Socialism in Saskatchewan
JANUARY 01, 1967 by W. ROSS THATCHER
Saskatchewan, with a population of slightly under one million people, for 20 years from 1944 to 1964 had a socialist government—about the only one in North America, except Castro’s. Two years ago, we defeated that government.
Saskatchewan is primarily agricultural. We have many well-to-do and efficient farmers. We have one of the higher standards of living in the world. The questions frequently are asked: "How did socialism take over? How did it last for 20 years?"
To find an answer, one must go back to the dark days of the depression. In the 1930′s a terrible drought struck. Year after year, crop failure followed crop failure. At the same time, the world price of wheat dropped to less than 35 cents per bushel. These two factors brought our prairie economy to its knees. Unemployment was everywhere. Men lost their dignity and their self-respect.
Of course, the government and the economic system of the day were blamed. Out of the depths of the depression, the Socialist Party, which glibly promised to solve these terrible problems, was born.
Among other things, the socialists proposed:
1. To end unemployment;
2. To provide jobs by building socialist factories;
3. To provide free medical and health services;
4. To give a new deal to the farmer.
Thus, as a protest to depression conditions, in 1944 Saskatchewan elected a socialist government.
For 20 long years, our people were subjected to a leather-lunged propaganda machine, paid for from public funds, which filled the air with plausible platitudes and clichés. You have heard some of them —
"Tax the rich to help the poor"; "The capitalist is an exploiter of the masses";
"Only a planned economy is the answer to unemployment"; and so on.
They had all the answers.
How Did They Succeed?
In 1944, the socialists said they would solve the unemployment problem by building government factories. Not only this, they promised to use the profits from these socialist enterprises to build highways, schools, hospitals, and to finance better social welfare measures generally. Over the years they set up 22 so-called Crown Corporations. By the time we had taken over the government, 24 months ago, 12 of the Crown Corporations had gone bankrupt or been disposed of. Others were kept operating by repeated and substantial government grants. Virtually without exception, those which have had to compete with private enterprise on equal terms lost huge sums of money regularly and consistently. The whole Crown Corporation program became bogged down in a morass of bungling, red tape, and inefficiencies. The experiment cost the taxpayers of Saskatchewan millions of dollars.
War on Business
During the whole period, the socialists waged war against private business. They passed legislation giving the government power to expropriate and operate any industry or business in the province. The making of profits was condemned as an unforgivable sin. The public and avowed objective of the socialist government was to "eradicate capitalism."
What was the result?
Investors from Eastern Canada, from Europe, from the States, simply turned their back on the socialists. Industry after industry looked over sites in our province, only to by-pass Saskatchewan and locate elsewhere in Canada. Dozens of oil companies pulled up -stakes lock, stock, and barrel and moved out of the province because of discriminatory legislation. Gas exploration ground to a complete halt. Prospecting in our vast north became almost nonexistent. During the period, while Canada was experiencing the greatest economic boom in her history, Saskatchewan received only a handful of new factories.
From 1945 to 1963, more than a million new industrial jobs were created across Canada. Yet in Saskatchewan, after 18 years of socialism, there were fewer jobs in manufacturing than existed in 1945 — this despite the investment of $500 million in Crown Corporations.
As I said earlier, prior to taking office the socialists promised a greatly expanded program of social welfare measures. There was to be "free" medical care, "free" hospitalization care, "free" drugs, and so on. The money to finance these projects was to come from the profits of the Crown Corporations. Of course, in the overall picture, there were no profits; rather, there were colossal losses. Thus, the welfare program had to be financed from taxation.
Most people in Saskatchewan like the principle of our hospitalization plan — all hospital bills are paid by the government, from tax revenue. However, in 16 years, costs have gone from $71/2 million to $57 million. Three years ago, a medical care scheme was introduced — under which all medical bills are paid. The same pattern of skyrocketing costs is evident also in this field. Our people have found that medicare and hospitalization are anything but "free." On the contrary, they will cost our people $110 million this year — and are still rising 10 per cent annually.
Under the socialist government, our provincial debt went from $150 million to $600 million. During the period more than 600 completely new taxes were introduced; 650 other taxes were increased. "Per capita" taxes in Saskatchewan were soon substantially out of line with our sister provinces — one more reason why industry located elsewhere.
Throughout their regime, the socialists tended to use compulsion. Repeatedly, their boards and agencies were manned by some social theorists, who told businessmen how their businesses should be run. Everyone in the north was forced by law to sell his timber to the government-monopolized timber board, every trapper, his fur through the government fur marketing board. Every fisherman who caught a fish was forced by law to sell it through the government fish board. Every purchaser of an automobile license was forced to take his insurance from the Government Insurance Company. Two years ago, they introduced a medical plan where every doctor would have been forced to receive his remuneration from the government. Only an aroused public opinion forced them to withdraw this contentious legislation. Drivers of government cars and trucks were instructed to buy their gasoline from Co-ops.
Twenty years ago, the socialists promised to make Saskatchewan a Mecca for the working man. Instead, we saw the greatest mass exodus of people out of an area since Moses led the Jews out of Egypt more than 3,000 years ago. Each of the other nine provinces which had a "private enterprise" government increased in population by leaps and bounds after 1945. On the other hand, Saskatchewan virtually stood still. Her population increased 12 per cent while the nation’s increased 60 per cent. Since the war, 270,000 of our citizens left Saskatchewan to find employment elsewhere.
