Let's Talk Politics

Ep 34: Separatism or Scapegoating? Jim Stanford on Power, Profits, and Politics

• Julia Pennella • Season 1 • Episode 34

Share episode

Send us a text

Welcome back to Let’s Talk Politics! This is Part 2 of my conversation with economist and Director of the Centre for Future Work, Jim Stanford. In this episode, Stanford brings clarity to contentious economic debates and issues — from wealth inequality and corporate power to the misleading narratives that shape our political discourse. It’s a candid, eye-opening discussion you won’t want to miss.

Born and raised in Alberta, Stanford dismantles the province's separatist rhetoric with insider precision, revealing how record-breaking oil industry profits have failed to improve life for average Albertans. "Real wages have fallen. They're lower than they were 10 years ago," he explains, pointing to deliberate policy choices—frozen minimum wages, anti-union labor laws, and corporate tax cuts—that prevent prosperity from reaching working people. Rather than blaming Ottawa, Stanford argues Albertans should scrutinize their provincial leaders and corporate executives who benefit from this arrangement while promoting divisive nationalism as a distraction.

The conversation shifts to inflation's true drivers, challenging the conventional thought that workers' wages fuel inflation. Stanford explains that record corporate profits—not labor costs—correlated with inflation's rise and fall during the pandemic recovery. "Unit labor costs had no correlation to it whatsoever," he notes, explaining how unique post-pandemic conditions created opportunities for companies to exploit disrupted supply chains and commodity shortages.

Stanford also addresses recurring anxieties about AI and technology eliminating jobs, having witnessed similar panics throughout his career. "We've never experienced what I would call mass technological unemployment," he observes, explaining that while AI will transform work, the greater threats come from changing employment relationships rather than technology itself. His human-centered economic perspective provides a refreshing alternative to abstract metrics and theoretical models disconnected from lived reality.

Challenge your economic assumptions and gain a clearer understanding of the forces shaping our economy by listening to this thought-provoking episode. 

Share your thoughts with us and subscribe for more insightful conversations that connect complex economic issues to everyday lives.

Quick heads up this episode was recorded on June 9, 2025 so while the news may have changed since this conversation was recorded. The thoughts and ideas still remain relevant. 

Check out some of Jim Stanford's work here:

Let’s drop the phoney Alberta versus Canada nonsense. The province has met the enemy — and it is them 


Julia Pennella:

One of Canada's biggest exports is obviously our oil and gas sector, and I want to point more specifically, obviously, to the tensions happening right now in Alberta and the rise of separatist sentiment.

Julia Pennella:

And you wrote a very interesting piece for the Toronto Star commenting on the separatist movement and that you're sick of the quote phony, alberta versus Canada, nonsense, nonsense. I'll just give a high level summary here. But you talk about how Alberta's oil industry profits have never been higher, production is booming and GDP per worker is higher than anywhere else in the country, but yet the average Albertan is worse off than they were a decade ago. Wages have stagnated, jobs have been lost. So I want to ask you like in your writing you argue this isn't Ottawa's fault, but rather the fault of what you call the enemy within of Alberta's oligarchs and own corporate elites who are hoarding the gains of the oil industry while pushing a national unity narrative to get more pipelines approved. Can you unpack this for us? Why isn't Alberta's wealth translating into a better standard of living for its people, and what does that say about who's really shaping the province's economic future?

Jim Stanford:

Well, first of all, julia, I should point out for your listeners, I'm allowed to say those things because I was born and raised in Alberta. So I don't live there now, but I've still got family there and I've seen the boom and bust happen in Alberta many times over in my life. I remember when I was a university student in Calgary, the bumper sticker that said please, god, let there be another oil boom, and I promise not to piss it all away this time. So this is kind of embedded in Alberta's psyche, I think. So I'm allowed to say these things, even though I get so much hate mail from people calling me an Eastern bastard and everything else.

