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An economy on steroids

In the run-up to this election, I have been asked to comment on Malta’s economic success on several occasions. My answer has been to confirm that, yes, the economy grew, yes, there is considerable cash in hand and yes business is doing well. But any person who owns a purse and a bank account knows that what makes you rich is not how much money you have in your hand, nor how much you spend.

If you spend your savings, you may feel great in the short term but it will not be long before you are broke. How much of this growth burst we are experiencing involved cashing-in on Malta’s assets? By this I mean Malta’s natural and social assets: its protected land, its landscape, its village cores, its entities, its institutions, its reputation, its social capital.

We seem to have thrown it all into the furnace that makes the economic flame burn. We have thrown in all sorts of planning permits, major infrastructure deals, citizenship sales, tax holidays, recruitment with the public sector: the works.  The flame is bright and hot – in the short term.

But what can we throw in, in a few years’ time to keep the fire burning? What have we done to replace the depletion of natural capital? What have we done to invest in new business models? What do we do if trust, the basis of all economic transactions is eroded? Will others do business with us? Can we even do business with each other?

Our economy needs the accelerator pedal in some areas but, more than ever, it needs brakes in others

To be sure, this is not the first government that did whatever it could to incentivise economic growth. It is certainly not the first time that I’m commenting about killing the goose that lays the golden eggs. But at this point of Malta’s economic development, did we really need to go that far? Did we need the economy to grow so fast and furiously, the furnace to burn so hot?

Consider that we can barely find the people to fill the jobs we are creating – and that we have instead, provided work to thousands of Europeans. Consider also that part of the growth is predicated on very low wages which we are reluctant to shift, for fear of an economic shock (never mind the tsunamis we created in the rental market, and never mind the inflationary tax holidays granted on property purchases).

Consider that the vulnerable – women, children, the elderly, those who rent property – are still waiting for the trickle-down to happen. What they needed was to be given priority, and not the crumbs that fall from the table; an economy that grows from the bottom-up.

Addressing them seems to have been planned as the cherry on the cake – in the last year of this electoral term. Unfortunately, by the time the last year came, it was too late. Others had eaten the cake and the term was up. The cherry is now dangling as a promise.

Certainly, our economy needs the accelerator pedal in some areas but, more than ever, it needs brakes in others. At the risk of stretching the metaphor, what it really needs is a sensitive steering wheel. Our men work longer hours than most Europeans, our mental and environmental health indicators are deteriorating and emissions targets are being missed.

We have less and less time or space to enjoy our families, to be a community.  Traffic, complete with pollution, accidents and loss of productive time, soars and yet, we continue to nurture the plague of cars with accommodating infrastructure (millions for roads).

We basically put the economy on broad-spectrum steroids, leaving the side-effects for later. What we desperately need is a government that operates less like private business, that is less intent on acting like a market-player and more keen on governing. A government that focuses less on sales and more on enhancing public goods like infrastructure (for people), police, open space, planning, enforcement, research and, most importantly trust.

A government that focuses on the human being not just on human spending.

Our economy is not an end in itself but a means to achieving quality of life and well-being for the people it sustains.

Economics itself is not a one-shot game: a short-term high is not sufficient to state we are doing well. Because a country does not shut down after one or two electoral terms.

Dr Marie Briguglio B.Com, B.A.Hons, M.Sc, Ph.D is an economist.

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