Finally, two years ago, our people decided they had been the Canadian guinea pig for socialism long enough. They threw the socialists out. The Saskatchewan Liberal Party campaigned on a straight program of private enterprise. We made no extravagant social welfare promises. Instead, we committed ourselves to reduced government spending, reduced taxes, incentive programs for industry, and so on. The people gave us the job of cleaning up the mess.
Is there a lesson to be learned from Saskatchewan’s experiences? I think there is — a rather horrible lesson.
If there are any Americans who think that socialism is the answer, I wish they would come to Saskatchewan and study what has happened to our province. Twenty years of socialism gave us industrial stagnation, retarded development, oppressive taxation, major depopulation.
At this moment, you are doubtless saying to yourself, "It can’t happen here." Yet, people all over the world are finding, "It can."
We know, as you do, that the private enterprise system is not perfect — but it is still the best system devised for progress. Under the system, Americans and Canadians have enjoyed the highest living standards in the world. It is our task to prove in the next few years that the private enterprise system can do more for our people than socialism.
I would like to tell you some of the actions we have taken to get Saskatchewan moving again economically.
Timber Board Monopoly Ended, Private Interests at Work
One-third of the land in Saskatchewan is covered by timber. We are told there is sufficient lumber for three or four major pulp mills. During the socialist regime, the government had assumed a complete monopoly in the production of lumber. Producers could not sell a toothpick unless it went through the Timber Board. The new administration has discontinued this monopoly. We are encouraging private enterprise to come into our timber limits. We are providing incentives for them to do so. Already three lumber complexes have moved into our north — employing an average of 250 men each. Four months ago, we persuaded a New York company to invest $65 million in a huge pulp mill, which will employ, when in operation, 3,500 men. We are hopeful that a second mill may also locate in our province within a year.
The northern half of Saskatchewan lies in the Pre-Cambrian Shield. When we assumed office, we were concerned by the almost complete lack of new mineral development in our north. By 1964 prospecting in Saskatchewan had almost come to a halt. We found that royalty rates sometimes were out of line with rates applied elsewhere in Canada. We called representatives of the mining industry and discussed the problem with them. From those discussions emerged a new formula for mining incentives. Already, we are seeing results. Prospecting activity throughout the whole north has gone ahead spectacularly. Fifty new companies are doing exploration work in northern Saskatchewan at this time. Three new mines have commenced operations, including a major copper mine at Lac La Ronge.
Potash is a field which offers tremendous prospects for future development. We believe that potash will do for Saskatchewan what oil has done for the province of Alberta. World demand is increasing at a rate that doubles every 10 years. The overwhelming bulk of this demand will be met by Saskatchewan in the years ahead. At the present time, three potash mills are in production. Six additional mills are now under construction. We are negotiating with at least four other potash producers, which are now seriously looking at the potential of Saskatchewan’s reserves. Investment and commitments now total more than $500 million. When it is realized that each of these mines costs from $50 to $80 million and employs from 500 to 800 people, you can realize the impetus the industry is giving Saskatchewan.
Saskatchewan, in 1964, produced 20 per cent of the total Canadian petroleum demand. Rightly, or wrongly, many of the oil people felt that Saskatchewan had not been friendly to the oil industry. We found keen resentment at some of Saskatchewan’s rules and regulations. Upon taking office, we found that drilling activity in Saskatchewan was just holding its own with the previous year, and was lagging far behind Alberta’s. No new fields had been found for a number of years.
We immediately sought the advice of the industry as to how the situation could be improved. We asked them what we could do to encourage greater development in Saskatchewan. Having received the advice, the government adopted a new major incentive program.
The results have been spectacular. Dozens and dozens and dozens of new companies have moved in. Eight new pools were discovered during 1965. Our royalties and bonus bids in the past year reached $40 million as compared to $18 million in the last year of socialist administration. Our opponents have accused us of selling out our resources to big business. But, the oil resources of Saskatchewan are not much use to our people when they are buried a mile underground.
Saskatchewan is blessed with substantial gas fields. Under the previous government, the Saskatchewan Power Corporation was given a complete monopoly, and paid the producer a price which was substantially below market value. As a result, gas exploration last year came virtually to a halt. The new administration canceled the Power Corporation monopoly and opened the gas industry to competition. Again, the results have been most gratifying. Dozens of gas exploration crews have moved into our province in recent months.
Secondary manufacturing has also made encouraging strides, since the socialists left office. These are only a few of the exciting developments which have taken place recently in Saskatchewan. Instead of exporting thousands of our people, as we did year after year under the socialists, this year our population is again headed upward. Our province is one of the booming areas in all Canada.
In short, we think our "experiment in private enterprise" is working.
In our province, we know socialism not from textbooks but from hard, bitter experience. We have found that there is nothing wrong with socialism, except that it doesn’t work. I am sure you have heard some people say: "We don’t agree with socialism — we wouldn’t support it generally — but a little bit of socialism might be all right." We found in Saskatchewan that once it begins to develop, it is pretty hard to stop.
I think we can all be proud of the private enterprise system. But, I also think we must be vigilant. The danger from socialists, far too frequently, is not what they can do directly, but what they can accomplish indirectly.
Far too often we find political parties which pay lip service to the principles of private enterprise but at the same time, for the sake of political expediency, endeavor to neutralize the socialists by adopting large segments of their programs. Such a course can only be disastrous.