Jim Stanford:

The reality is, first of all, it's important to point out that the oil and gas industry has not been suppressed in Alberta. That's nonsense. It's set new production records for the last four years in a row since the pandemic. The profits generated in the oil industry were never higher than in 2022, when the rest of Canadians, including Albertans, were suffering from a pandemic and inflation and cost of living challenges. The oil industry raked it in like they'd never raked it in before, because they were taking advantage of the supply chain issues, the uncertainty, the oil price spike after the invasion of Ukraine and so on to soak it to us, the oil price spike after the invasion of Ukraine and so on to soak it to us, including Albertans, by the way. They had to pay high prices and their real wages fell because of inflation as well. And this idea that just freeing things up for the oil industry will trickle down to everyone in Alberta, let alone the rest of Canada, is nonsense. We have seen a systematic and sustained policy of wage suppression in Alberta. Real wages have fallen. They're lower than they were 10 years ago. Real wages have performed worse in Alberta than any other province, despite the record oil production that's being set. So this idea that, please God, let there be another oil boom and I'll get a share of it that was where the bumper sticker went wrong. You won't get a share unless society is organized in a way to help you get a share.

Jim Stanford:

And the way a normal democratic society organizes itself so that typical working people can share in prosperity is through things like minimum wage to ensure that wages go up, support for collective bargaining and trade unions so that workers have a share to negotiate or a chance to negotiate for higher wages. Public services funded through taxes, progressive taxes, preferably on profitable companies and high income households, another way of sharing the wealth so that people have access to quality health care and education and infrastructure. All of those things have gone off the rails in Alberta, and deliberately so. Taxes have been cut for companies. Royalties have been cut for oil companies. The minimum wage has been frozen since 2018, despite six years seven years coming on now of inflation. They have the most anti-union labor laws in the country by far and the weakest collective bargaining provisions of any province by far provisions of any province by far. So the wealth is not trickling down, but people in Alberta feel ripped off and some of them have been tricked into saying it's Justin Trudeau's fault or Ottawa's fault or the Eastern Bastards fault, and it isn't.

Jim Stanford:

Alberta's economy has grown. Oil and gas production, in particular, have grown rapidly. Albertans are not getting their share from it and they should look at their bosses and their leaders in Alberta to figure out why. Why do you have a situation where the economy has been so distorted in favor of private profit but public poverty that healthcare sucks, you know. Measles are on the rampage, infrastructure is pathetic, housing is expensive and inadequate, and none of those things can be blamed on Ottawa.

Jim Stanford:

I've seen different waves of Western separatism again through my life.

Jim Stanford:

In the early 80s it was a big thing for a while, there was even one Western separatist who got elected in the provincial government and the provincial legislature, but I highly doubt that this will amount to a significant change in Canada and our future as a nation.

Jim Stanford:

We are going to see opportunistic politicians like Daniel Smith trying to milk this separatist threat to push their own agenda, but the Albertans that I know are not interested in seriously leaving Canada. There's clearly a loud minority that's associated with the anti-vax movement and the truckers convoys and these other far right populist causes, but they do not speak for most Albertans and I do not think the rest of Canada should take this threat as a meaningful reason to change all other things that we do as a country. By all means we should treat Alberta fairly and Alberta has done well as a province, and the problems that Albertans are suffering are more due to provincial decisions by their employers and their government than by some kind of fundamental problem with Canada. They're not going to let me into the province the next time. Provincial decisions by their employers and their government than by some kind of fundamental problem with Canada. They're not going to let me into the province the next time I try to go there. But we'll see.

Julia Pennella:

I mean, I hope it doesn't come to that. But you know, all very well said and thank you for breaking that down, because I think there is so much anxiety around what's happening, what we're seeing online, especially you know, as young people trying to navigate this around what's happening, what we're seeing online, especially you know, as young people trying to navigate this, and giving that breakdown I think is really important and understanding.

Jim Stanford:

There is political fumes, kind of flaming this fire right, and even the online stuff that we see is fanned and fomented by people with money paying for this to happen. You know everything from these astroturf groups that are out there with websites and advertising about how Alberta's ripped off, to the bots on social media that are probably working from Russia but paid for by various way Alberta works today, especially the oil industry and the conservative government trying to take advantage of this sentiment to distract Albertans from demanding other things like a smarter approach to auto insurance their auto insurance costs have gone up more than anywhere else in the country. A smarter approach to electricity prices? No-transcript. They've lagged behind inflation by 10% over that period, 15% over that eight-year freeze. Those are the things they don't want to talk about, so instead, people are fanning the flames of this pseudo separatist sentiment.

