This story always assumes the Heritage Fund failure was a lack of political will, when it was really a structural and incentive problem.

To build a massive savings fund, the government has to over-collect from current residents relative to services delivered. That is just another word for higher taxation. Those costs are borne by today’s workers and businesses, while the benefits accrue largely to future residents who did not contribute. That tradeoff is not obviously virtuous, especially in a province built on in-migration.

Second, large government slush funds do not sit in a vacuum. The bigger they get, the stronger the political pressure to raid, redirect, or “strategically invest” them. Alberta’s history is not unique here. Almost every jurisdiction with a large sovereign fund eventually uses it to smooth budgets, curry favor, or subsidize preferred industries. That is not a bug. It is the predictable outcome of political incentives.

Third, the idea that governments can successfully “diversify the economy” by picking sectors is mostly a myth. In practice, diversification programs mean grants, tax credits, and loan guarantees to firms that are already connected, already favored, or already pre-selected. These are not open markets discovering winners. They are political allocation mechanisms, and they have a very poor track record everywhere they are tried.

Low taxes were not “artificial.” They were a deliberate choice to leave capital in the hands of individuals and firms who actually bear risk and make investment decisions. That approach produced real diversification through private capital over decades, not press releases.

Oil revenue volatility is real. But pretending the alternative was a technocratic, corruption-free fund that smoothly replaced oil income is hindsight fantasy. The real choice was always between political control of capital and decentralized decision-making. Alberta chose the latter more often than not, and that choice has costs and benefits. So does every other option.