Over the last several years, a bemusing lamentation has trickled gently, like tap water on a low-pressure day, through certain areas of intellectual Malta. People mourn the passing of major ideological differences between the two political parties of government. Division is missed in the same nostalgic tone with which the golden years of strong community ties and Shangri-la are sniffily remembered.
And where did it all go wrong? All accusing fingers point at politics based on economic management. It is so technocratic, apparently, that it sucks the ideology out of politics.
Well, cheer up, folks. Ideology is back. And, to go by last Monday’s Bondiplus, it is alive and kicking. What’s more, it is partisan disagreement about how the international economic crisis should be tackled that is exposing interesting rifts.
In a recorded interview given to the programme, the Finance Minister, Tonio Fenech, said the electoral promise to cut income tax had been premised on a growing economy. Once it began to contract, cutting taxes no longer made sense.
Back in the studio, his Labour shadow, Charles Mangion, found this statement contradictory. Cutting taxes in a contracting economy, he said, is just what the doctor ordered to stimulate growth.
Well, that depends on which doctor you ask. There is a highly respected body of economic criticism – including that made by Nobel Laureates Joseph Stiglitz and Paul Krugman – aimed at President Barack Obama’s first stimulus package. It was too small, these neo-Keynesians say, and should have focused even more on investments in infrastructure and less on tax cuts. Some studies show that for the US, every dollar spent on infrastructure yields back $1.50 in economic growth. Tax cuts, during a recession, yield less; if they yield anything at all.
Maybe it is because Labour has not yet said enough about its general economic assumptions but what it prescribes to stimulate the economy generally resembles that of the neo-liberal consensus that flourished from roughly 1980 till the crisis. Of course, Labour also projects itself as the champion of welfare and advocates more government subsidies in a range of areas, all things which are not neo-liberal at all.
The stimulus prescriptions, however, are associated with a certain philosophy of government and markets. One general belief thinks the government should generally get out of the way. Another says markets will correct themselves in response to consumers. A third states consumers have the best information available to them (in prices) and will behave rationally.
In short, it believes that order is part of economic nature. It is government action that is disruptive. If only people were allowed to keep more of their money.
Meanwhile, the neo-Keynesian economic world, from where Minister Fenech is drawing his prescriptions, is one which sees economic nature as characterised by high uncertainty. Governments have to intervene to mitigate it because markets sometimes fail. In response to the crisis, neo-Keynesians would not have necessarily recommended building a new Parliament; however, a range of building projects, amounting to the sums the government is proposing, would not strike them as absurd as Labour has made it sound.
My point is emphatically not that the Nationalist Party is neatly neo-Keynesian and Labour neatly neo-liberal. Nor even that it is purely economic philosophy that is attracting them to their respective constellation. Rhetoric and political positioning play their part. The affinity that Labour has with prescriptions based on suspicion of government probably has much to do with its suspicion of specifically Nationalist governments. Its affinity with tax cuts also has much to do, I suspect, with that distinctive Maltese individualism captured in that class-coloured phrase “kemm naqbad paga f’idi” (literally, how much of the wage I grab in my hand) as well as with a long-standing Labour concern with giving priority to combating inflation.
Nonetheless, the political parties are broadly aligning themselves with different economic philosophies, each respectively linked to a distinctive understanding of how the world in general is. These alignments are divergent, not convergent. Moreover, in some ways they indicate a realignment of political positions; a bit less so for the PN, rather more for Labour.
At any rate, there is enough being said to make one look closer to see if this is really happening. And there is enough reticence to make us insist on knowing more about the parties’ assumptions.
In particular, we should be asking for their assumptions about that coming crunch which neither of them is talking about. By 2013, on current estimates, our social security system will no longer be able to fund itself; spending commitments will exceed contributions. How each party plans to address that will tell us a lot about which economic philosophy it espouses, which world it inhabits and how many clouds and cuckoos it has.
Economic management never took the ideological differences out of politics. It was the appearance of consensus that hid them from view. The economic crisis is lifting the fog. It is still very misty but the contours being revealed suggest that interesting changes have been taking place behind the veil.
ranierfsadni@europe.com