Julia Pennella:

Distraction is a very good skill. I think politicians are good at some businesses, businesses too.

Jim Stanford:

I give as much blame to the businesses in Alberta, which have profited so mightily from an economic system that is weighted in their favor.

Julia Pennella:

Well said, and I think that's a great segue into my next point here about how your work often challenges that idea that wage growth is the main driver of inflation. Yet we don't often look at or talk about the corporate greed and corporate increases. So you've stated that profits, not wages, are the driving force behind inflation. Can you walk us through what the data is actually showing us and what policy interventions are maybe necessary to address profit-driven inflation, rather than focusing solely on wage controls?

Jim Stanford:

Well, I grew up studying economics at the University of Calgary, starting in 1979, so then into the early 80s, and the textbooks that were written then were all about the so-called wage price spiral that had been bedeviling countries around the world, presumably including Canada in the 1970s, and we could have an argument about what the 70s was really like. But there was no doubt that wages were growing stronger and at times faster than the economy was growing. So you know, you could at least have an argument about whether wages were the cause of inflation. Fast forward to the COVID pandemic and the inflation that broke out after it. So we really got the inflation going late 2021. So a good year and a half after the onset of the pandemic. It was more associated with. The reopening after the pandemic was when we saw this surge in inflation.

Jim Stanford:

All of the kind of status quo economists who studied economics the same time I did went and opened the textbooks and said, oh, there must be a wage price spiral, we better do something about it. And this was reflected in the conventional storyline about inflation that it was due to excess demand. That was the term, a kind of euphemistic term, that the Bank of Canada and others used to explain why prices were suddenly growing so quick. Basically, canadians have too much money to spend and that's why inflation has risen. So most Canadians would disagree violently with the proposition that the inflation was their fault because they had too much money to spend. And the evidence was not clear at all, particularly on the wage front. If you look at unit labor costs adjusted for the size of the economy, that's what unit labor costs means. You're taking all the wage and salaries in the economy and dividing it by the amount that workers produce. So how much labor cost is built into each unit of output? They were just kind of creeping along at the sort of normal pace that they had been before the pandemic throughout.

Jim Stanford:

Suddenly inflation spiked way up peaked in mid-2022, and then it spiked way down. We came down as fast as we went up. We went from 2% to 8% and then we went from 8% to 2% and wage growth and unit labor costs had no correlation to it whatsoever. So the wage price spiral story in particular and the blaming the problem on excess demand more generally, I think was not valid. Others blamed it on the payouts of the CERB benefits and the other emergency benefits during the pandemic lockdowns themselves. This is well before the outbreak of inflation, pierre Polyev said it was all Justin Trudeau's fault. He called it just inflation, even though the same inflation happened all around the world. Hard to know how Justin Trudeau had so much power to cause inflation everywhere, but apparently he did so. None of those storylines. Even the CERB benefits. There was a spike, a very short-term spike, in disposable income as the CERB benefits were going out. They were done by the end of 2020, well before the inflation really got going.

Jim Stanford:

So in our research, we looked at what was it that was allowing companies to charge so much above and beyond the costs of production. Every business says, oh, we're not charging more, we're just passing on the higher input costs that we've experienced. Yet, magically, during the run-up of inflation, aggregate profits reached their highest level as a share of GDP ever in 2022. And so they were definitely not just passing on higher costs. If you have $100 in higher costs and you pass it on at $100 of higher prices, your profits haven't changed. But their profits grew spectacularly and reached the highest level ever. And economists around the world who I think, were a bit more realistic about looking at this and not just assuming that prices are a natural supply-demand outcome, but in fact, companies have power to set prices. It's not a natural phenomena that the price of grapes went to $10 a pound, as somebody said. Those grapes are going to be $10 a pound a human being acting on the orders of other human beings.

Jim Stanford:

And it turns out that, particularly in the immediate aftermath of the pandemic, there was lots of circumstances broken supply chains, shortages of key commodities like everything from building products to semiconductors to new cars. A shift in consumer demand for a while when we couldn't travel and we couldn't eat in restaurants. Instead, we bought stuff. We bought more goods rather than services, so that created a pricing opportunity on the good side of the economy. The oil price spike that occurred in 2022 around the invasion of Ukraine. It was not a supply shock in the sense that there was never a shortage of oil. The world supply of oil grew throughout that whole period but the way that oil prices and speculative futures markets behave just the shock of the invasion and the fear that something else could happen drove up prices and companies in the energy or the fossil fuel sector made record profits. All of those things together created a unique and temporary opportunity for the corporate sector to make money like they've never made it before and they did.

