When a viable economy be­gins to lose its rhythm and more so when there is suspicion of an approaching slump, public opinion tends to seek the steadying hand of government. One begins to hear complaints about the inertia of the Administration and the shortcomings of the bureaucracy.

As is normal, the first laments come from the labouring classes and their trade unions. The most convincing evidence the situation is turning sour is when one hears similar laments from business quarters which, normally, speak the language of laissez-faire and of minimum state interference.

This is a sobering thought, all the more sober because laments of this nature are being heard in these islands with increasing frequency and persistence.

This situation has to be considered objectively and with the necessary detachment.

The sheer scale of modern social organisation and the complexities of economic development are such that, if government never existed, it would have to be invented. Governments have to legislate, to maintain law and order, to protect the weak from the strong, to protect their nations and promote their interests.

Size, power and persuasiveness elevate governments everywhere to the status of a leviathan. Their absence is felt when they take a nap. There is concern when they go sick.

Never mind the fact that genuine democracies try to devolve power. When these governments surrender power, they generally hand it over to their substitutes that are managed by bureaucrats accountable to their bosses, whether elected or nominated, rather than to their citizens.

As the reach of government extends more and more into the economic life of the citizen, officials are led more and more into areas to which they are ill-fitted.

Private enterprise operating in a competitive environment rightly claims superior efficiency in the use of resources, in its ability to adapt to variations in local and individual needs, in responsiveness to meet changed situations and to make decisions.

Its superiority derives in part from its ability to collect and evaluate information, to cater for different and individual tastes, to take risks and to seek the lowest cost methods for transforming raw materials into goods and to render services that consumers want.

Many problems today result from the large and proliferating proportion of economic decisions that must be subordinated to the political process rather than the market process.

High visibility politics, planning and local government considerations have to be weighed and debated before governments give the go-ahead. The result is, more often than not, that while politicians dilly-dally, the wheels of government grind at or below normal speed. When the government slumbers and the wheels no longer grind, very often because of regulations and the uncertainties associated with their implementation, decisions geared for long-term objectives and long-term capital commitments are inhibited.

Sometimes, governments are further frustrated by criticism based on dramatisation of “horror” scenarios, all of which lead to political reaction. For these reasons alone, governments ought to concentrate their efforts and spend the taxpayers’ money in areas where they have special capabilities and responsibilities.

Activities that have to do with productivity and growth, with risk-taking and investment, with diversification and technological advance should be best left to private initiative within a national strategy developed by the social partners in a spirit of consensus.

On the other hand, the government has a clear comparative advantage in raising and distributing money, particularly with an eye on the infirm and the needy, in constructing a framework of law and security, in the sphere of defence and foreign affairs and in promoting and protecting the vital interests of the nation.

One area of government responsibility neglected for many years is that of tax evasion. If heavily burdened by taxation, low-income citizens react negatively and predictably everywhere.

Work in the underground economy, where people are paid in cash or kind not reported for tax or gross domestic production, is one way of dodging taxation. Relying illicitly on social assistance instead of employment is another way of evading tax.

We do not know the exact size or growth of our underground economy. The bigger it is, the bigger the distortion or underestimation of the rate of increase of our GDP is. Hidden inflationary elements lurk in the background of our economic scenario.

Classical economic measures – fiscal and monetary discipline, control of public expenditure and an environment conducive to productivity and capital formation – have yielded the desired results in the past and ought to do so at all times. And this applies for Malta as well.

The interplay of enterprise and market forces, driven by competition and stimulated by profits as a reward for risk-taking, is the way for an efficient economy. The market system in a competitive environment goes beyond promoting efficiency. It satisfies individual choice as well as collective needs.

To shift the blame from culprit (big government and an incompetent bureaucracy) to victim (economic efficiency) obscures the overriding objective of government responsibility.

The inability to kick-start the economy, the failure to attract sufficient foreign investment, the burgeoning public debt coupled with predatory taxation, all to be consumed by uncontrolled public expenditure – all of these are symptoms the Maltese leviathan is chronically sick and is badly in need of specialist medical advice. Or does it merely need a change of doctor?

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