Present and past

In the Labour Party's latest pamphleteering venture, we get their latest version of economic events. There is good news: the pamphlet is a welcome confirmation that the MLP has now accepted the official GDP numbers. Gone are what I publicly had shown to be half-baked estimates by Labour's so-called research assistants.

Despite the public statements made by Alfred Sant and Leo Brincat about the claimed seriousness and scientific nature of their GDP estimates, we now find that these same numbers have been ditched. That particular demon is exorcised!

However, political dishonesty still rears its head. The authors had no choice but to mention the worldwide recession. Yet where it matters, it sweeps aside the reality of the world economic slowdown, making sure that it can blame a litany of the government's high crimes.

What is the single most dishonest piece in the entire pamphlet? Perhaps page 19, where the comparison of ETC and LFS unemployment data ignores some fundamental differences in definitions and method. Labour, it seems, insists on being politically immature and apparently determined not to engage in serious debate. They ignore the fact that unemployment is some 1,200 fewer than during Dr Sant's not so golden era, while today employment is some 4,000 higher.

The report amply glorifies their two years in office. We read that the major achievements of the 1996-98 Labour government included the doubling of the profits of public sector enterprises. The heights reached under Labour in the public corporations' profits are inspiring. One question immediately comes to mind: if profits were so abundant, why did Dr Sant engineer the meteoric jump in utility prices?

We always knew that it was neither Labour's social conscience nor its sensitivity to the health of industry that inspired the heist. If profits were so ample, even fiscal rectitude did not require Dr Sant to raise consumer rates almost threefold and industrial and agricultural rates by a factor of ten.

The pamphlet tries so hard to create a nostalgia for their two years of glory under Dr Sant. Actually, things were not so swell: it's too soon to forget the slowdown in investment - falling by a third - and negative employment growth. In contrast with the current situation, the external environment in which Dr Sant operated was entirely benign, with international trade expanding and the price of oil being at historical lows.

Yet Dr Sant managed to foul up the internal environment or conditions, not to mention his internal party mess-up. Who can forget Dr Sant at the Cottonera waterfront, red under the midday sun, in front of a small crowd, calling his erstwhile saviour a traitor?

At a recent social function, somebody reminded me of how some of the party faithful reacted - throwing Mr Mintoff's portraits out of their windows into the gutter, to be left at the mercy of stray dogs' natural whims until the garbage collectors mercifully cleared up the whole pitiful mess. And yet, according to Labour, the Maltese public is expected to again entrust the destiny of this country to Dr Sant - after having demonstrated such incompetence and bad judgment!

Labour on inflation

The Labour Party document blames inflation on the "continuous bombardment of government-induced costs". It refers to various government measures, including - wonder of wonders - increases in energy and water prices. This from the same people whose exorbitant utility price increases caused them, along with self-induced other mischief, to lose office as recently as 1998. What gall!

A lot goes unsaid in Labour's pamphlet. For example, when their experts spew out their list of costs allegedly raised by the current government, there is a glaring omission. What kind of research unit could have missed the cost and price reductions that result from levy elimination?

Moreover, in the section on inflation, why is there no mention of the contribution of weather-related shortages, which pushed up food prices over the last year? Why not be honest enough to accept that further liberalisation will allow imports to fill the shortages caused by seasonal shortfalls in agricultural production?

A recent NSO release shows that prices in May 2002 were 2.46 per cent higher than in the previous May. That number is the rate of inflation measured on the month-on-same-month-last-year basis. May's 2.46 per cent was the lowest since April 2001, when it stood at 2.45 per cent. In fact, the rate of inflation has now declined for the fourth straight month.

Along with this string of drops, there now comes a decline in the official inflation rate, which compares prices in the last twelve months with those in the previous 12 months. This "moving average" inflation rate showed the first decline since May 2001, to 3.64 per cent.

Trade and other figures

Other NSO releases provide additional evidence of a turnaround in statistics that were influenced by weak international demand. We had news on quarterly real GDP, which had declined in each of the last three quarters of 2001. In contrast, the first quarter of 2002 showed real growth of 1.4%.

Total exports in May were up by Lm1.7 million from the previous May. While domestic exports declined, the drop in May was relatively small. On the import side, the Lm1.7 million rise in consumer imports was the fifth consecutive monthly increase. In fact, over the first five months of 2002, consumer imports were 8 per cent up on last year.

There was a Lm1 million increase in imported capital equipment during May and this was the second consecutive monthly rise. Imports of industrial supplies were down by Lm0.2 million, but the small size of the decrease, on top of the increase reported for the previous month, is further evidence that the de-stocking of imported supplies is tapering off.

Balance of payments data for the first quarter show a narrowed deficit in goods, a larger surplus in services, and an increase in the official reserves.

Fluff

When they have little or nothing to add on a matter of national importance, there are commentators who insert irrelevant material, relieving what little pressure they may feel to deal properly with the basic issues.

Apparently, those who follow this practice believe that there is nothing better than distracting the reader with your own fluff. Just look at the way one columnist in l-Orizzont dealt with a remark I made in the Xarabank discussion on the shipyards.

My remark had to do with Norway. I said that as an EEA country, Norway has aligned itself to EU rules on shipyards, even though it is not in the European Union. I added that Malta would fall for the same fate under the Switzerland-in-the-Mediterranean option. In short, operational aid to the Malta yards would have to end regardless.

L-Orizzont's columnist replied that I had no grip of the facts. The reason: because Switzerland is not an EEA member.

Well, Switzerland does not have many shipyards either, and that basic fact seems to have escaped Joseph Muscat's keen sense of observation.

But this is unimportant. What matters is that Malta has arguably one of the largest ship-repair yards in the Mediterranean and even Dr Sant can never get an agreement with the EU that would exclude our yards from the EU rules of competition. It is awful that people inside Dr Sant's inner circle should be so ill-informed as to believe that the level-playing-field concept that is at the heart of any trade agreement could possibly exclude our yards.

Not content with having wasted his readers' time, the columnist took me on again later in the same article, this time about an essay exam question at the University. My question asked about exchange rates and the economic consequences of the euro. Mr Muscat went on and on about the number of countries that have taken the euro on board. Once more, he missed the basic fact: the number of euro countries was not material to either question or answer. The answer to the question remained the same, whether Greece is in or still out.

It makes you wonder about the idle pastimes of Dr Sant's protégés, perched in their glass tower, looking for the inconsequential in University exam questions, and if the professor happens to be a minister, writing a column about it. Twiddling your thumbs would make for a more interesting article in l-Orizzont.