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Being labelled an ‘eminent’ economist by this correspondent entitles me graciously to also accept his other compliment attributing to me ‘superior wisdom.’ Even if with sarcasm which, incidentally, I rather enjoy once I am not in politics.
Indeed I see humour in it all. As much as I do when I read reports of weekend political speeches. Just four examples should do, all from last weekend. (1) Each citizen is burdened with a debt of Lm 3,500 (MLP deputy leader), forgetting to add that the same citizen is concurrently owed almost the same amount after taking away the relatively small (thank God) part of the national debt owed overseas. (2) Criticising the government for collecting Lm11 million more so far this year than the corresponding period last year (Maltastar), forgetting that the same government was reprimanded during last budget debate for collecting less in taxes than they had forecast. (3) Malta has the lowest rate of university graduates looking for work (the Prime Minister quoting Eurostat), forgetting to add that Malta also has the lowest rate of university graduates per hundred people. (4) On pension reform the Premier accused the Opposition of wanting ‘everything to stay as it is,’ forgetting to consult his Minister for the Family and Social Solidarity beforehand about what Labour’s shadow minister had said at the breakfast seminar organised by ‘The Malta Financial & Business Times,’ barely two days earlier, namely, that he advocated an ‘overhaul’ of the current system, pledging that ‘welfare reform will be tackled by the Labour Party….equitably and fairly…and complemented by sound fiscal and economic policies.’
On devaluation
However, let’s go back to devaluation as viewed by the correspondent. He sees it as the only cure left for this country to resort to in order to regain sufficient competitiveness to revamp exports, visible and invisible, and thereby create enough productive jobs to avoid the ‘devastating effect of unemployment.’
A view which I respect, but cannot endorse for reasons already succinctly explained in my previous column, going so far as to call it a ‘dishonest measure’ in present-day circumstances. The humour I detect is not in depicting me as wanting the country to ‘carry on the road to abject bankruptcy,’ but in claiming that his ‘conclusion that devaluation is necessary is based on my close observation of the economic fortunes of the UK.’
Simply because he lived for some time there! I lived in the UK for seven years but that alone (or anything else for that matter) didn’t make me an expert on the country’s economic problems.
As luck would have it that was precisely what the episode from ‘First Among Equals’ shown on UKTV last Sunday, was about. Raymond Gould, Secretary of State for the Economy and acclaimed as the British Labour government’s foremost intellectual for his book on politics just published, stood up in parliament emphatically opposing devaluation as this would impact adversely on job creation. That same night his government devalued sterling. He felt totally betrayed and immediately tendered his resignation, but agreed not to make it public until the Chancellor of the Exchequer had made his statement in parliament the following day. Members from the opposition benches stood up in disgust, haranguing Gould as he still sat on the government’s front bench. Until, of course, the Chancellor explained what had actually happened, emphasising the vital need to keep the decision away from even the Cabinet to avoid speculation against the pound. Respect for Gould was not merely restored but increased multifold. Eventually he was to become the ‘primus inter pares.’
The series was written by Jeffrey Archer almost in faithful reproduction of the events in the sixties when, inter alia, people believed that devaluation of sterling was the answer to Britain’s economic woes. Probably symbolised in the Leicester scenes depicted by the correspondent.
Britain’s dependence on international trade was (and still is) much less intense than Malta’s, and yet history tends to prove that devaluation, at best, was only of a very short-term benefit. This disappeared in less than a year when again the previous problems resurfaced. Competitiveness does not come about through such a measure, but from a realization that only through restructuring and innovative investment, both physical and human, can any developed economy produce for itself and the rest of the world the right products at the right price.
The trouble with Maltese politicians is that they hardly ever point out clearly and understandably to the masses the real implications of the measures they propose and eventually implement. If, in government, they minimise the negative effects; if in opposition, they magnify them. It is left to apolitical writers to balance the two weights against each other.
Often they have to rely on scanty statistics, sometimes dubious in their fullness and wanting in their promptness, rendering them shaky in pronouncing definitive views one way or the other. Worse, when they do arrive at conclusions, they are immediately labelled politically - motivated and assigned a prejudicial slant pro or against a political party. Pity, but ever so true in this little nation of ours where merit often plays second fiddle to contacts.
At least on devaluation the political divide is absent. Or so it appears. Until some wise guy from somewhere in the EU or Washington comes up with the idea and, as we more than sometimes do with what foreigners tell us, we start believing in its desirability. Wait until we are in the Exchange Rate Mechanism (2) some three years from now.
I end with another peek at humour in the top quote. The correspondent is obviously new to this paper. Welcome, sir. Could you please go over several of my recent past contributions? You will be surprised to read the many suggestions I put forward for consideration of inclusion in the forthcoming social pact, if it does come about, all meant to enhance our national competitiveness and render us worthy of eurozone membership. Devaluation is not one of them and cannot be. It would be disastrous to our social fabric, hitting chiefly at the poor, the sick, the underprivileged, the wage-earners….. and, in the process, earning extra millions to the banks and those with huge reserves in foreign currencies.
Is this what the correspondent wants to see? Wouldn’t it be preferable if the government appeals to all for a little sacrifice according to their means, itself setting the example first?
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