Most western economies have started the exodus from the wilderness of economic stagnation and are marching to the promised land of prosperity. They are looking up to their leaders to define the road map that will bring them back to the countries they used to know where consistent economic growth brought about jobs and improving standards of living.
Reading and listening to what EU governments have to say about their vision for the future, one can easily think that the solutions to today’s problems are well defined. But behind the undoubted eloquence of political statements describing the way ahead, there are complex problems that indicate that our leaders are often merely indulging in wishful thinking.
The search for a more effective educational system seems to be today’s equivalent of the quest for the Holy Grail. Just listen to what President Barack Obama’s vision is for the revival of the US economy: “Providing a high-quality education to all children is critical to America’s economic future. Our nation’s economic competitiveness and the path to the American Dream depend on providing very child with an education that will enable them to succeed in a global economy that is predicated on knowledge and innovation.”
Haven’t we heard all this before? Visions are easy to conceive and government leaders, with the help of their economic and communications consultants, can cunningly speckle generalities with specifics to impress the public that they really have a plan for our future and are not just engaging in waffle.
Some months ago, then British Prime Minister Gordon Brown promised to light the “beacons of excellence” that we so often hear about from other government leaders. He wrote in The Observer: “We have a growth strategy – a prosperity plan – that will take Britain forward by making us world leaders with new jobs in digital, low-carbon and advanced manufacturing technologies – but also by a new wave of educational reform. We will never stop reforming.”
But the Achilles heel of most European economies, including our own, is the speed and extent of reform, especially in public services. Timidity and a missing sense of urgency are real risks to our economic recovery.
Some EU countries are performing better than others. Labour market reforms in Germany, undertaken ten years ago by the Schroder administration, has helped to reinforce the competitiveness of German industry. The successful social dialogue with trade unions has also avoided the social unrest as reforms were being implanted.
Other countries, like France, Italy and Spain, lag behind in labour market reforms. Their journey to the promised land of economic prosperity is likely to take longer. With youth unemployment reaching unacceptably high levels, the protection at all costs of those still in employment is, in reality, preventing the young unemployed from putting their feet on the first step of the employment ladder. More liberal employment laws are likely to create incentives for employers to offer low skills jobs to young people who are desperate to start earning some money and avoid the splitting up of our society into those that are employed and those that are not.
The eloquence of most Western government leaders on their future plans for their economies often hides the lack of political will to undertake the difficult social welfare reforms. These reforms have been clearly defined by bodies like the IMF, the rating agencies, and the European Commission. But it is ultimately up to the various governments to administer the bitter medicine of reform despite the electoral risks that it entails
Most EU countries, including Malta, have pensions, health and educational systems that are financially unsustainable. Yet, few governments are prepared to define their plans to remedy this situation. There always seems to be a good reason to postpone tough decisions. Only when their backs are really against the wall, as has happened to Greece, do they move to avoid a meltdown of the entire social support system.
Stephen King, HSBC chief economist speaking at a meeting in Trinity College, Dublin recently stated that “Europe must accept its economic decline or risk isolationist turmoil. Globalisation has increased equality between nations but increased inequality within countries.”
The sooner EU government leaders understand how globalisation has changed the dynamics of world trade, the sooner they will be able to come up with a credible plan that will really take us to the promised land – even if it may be a very different land than the one we imagined it to be just a few years ago.
jcassarwhite@yahoo.com