Jim Stanford:

And it's not enough to say well, you know, that's how business works, that's capitalism, you know, you're right, it is capitalism. If someone with economic power has an opportunity to exploit someone else, they will. That is capitalism. But I'm not prepared to just say and that's how it is. Companies took advantage of this.

Jim Stanford:

Now, in most cases, those supply challenges and unique post-pandemic situations have been resolved and competitive conditions have returned to something more normal and profits have fallen. So profits in Canada are still a bit higher relative to GDP than they were before the pandemic, but not much. And that decline in profits correlated perfectly with the rapid slowdown in inflation. So both on the way up and the way down, there was no connection between inflation and wages and a almost perfect connection between unit profits, which isn't usually measured and reported in conventional economic discourse. But you can do it. You can calculate unit profit costs from the national accounts data Almost a perfect correlation between unit profits and the rise and fall of inflation.

Jim Stanford:

So you know, I think we had the storyline wrong about what caused the inflation and to some extent we had the remedy wrong.

Jim Stanford:

The justification for high interest rates was based on the assumption of excess demand, and we had to suck that excess demand out of the economy by requiring people with mortgages to pay hundreds of dollars extra to the bank instead of spending it on goods and services. That's how it works, and I think, for the most part, that wasn't necessary. I think if we'd have paid more attention to quickly repairing those supply chains and better regulating some of those unique systemic pressure points in things like building materials and energy and banking in the initial post-pandemic years, we could have slowed down that inflation through less painful ways inflation through less painful ways but you know, history is what it is, and we're through that. Now we're back to inflation at or near a target, and I do think, though, that economists should look at this experience and broaden their understanding of the different things that can cause inflation, rather than relying solely on that wage price narrative that we studied in our 1980s textbooks.

Julia Pennella:

Very well said and I have so many other, I feel like follow-up questions, but time flies when we're having fun. So I'll have to invite you back, jim, to dive deeper into that, because I think there's elements of we're seeing a lot of union busting and this blaming of workers asking for wage increases. So that will be a future episode. But you know I'd be remiss to not ask you, working at the Center for Future of Work, about the buzz around AI wiping out jobs. So you know a lot of the people inventing the semiconductors, the CEOs like, for example, nvidia's CEO, is calling and making headlines that ignoring AI could be a one-way ticket to unemployment. Others are predicting that white-collar middle management jobs will disappear in the next five years. From your perspective on labor economics, is that a real threat, do you think? Or is this all more of a distraction for bigger structural issues in the economy?

Jim Stanford:

Well, unfortunately, I'm old enough to have seen this whole narrative come and go several times in my career. You know, I remember even when I was an undergrad, there was a TV series called Welcome to the 70s or something like that that had all this sort of futuristic discussion about robots and how everyone was going to be unemployed. Then, in the 1990s, there was another wave of this concern. Jeremy Rifkin wrote a famous book called the End of Work, and automation was going to mean none of us had jobs anymore. In the 2010s, there was a big wave of obsession with robots and automation and some of the amazing things that robots could do. And now the current one is AI, and in every case in history it's been wrong. We've never experienced what I would call mass technological unemployment of the sort that all of these different cycles of concern about technology have argued.

Jim Stanford:

Technology certainly changes work there's no doubt about it but it doesn't mean work disappears. It means that we have to do different kinds of work. We might do it in different places, we might do it under different contractual arrangements than we did in the past, and in many cases, those changes in relationships, more than changes in how we actually work, can be quite negative for workers. A good example is the platform economy. You know we're all heard about Uber and Uber Eats and how this is really how technology is changing the work. Well, guess what the work actually hasn't changed. In an Uber car, a driver gets in, picks up passenger, takes them from point A to point B, just like a taxi did 50 years ago. The work itself hasn't changed. What has changed is the relationship between the person doing the work and the company they're working for, and you know, their ability to earn a decent wage has been sacrificed because the companies are using the platform as an excuse to evade normal practices, whether it's the minimum wage or paying into CPP and EI for workers and so on.

