I express full support for the appeal by the President, George Abela, to save and not spend what we do not have. The dominant values now appear to support spending and borrowing, thinking about now and not the future. The root of this problem seems to be economic philosophies where social services ballooned and growth has become the be-all and end-all of politics. This is understandable because economic growth results in jobs and taxation to fund social services which then help raise standards of living for greater parts of the population.

What seems to be disregarded is that, to provoke growth, one needs to take on debt and risk. Not all individuals are educated and capable of managing this.

Now, in ignorance, we act as though there is no tomorrow. Some remarks may be useful. Let’s distinguish between states and individuals. With individuals we all have patrimonies which are the sum of all our material possessions. Patrimonies are made up of assets and liabilities. These are finite and when they are exhausted we go bankrupt. When we die, our patrimonies are inherited and so the debts we incur are also passed on to our children. They can reject their inheritance but that is not only a material issue but one which is psychologically loaded because it has to do with a family home and business, tradition and reputation. So our debts may pose a big problem for them.

We need to educate ordinary people more about patrimonies, assets and liabilities and help them understand what they are doing to themselves and their children when they borrow and speculate. We also need to introduce some controls on lending and diligence to be carried out before lending, as not all loans are appropriate to all people, just like not all investments are appropriate to all people. The recent trends in easy credit has not done great things for our societies.

When states spend, no individual is at risk of personal liability but when our nation takes on debt it will have to repay it from taxation, which then means we will have to contribute more. States can pay debt from reduction of annual costs, which means that state services will have to be reduced, which means we receive less support at the same time as we are paying more taxes.

What is spent now is actually repaid by future generations and we almost have the same situation as with families, where the parents benefit from high standards, social services, free health and education and so on and the children then have to face the problem of absorbing the deterioration of living standards to pay back the money overspent in years gone by, for the benefit of their parents, through bad forward planning and management. Our President’s appeal to save and not to spend more than we can afford goes as much to the State as to individuals.

There is the temptation, often used, of turning debt over with new debt having longer repayment cycles, something lenders also encourage individuals to do. However with individuals there is a life-span limit of 40 to 50 years, while states have no lifetime.

In the latter case politicians do not control adequately and are often applauded by populist measures which cost a lot of money. At most they may suffer electoral loss when people realise the effects of over-spending, but that usually hits many years later. It is always easy to blame predecessors for the accumulated debt. Citizens are then confused, as we see now, when asked to suffer the consequences of measures they applauded or even demanded through unions are other similar organisations.

Our Central Bank leaders have been appealing to the government not to overspend for many years but warnings seem to go unheeded. That is why the recent suggestions of a legal and enforceable cap on government spending in our Constitution must be supported. The problem is that at some point in time borrowing money and spending more money than we have surpasses the limits and we fall into a spiral of debt and repayment we just cannot afford.

States and individuals are then intricately combined and we all suffer the consequences. Imagine what will happen if the next generation will have to pay for their own debts, the debts of their parents and, at the same time, pay higher taxes and social costs, while receiving less state support, so as to allow our states to repay the massive accumulated debts.

Let’s all try to understand what the President is telling us and let’s discuss these problems more openly and intelligently. We can possibly help redirect national and individual behaviours towards a better outcome.