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Karm Farrugia tells Lawrence Gonzi to follow Costanza and suggests the Maltese should start saving if our economy is to recover
And so say all of us! “Luck and God placed me on the driving seat at a historic moment,” continued our new Prime Minister.
Personally, I don’t have the faintest idea what part God plays in such events, except that, if HE does, it must by definition be a benevolent one. “Good God” is often uttered. But has anyone ever heard any reference to a ‘bad’ God?
Not so with luck, though. Sadly, it can go either way. Obviously, Lawrence was only thinking of a good luck that had contributed to his elevation to Malta’s most powerful and influential position. However, it will undoubtedly take months before a realisation dawns on him that Lady Luck’s recent smile (or was it a grin?) was as synthetic and enigmatic as Da Vinci’s ‘Mona Lisa’ at the Louvre.
For the country’s sake let us all pray that such fears are unwarranted and that Lawrence will, in time, rank with our (very few) statesmen, superior to most politicians, not bent on winning the next general election to prove to his party councillors that their choice of leader four years earlier had been the right and best one. The Law of Costanza applies equally to politics, besides religious convictions. In a nutshell: do the opposite to what most people expect from you and success is guaranteed.
His predecessor and mentor, now his father confessor (as it were), once conceded that the historical norm in Malta’s governance style was that each of the two main parties is elected for two consecutive legislatures, then is automatically kicked out of office for becoming too ‘tired’ and out of touch with changing circumstances. Leaving behind a legacy of serious problems it had failed to address simply because this would have meant a heavier defeat later.
Attempts to cling to power at all costs is typical of our political scenario. The sad thing is that, instead of being statesmanlike and carrying out desperately-needed reforms in the interest of the economy’s well-being, especially if they are medicinal in taste rather than delicious, and knowing full well that they are bound to lose the next election anyway in the nature of things, administrations pamper the electorate at a time when it needs disciplining, in the expectation that perhaps, just perhaps, something unexpectedly occurs to divert the inevitable.
Of course, this rarely happens. In the meanwhile, however, the patient-economy has deteriorated and the alternative party in office faces a crisis of ‘cosmic’ proportions in their spin-lingo. The electorate meekly accepts everything it hears in the euphoria of a new government and generously grants it a ten-year span to set things right as they should. The cycle resumes.
However, not if the new administration’s focus stays on the country’s long-term well-being as it did on its first election, rather than on votes now that the third attempt is around. Ask Britain’s Tony Blair. But he has been lucky in having a finance minister of the calibre of Gordon Brown with full power and freedom to introduce unpleasant reforms if necessary, sometimes contradictory to his party’s beliefs, to ensure that the economy did not depart from its steady growth path, albeit not so spectacular.
Last month Gordon presented his nation a budget with new taxes as needed to strengthen the national health service and education, perhaps ‘neglected’ according to his critics. It was certainly not the last budget for the current legislature, and a deficit one for that matter (though well inside the Maastricht criteria, even if Britain has again deferred its decision on joining Euroland), but still regarded as an election one. Imagine it being our budget !
No wonder Lawrence puzzled everyone in retaining the Ministry of Finance for himself. To me this was not a desperate act; it was a wise one, probably courageous. Mintoff did this with foreign affairs when the crisis was political vis-à-vis Britain. Although Lawrence did not say so (and nobody really expected him to), he acted as if the government’s finances were indeed in a crisis, as the opposition has been clamouring for weeks on end. I prefer a politico in power to act on a belief without wasting energy and losing face countering it, to one who persists in denying it and hence does nothing about it. The inclusion of all his three women MPs in the cabinet is a case in point.
The odds are clearly against Lawrence. Both he and Eddie know it. In contrast, our national debt in 1987 was under 20 percent of our GDP, despite Labour’s desperate last budget of relative largesse in the wake of a series of ‘standard’ balanced budgets reflecting Dom’s fiscal conservatism juxtaposed against his socio-political radicalism. The country then needed massive infrastructural investments to be financed from borrowings, perfectly executed for fruition by the following general election in 1992. Budget deficits translate themselves into increased spending power and higher living standards: the ideal recipe for winning votes.
Adequate savings were not engendered for economic superstructural investment. Unrestrained spending led to a situation today where the average family saves practically nothing from its disposable income. Thank heavens that a part (certainly not enough) of such excesses in outlays has been on house ownership.
If only the deficit had been solely due to a reasonable portion of the budget’s capital account. It was not. And now Lawrence’s economy will have to reap the consequences. John Dalli could not do much when he kicked off as finance minister in 1992: the culture of wanton spending had been ingrained in the government’s psyche and by 1996 he was desperately proving that he could win his party a third term. He could not. Unfairly, he was blamed for the mess Labour found when moving in. If it wasn’t for Dom’s red herring, a similar situation would be facing Alfred Sant today.
Lawrence could not, with a clear conscience, bestow the ‘privilege’ (sic) of the finance ministry on any of his colleagues. Least of all to John who had been blamed for all new taxes and deprived of any credit for any resultant benefits.
Lawrence will be told the truism that only economic growth can set us right. His advisers will stress competitiveness, which in turn depends on national higher output from the same input or lower input for the same output, which in turn means a reduction in the national unit production cost both for manufacturing and for services, and finally that the circle comes to its ‘end’ (sic) only if everyone is forced to sacrifice a wee bit of their comfort and ‘acquisitions’ for a while until the economy recovers and manages to create more jobs, which in turn require export-oriented direct foreign investment, which could simultaneously enhance the government’s tax earnings or, better, reduce its expenditure, thus encouraging further investment…..the full circle again.
Sorry, Lawrence. Yours is a bed of nails. But you are young. Read more about the Law of Costanza: it might come in handy.
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