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    Unnecessary Tension between Austerity and Growth

    3 minuti qari

    There is unnecessary tension between economists that are claiming that the present debt crisis that has devastated economies in the euro area and threatening others could only be resolved by an economic policy of austerity, and other economists (and politicians) claiming that the only way to resolve the effects of this problem (chiefly market stagnation and unemployment) is through a policy of growth. The tension between these two points of view is futile and unnecessary… one policy does not contradict the other. We can use another term to describe a policy of both rigor and growth stimulation – a policy seeking sustainable growth.

    The medium to long term objective is to attain sustainable growth that generates consumer activity both locally and overseas, that generates new business activity and new investment, and subsequently creates new employment opportunities besides retaining those who are already employed. Let us look at a check-list for Malta.

    Let us first go for Rigor. Are we serious in eliminating waste in public service? Are we instituting appropriate governance and accountability for our policy makers and decision makers?  Are we creating the correct checks and balances between legislators and the executive? Are we giving real autonomy to regulators (read here MEPA, MCA and MRA)? Are we selecting the right persons to champion these state corporations, agencies and commissions? Are we providing quality and value added to our citizens in the services we provide? Are we brave enough to overhaul our wasteful and inherently unjust welfare state?  Are we reducing drastically state bureaucracy especially when it comes to the starting up and expansion of new business?  Are we making the best use of government property (think of the Auberge de Baviere, Fort St Elmo, Pembroke, St Andrews barracks, White Rocks)?

    Second, let us move on to Growth. Are we shrinking the state sector? When are we privatising the last few public corporations – Enemalta, Air Malta, Water Services, PBS and Gozo Channel? Are we cutting taxation on companies and individuals? Are we seriously investing in Research and Development, promoting and encouraging innovation? Are we encouraging industry and University to strengthen their links? Are we encouraging enough leadership and management training and education? Are we creating new entrepreneurs and a culture of self-help while crushing a culture of state dependence and political favouritism? Are we encouraging more private investment in education and health?

    We need to soul search what we would like to be as a country and as an economy.  What is our cutting edge? What makes us different from other countries? We cannot afford mediocre thinking and average policies, but a vision and a strategy that will lift us up another notch in our journey towards sustainability. The crux of the issue lies in Choice… giving responsibility to Citizens to make their Choice on where to consume, serve and invest. This can only be done is we shrink the state and expand the private sector.

     

    Joseph FX Zahra

    Economist