Visions, miracles, mirages: an economic strategy built on empty promises
It is good to aim high, but targets must be grounded in reality
June 15, 2021|5
3 min read
Photo: Shutterstock.com
As the country moves steadily towards the next election, the main political parties are defining their economic visions in an attempt to engage the electorate.
Prime Minister Robert Abela last week launched a public consultation document that outlines Malta’s economic vision for 2021-2031, accompanied by the political sound bite that the country aims to be “the best in the world” in this coming decade.
The 58-page document, bombastically entitled ‘A Future-Proof Malta: A Nation of Courage, Compassion and Achievement’, presents a dazzling rhetorical vista intended to excite readers. The political hubris that inspires the narrative promises communal goals that would amount to nothing short of a miracle if realised.
Malta’s last economic miracle took place in the latter part of the last century when different administrations transformed the country’s colonial economy, that for two centuries had depended on military spending, into a modern economy built on tourism, manufacturing and financial services.
The value of the latest economic vision must not be judged by the sizeable dose of political hype, the abundance of buzzwords and the high-tech ambitions that underpin it. It must be judged by the sobriety of the analysis of where we stand today and where we aspire to be in 10 years’ time.
In the last decade, Malta has experienced strong economic growth that was, however, built on weak fundamentals. This growth was certainly not a miracle but a result of the crafty exploitation of opportunities created by Malta’s low tax regime, a weakly controlled property development industry, mass tourism, public and private consumption and the sale of EU citizenship to wealthy third-country individuals.
The vision document glosses over the weaknesses and threats of this economic model, one that could undermine the country’s prosperity. How can one believe that Malta will become “the best in the world” when faced with these worrying endemic weaknesses?
In the latest World Bank report on the ‘Ease of Doing Business’, Malta is ranked at 88th place in the worldwide index. This ranking is below that of most EU countries and some developing countries like Albania and Kenya. In the latest PISA education assessment, Maltese students ranked in the 44th place in reading, mathematics and science, below some of our competitors in financial services like Luxembourg and Ireland.
The government’s economic vision rightly identified the five most important pillars on which to build the country’s economic future. Sustainable economic growth, infrastructure, education, good governance and the environment are undoubtedly the areas where Malta has underperformed in the last few decades. There is no doubt that our competitors will be aiming to improve their performance in all these areas too, even if they may have more modest expectations than to be “the best in the world”.
Politicians, like most other people, often want to avoid facing their most pressing problems. Facing reality can be painful; addressing it can be even more painful, requiring leadership, sacrifice and change.
To many objective economic observers, the gap between today’s socio-economic realities and the oasis promised in the vision document is wide. Promising more of the same economic activities, which are increasingly showing signs of unsustainability, means the vibrant “future-proof” image depicted in this document is nothing more than a mirage, something that appears real or possible but is not, in fact, so.
Malta is not an oasis of prosperity in an otherwise struggling world, as implied in this vision document. The country needs a hefty dose of new political thinking rather than more of the same broad economic strategies changed in minor ways.
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