It is generally recognised that the success of most economies depends on the level of private initiative. The extent of private initiative in an economy is a reflection of the extent of democratisation of an economy. It is also recognised that governments have limitations to solve both individual and economic problems.
History has shown us that governments cannot guarantee work for everyone and when the State seeks to substitute private individuals in the role of the entrepreneur, it has failed miserably.
This does not mean there is no role for government in setting rules and operating a fair system of laws but governments must understand the limitations of their role, in order not to stifle private initiative.
Private initiative implies taking risks and this is what makes profit legitimate. However it is not the only indication of the health of any economic enterprise. Elements such as conditions of work, quality of the goods or services produced, and relations between management and the employees are all other important indications.
However if we were to limit our considerations on private initiative to entrepreneurship, we would be missing two points. First is the attitude of businesses. Governments may give a great deal of space to private initiative. This does not necessarily lead to private initiative taking up the opportunities created, as there may be an attitude of waiting for government to do all the work.
If people expect a job with the public sector as a right, then private initiative cannot thrive
For example if private businesses get excessively reliant on demand created by the government, there would be very little private initiative to write home about. Another example is the way existing businesses view competition. If competition is not welcomed, that would be an indication of a culture that works against private initiative. It is therefore essential that there not only be the structures that guarantee the right of private initiative, but also a culture in the business sector that encourages private initiative.
The second consideration is the attitude of the human persons making up society.
Private initiative cannot truly thrive, where there is a disproportionate reliance of individuals on the State.
This disproportionate reliance manifests itself in the expectation of persons to be employed in the public sector rather than the private sector.
If, even when job opportunities abound, people expect a job with the public sector as a right, then private initiative cannot thrive. A similar situation manifests itself when individuals expect to be entitled to all sorts of social benefits, without appreciating their responsibilities towards the rest of society.
Although the State is expected to provide an adequate safety net, we need to appreciate that this does not lead to an expectation that the State provides for everything and the individual does not need to do anything to help oneself.
It is therefore of paramount importance that we agree that for us to smell the sweet smell of private initiative, it is not enough to have good legislation in place. There need to be in place a number of intangibles, the main one being culture, that enables private initiative to thrive. Private initiative is to be enabled and not managed or directed.
Within this context we need to remember the Malta situation. I have often said that we should all be pleased with the performance of our economy of the last years. I say all because we have all contributed to it and the fruit we reap today is the result of the work that came before.
On the other hand, we need to appreciate that unless we enable private initiative to thrive, we may not have fruit to reap in the future. There cannot be the reliance on the government to provide all the answers. The government is there to set the rules and then it is up to individuals to provide the answers. That is what creates the sweet smell of private initiative.