The role of the government in the economy has always been the subject of controversy, not only in Malta but also abroad - in fact more abroad than in Malta. At the basis of the whole discussion is the issue whether the individual (both as a consumer and a producer) should be left to his or her own means, or should the state (as represented by the elected government) play a central role and take decisions on behalf of the individual, presumably because the government knows best and needs to protect us from our own decisions.

One may ask cynically as to who will protect us from the government's decisions. In this country, over the last 40 years, we have had a number of situations where the economy needed to be protected from the government's decisions.

Thus, students of economics study the advantages and disadvantages of a centrally-planned economy and of a free market economy, the extent an economy should be mixed, the importance of public goods and merit goods, the costs and benefits of nationalisation and privatisation of economic activities, the role of the government in the distribution of income, etc. As with most situations, there is no easy answer and, over the years, the pendulum has swung from one side to the other and back.

During the lifetime of an individual, we have moved from a strong drive towards nationalisation of economic activities, with the objective of safeguarding jobs and to use profits made from nationalised enterprises to fund social services, to an active process of privatisation of state assets, in the belief that the government should not undertake activities which the private sector can do just as good or better.

This has meant that the state has moved from playing a very active role in the economy as an operator, just like individual producers, to playing a role as a regulator and being responsible for the fiscal policy of the country. With regard to the management of monetary policy, the government has passed this role to the Central Bank, which enjoys independence in its decision-making process.

It is also recognised that the government also has the responsibility to provide services such as health, education and security, with the objective of achieving a stronger cohesion in society. It is generally accepted that, even if the government were to retreat from its role as an operator in the economy, social cohesion is not just a desirable feature but a necessary one for an economy to thrive. This implies that the government needs to adopt policies to have a fair distribution of income; the problem being in defining the word "fair". This is after all one of the main functions of fiscal policy.

Social cohesion brings with it inclusion. Even in this regard there is a lack of clarity. Does inclusion mean taxing the rich to pass the money on to the poor? Or does it mean having policies that create opportunities for everyone to take an active role in the generation of economic wealth? Does inclusion take away the responsibility that each individual has to take charge of his or her own destiny and provide for oneself? On the other hand, should not the government have the responsibility to provide support for those who for one reason or another have found themselves in difficulty? Inclusion is something on which there is agreement but there is no agreement as to how far the government should go to achieve an inclusive society. When does a policy of inclusion become paternalism? And is paternalism necessarily wrong? Something which has always struck a negative chord with me is that, when things go right, businesses claim ownership of that success but, when things go bad, the government is invariably blamed for the failure.

It is worth quoting John Stuart Mill from his essay On Liberty. He writes: "He who lets the world choose... his plan of life for him, has no need of any other faculty than the ape-like one of imitation. He who chooses his plan for himself must... use observation to see, reasoning and judgement to foresee, activity to gather materials for decision, discrimination to decide and, when he has decided, firmness and self-control to hold to his deliberate decision".

One may not agree with what appears to be the crude way Mr Mill put forward his argument against paternalism way back in the 19th century. However, there is no doubt in my mind that we need to keep reminding ourselves that the government's role is not to provide us with wealth but to help create an environment where wealth can be generated. Essentially our economy needs to have policies that promote inclusion, but it does need paternalistic policies because I believe that economic paternalism is a sign of immaturity.