the letter by Mr. Peter Nagai (The Herald, Nov. entitled Supporting the poor, I must stand up in defence of; the developing nations, Catholic doctrine, the uneducated as social parasites, worldwide welfare institutions, and finally, parasites as living organisms. Mr. Nagai asked "why must Canada with zero popula- tion growth wilt and die of exhaustion and inflation to support nations whose only aim in life is to procreate Well, Canadians must assume some sort of respon- sibility because, as human beings whose function it is to promote our own well-being, we must also do the same for all others in the human family for their essence is our es- sence, their existence is our existence we are one. To deny life to them is to deny it also to ourselves. Perhaps the only reason their only aim in life is to procreate is that it is the only joy they have after all they are only human, they need some joy. He says, "I understand the reason contraceptives are banned by the Catholics is for the sole purpose of eventually attaining religious majority in the Ludwig Feuer- bach once wrote, "the object of any subject is nothing else than the subject's own nature taken objectively." It is only fitting, therefore, that Mr. Nagai, as the subject, should understand this, i.e., the will for power, to be the motive. He asks, "isn't it the ig- norant, lazy and uneducated who sink to the bottom of our social structure to suck like parasites by virtue of welfare and unemployment Well, seeing as the affluent nations only regard wealth, knowledge, position, and beauty as criterion for being worthy of life (notice I did not include it is only natural that the ignorant and uneducated should sink to the bottom of our social structure. Where else could they go? Furthermore, the lazy are found at all levels of the social ladder. With regard to worldwide welfare institutions, they only exist because of those who consider it a privilege to contribute. Charity is not a mandatory activity, but if you consider it a forced option perhaps you're playing the wrong game. He says, "parasites always end up killing their Well this is not necessarily the case: two conditions are re- quired. The first is that the host's hide is not so thick that they cannot enter the flesh. And the second is that the flesh must not be so morbid that it proves fatal. ANONYMOUS Lethbridge Nation like a family The suggestion by Dr. Herb Axford (The Herald, Nov. 15) that Alberta should leave Confederation because of the "high cost of remaining in is selfish and ridiculous, and typically Tory. Alberta's leaving Confedera- tion would be analogous to a little boy, who suddenly dis- agrees with the rules of the game, taking his marbles and going home. A nation is like a family. The whole is more than just the sum of its parts. The fami- ly functions much better when all of its members work together for the benefit of all. Furthermore, individuals in a family are generally happier and more productive within the family framework. So it is with a nation; one province cannot arbitrarily decide to "take its marbles and go home." so to speak. We must manage our provincial affairs more efficiently. This would give more benefits to more people, in Alberta and in the whole of Canada, from the bountiful natural resources of this province. It is not a case of giving less, but of giving more. And I. for one. am prepared to work to that end. BESSIE ANNAND Lethbridge Lethbridge pioneers These are some of the names of pioneers of West Lelhbridge who were homesteaders, some before the province of Alberta was formed, and others who farm- ed the area known as West Lethbridge when the area was known as The Bend. Allen. Bailey. Davis. Excoffin, Firth. Grisak. Kreiger. McCaugherty, Neidig. Sheran, Russell Stelz. Van Teignan. Vaselenak. Waxmunti I met in some fashion or another every one of these men of great spirit who defied the frontier in order to eke out a living. They were men of great individual character and stamina. They portrayed perseverance to the utmost degree. In the face of great odds they forged ahead and ploughed up the prairie to grow grain. They experienced the losses caused them by the notorious Pat Burns roundups. Let us not forget the forerunners of farming in Southern Alberta. They had a share in the opening of the West. Who but these should have their names perpetuated for posterity? erase the names now used around the university. What contribution did names like McGii, etc. make to this region? Surely we must realize that these were the men who contributed their all so that others would follow. The city of owes much to them S VASELEN lyCthbndgc The Lethbridge Herald MM 7th SI S lernbriflge. Alberta LETHBRIDGE HEHAID CO LTD Pr'opnelprs and Second Mail Registration No 0012 C1.EO MOWERS. DON H PILLING Managing HOY DONALD fl DORAV General Manager MILES g Manager DOUGLAS X WALKEH ROBERT M FEWON Manager KENNETH f "THE HEHALO SERVES THE SOU H ;