On a path to nowhere
One way to see how this happens is to turn to the concept of path dependence from the language of mainstream economics. Path dependence is the idea that history matters and reverberates strongly in the present; more metaphorically, economic decision-making (whether about production or consumption) can follow increasingly well-worn grooves. Indeed in many ways, path dependence is actually a powerful challenge to parts of the mainstream framework, undermining equilibrium and efficiency as paths can diverge from the “optimum” – and also potentially undermining rational choice theory as decisions viewed in isolation now seem irrational.
Even if the tar sands account for but 2% of our economy, getting off this path may be difficult. Taking seriously the idea that a large percentage of fossil fuels will have to be left in the ground to prevent even more dangerous levels of global warming, path dependence becomes even clearer. A recent report notes that 40% of “high-cost” oil projects planned over the next 10 years (requiring a high per barrel cost to break even) are in the tar sands. Despite the potential for volatility in commodity prices, even higher extraction costs or serious political intervention on climate change, the tar sands may continue to expand, a furrow that requiring we dig ourselves deeper and deeper into a climate hole.
The mechanisms are various. Canada’s history of staples-based resource extraction lays the foundation. Expanding infrastructure and expanding extraction reinforce each other: “if we have the pipes, we might as well fill them!” The existence of vocal lobby increases the chance that the now almost $1 billion in direct subsidies, low royalties and significant externalized costs remain absorbed by society at large and encourages further growth of the industry. High profit expectations (until 2009, operating profit as a percentage of sales was significantly higher in the resource sector than in other sectors of the Canadian economy) and an insular boom town mentality also contribute.
This path dependence talk is not meant to enshrine pessimism, but to offer a realistic appraisal of the situation and the difficulties of putting an end to a relatively small (2%) industry. The good news is that for every path the leads further into the deep pits of fossil fuel expansion, there are new paths that can take us out it and institute new “lock-ins”. These paths will take struggle, on the ground, in the courts and in communities – struggle that today is often led by First Nations.
Spinning off in another direction?
While the pipeline lobby is crowing about all the economic benefits pipelines confer, it conveniently leaves out the fact that much if not more of these “spin-off” benefits would occur with new investment in any sector. Indeed, in this kind of analysis, money spent on a pipeline spill clean-up counts as contributing beneficially to economic activity. Economic development whether it involves building pipelines, assembling electric busses or teaching children, generates additional economic activity. There are important analytical questions about how much each development strategy can potentially impact other activity (and attempts at prediction in a world of radical uncertainty are never secure) but there are equally important questions about what kind of broader social dynamics are engendered. How will the institutional structures engendered by each development strategy impact deepening inequality, worker power, environmental degradation, the erosion of the even basic social democratic protections and programs?
There are no guarantees and social conflict will be the key to determining both. Even the small 2% of domestic economic activity represented by the tar sands contributes significantly to a localized bifurcated labour market in Alberta that segregates workers into high-pay technical and low-wage service work (thus also accelerating inequality). A small sector premised on different principles could work towards reversing such trends elsewhere. On the other hand, nothing is automatic: the auto industry has also seen two-tier contracts that create high-pay/low-pay divisions in the same workplace. Similarly, while resource development is premised on the privatization of natural resource wealth, often on land unceded by First Nations, there is no guarantee that a different model of economic development will face up to the history of colonialism.
Public investment in infrastructure should be a minimal demand; it isn’t. Yet the example of turning part of our manufacturing industry into the service of massive transit infrastructure expansion – something good for people and the environment – is not beyond organized political possibility. Whether small but significant pockets of a different kind of development could be lynchpins to reversing such trends will depend on targeted organization. This is the hint of optimism on the flip side of the pessimism generated by the fact that a 2%-sized tar sands industry can yet have outsize importance.