Should one not criticise Finance Minister Tonio Fenech – when he reassures us that Malta is out of the recession – for rushing in where others fear to tread? On August 16, in this column, we observed that the economies of some of our most important trade partners are not recovering fast enough for our comfort. Moral of the tale: It is premature to suggest that all is OK now. Understandably, this is the cautious view expressed today by persons in positions of responsibility in the private sector.
A few online commentators took exception, some vehemently. There were those who are so utterly blinded by ideology and by our pathetically insular and vicious tribalism that reasoning with them is as easy as walking through a stone wall. How right Daniel Bell is when he observes that “ideology looks at the world with eyes wide shut, a closed system which prefabricates answers to any questions that might be asked”!
For these a statement stands or falls not because of what it says but because of who says it. Being a “bespectacled doomsayer”, part of the “arrogant intelligentsia” and a “Socialist crocodile tear-cryer” (sic, readers will find other truculent epithets in the comments below the article at www.timesofmalta.com/articles/view/20100816/opinion/premature-cries-of-pleasure), whatever I say is, by definition, at best a “vacuous claim”. They counter my vacuous claims with “facts” such as “the ‘living it up feeling’ of Friday and Saturday nights”, which “feeling”, they assure me, is “in sharp contrast to the feeling in major cities like Athens and London”.
Dear reader, wipe that smirk off your unpatriotic face and remember that, as one of them peremptorily puts it, “there is nothing to be sceptical about – facts are facts”. Got it?
There is another sort of critic, however, that deserves closer and sympathetic attention. Albert Leone Ganado, who contributed critically but rationally to the online discussion, politely suggests that “rather than presenting a spectre of doom and gloom we should congratulate ourselves that, compared to other countries, we, as Maltese, have so far weathered the storm quite admirably and successfully”. No less politely I submit that while we should be pleased with the ingenuity of the Maltese entrepreneur and the productivity of the Maltese worker – a point Prof. Leone Ganado himself makes – we ought to be less impressed with Minister Fenech and his government.
Of course, a Finance Minister should inspire enthusiasm and confidence in the economy and not demoralise firms and households by taking a doom and gloom stance. If he is to succeed in doing so, however, it is necessary for him or her to be believed, to be credible. If, however, a government is insufficiently credible, then ministerial statements about how well we are doing – at a time when both firms and households are experiencing the contrary – will further depress consumer and business confidence.
That is exactly what Mr Fenech is doing. What must he do to save his political credibility? He should do what a minister of finance must do. He should ensure that funds distributed to his colleagues for both current and capital expenditure yield maximum value for money. He should ensure they are spent on what they were meant to be spent and, if not, he ought to discipline the ministers concerned. He should ensure that households and firms are not made to pay for inefficiencies in the public sector. He should ensure the greatest transparency and the highest standards of governance especially in the management of public procurement.
If he does what he should do, then the minister’s efforts to boost morale will translate into greater investment and consumer confidence, into greater labour productivity and national competitiveness. If he does not, then his insistence that all is well will be interpreted by the stakeholders as a sure indication that all is far from being well. Households and firms will take it with the same large fistful of salt with which any reasonably intelligent person will take vacuous claims such as that “the ‘living it up feeling’ of Friday and Saturday nights” is evidence that the Maltese economy is in good shape.
Minister Fenech’s endorsement of the brutal increases in water and electricity tariffs inflicted on households and firms – thus encouraging monopolistic utility providers not to reduce inefficiencies, depressing consumer confidence, forcing employees to demand higher wages, further eroding our national competitiveness on foreign markets, discouraging local and foreign direct investment – is a clear indication that he is not doing what he should do. His apparent failure to prevent infringements of the EU procurement regulations in the case of the BWSC contract award for a power station extension is another case in point. National economic recovery will have to be achieved in spite of this government and not thanks to it.
Meanwhile, orders for durable goods in the US increased less than forecast in July and sales of new homes dropped, fuelling fears of a renewed recession in the world’s largest economy. When it finally emerges from the recession, possibly with a “jobless recovery” for a few other quarters, the US economy (and that of our major trade partners) will be more competitive. Paradoxically for the naïve among us, the post-crisis world will not be a rose garden for Malta. It will mean greater pressure on us to become more competitive. We will need a government that is as productive as our most productive workers and as entrepreneurial as our best business persons.
Dr Vella blogs at watersbroken.wordpress.com.