Jim Stanford:

So I tend to think you know it's early days with AI, but there's no doubt that AI has created more jobs than it has destroyed, for better or worse. One of the ways it's creating jobs is this insatiable demand for electricity, and so we're seeing big investments in electricity generation sometimes dirty electricity, and that's the last thing we need. We should be using any opportunity for clean energy to displace fossil fuel use, and much of the AI capacities, I think, are things that are really not kind of fundamentally alter how we work, but some jobs will definitely change. So the NVIDIA CEO's thing if you ignore AI as a ticket to unemployment, that may be true for an individual. You know, kind of like 30 years ago, if you said, well, if you don't learn to use a spreadsheet, you're never going to get a job in any kind of career that involves numbers. So, okay, fair enough. As for an individual, we better learn these things and learn how to use them and hopefully use them productively and ethically aggregate.

Jim Stanford:

There's no way that it's going to undermine the general demand for labor. Human labor is still the only force that adds value to the resources we extract from nature and convert them into goods and services that we can actually use, and the economy cannot function without human labor. We were reminded of that, by the way, during the COVID lockdowns, when we couldn't go to work and suddenly we had the deepest, steepest recession that we'd ever experienced. So I think most of the AI hype is overstated. Much of it is driven by financial vested interests, companies like Nvidia talking themselves up as the latest thing, and vast overvaluations on the stock market.

Jim Stanford:

We are going to see an AI crash in stock market valuations, Absolutely I don't know when. If I did know when, I'd make billions shorting them, but it's going to happen. Just like it happened in the dot-com years of the around the turn of the century. It's certainly going to happen to crypto. That's another overvalued, hyped casino activity that is held up solely by the belief that it's somehow useful and in fact it isn't. We're going to see a lot of broken dreams as these things come tumbling down, but we will find some ways to use the actual productive potential of AI and hopefully in ways that are careful, regulated and ethical.

Julia Pennella:

I appreciate that because I know I'm always on my feet on social media and it's that anxiety I mean. There's so many things to be anxious about these days.

Jim Stanford:

There's lots of reasons to worry about your job and technology, is not it? Ok, your boss, is it? Donald Trump, is it? You know? The lack of government support for employment insurance and other protections is something worth worrying about, but worrying that we're all going to be unemployed because of AI? Don't waste your synapses.

Julia Pennella:

I appreciate that and this was a really great, insightful conversation. Like I said, I feel like I could pick your brain for hours, but I do want to throw it to you. Are there any other closing thoughts you want to share with the listeners?

Jim Stanford:

Well, as in my career, I've tried to work. As you know, I've been a labor economist, worked for a trade union for many years and now I work in a labor economics think tank and I try to connect economics to the reality of people's lives. So we tend to get obsessed with quarterly GDP numbers or stock market futures or other things like that are two or three or four steps removed from how people actually work and live. And I think that you can often get insights into economic phenomena and what we should do about the economy if you change your, redirect your lens.

Jim Stanford:

You know, and look, if Tiff Macklem, the governor of the Bank of Canada, had to go to the La Blas shopping center parking lot and interview people as they came out of the grocery store, having just paid $250 for a measly cart of groceries, and said do you have too much demand? Do you have too much spending power? Do you have too much money in your pocket? Is that why the prices of everything you're buying are so expensive? He quickly would have disavowed that notion in the course of fleeing for life from the shoppers who were saying are you insane? You know, of course that's not why the food is expensive. And I think, in other ways economists can get too carried away with their kind of theoretical frameworks, their axioms, their obviously their graphs and formula and simultaneous equation models and forget the human element. It is human beings who make the economy function. It is our labor, broadly defined, our brains and brawn that produces the goods and services that we need, and the more that I think economics can focus on that aspect of it, I think the smarter it'll be.

Julia Pennella:

Here, here. Very well, seth. What a way to end it and that's part of the reason why I started this podcast too is we got to bring that human connection, and I thank you for sharing so many great insights. So that was Jim Stanford. He is the economist and director at Center for Future Work. I'll be sure to include his articles and his work in the show notes if you want to read some more, and be sure to stay tuned for my next special guest, as we keep untwining all of the chaos we're seeing politically and economically. So, thanks so much, jim. I.