Sunday, 28 January 2001

Arrogance for argument

The Malta Independent on Sunday

Arrogance for argument

When politicians run out of arguments to defend their position they tend to replace it with arrogance.` As this administration cruises with fatigue towards its mid-point it is showing abundance of arrogance and scarcity of argument.

These are the` characteristics of the first part of this :


EU accession process q

Increased impact of taxation through new measures and enforcement of existing ones. q

Privatisation programme and its effects on the capital markets q

Economic stagnation.

Under each and every aspect government`s position is supported by arrogance rather than argument.

EU Accession

The main thesis underpinning government`s policy for EU membership is not that it is the best solution but that it is the only solution.` So rather than explain the overall net merits of EU membership, such an important subject with consequences far beyond the limits of government`s electoral mandate, is sustained by denigrating the Opposition`s policy of special Swiss style contractual relationship with the EU.

Government`s sole argument for EU membership is TINA (There Is No Alternative).` What Switzerland, Norway and Iceland have chosen to be their model for their relationship with the EU is not even worth considering.` For the government, Switzerland, Norway and Iceland are much less European than Ireland and Sweden.

My request for MIC funding to Super One TV to present factual information about the choices made by Switzerland Norway and Iceland gets` refused for reason that it does not form part of the terms of reference which are strictly within the parameters of EU membership.

Arrogance dictates that Malta should be all for EU membership not because it is a smart choice but because it is a no choice. Other options are` conveniently brushed aside.` Old age wisdom, repeated in Dr Tabone`s biography, of keeping options open is unfashionable for those who see EU membership as a personable objective rather than a national choice.


Taxation has certainly been the hallmark of the first half of this administration.` Taxation has a dual purpose. It is necessary to finance the functioning of government. It is also an important element of fiscal policy as one of the most effective macro-economic tools.

Government is using taxation merely as a funding exercise. The role of taxation as a macro-economic tool has been totally forgotten.`

A fiscal deficit of horrendous proportions architectured by those who denied its existence a mere 30 months ago is constraining our economic managers to slap ill-thought fiscal discipline on a fragile economy.

But rather than admit that their own past mistakes of the `money no problem` culture are rendering current hard measures unavoidable, arrogance stimulates government to sing praises to fiscal discipline without making any serious attempt to address the expenditure side of the budget equation.

Privatisation and Capital Markets

The only privatisation item handled so far was that of the fire-sale of Mid-Med Bank. This has been a model of how not to privatise.` It was widely criticised for the method chosen, for the price obtained and for the strategic implication of making Malta the only sovereign country where half of its banking industry is controlled by a single foreign institution.

This privatisation did however help to expose the true value of Maltese equities which were seriously undervalued on the Stock Exchange` due to the illiquidity of the capital markets.` `Rather than` rejoice for this indirect benefit, the capital market explosion increased government blushes as it helped to quantify in clear numeric terms the opportunity cost of the Mid-Med firesale.

As if for spite administrative measures ( sale of Middle Sea shares at much below market price)` and fiscal measures ( tax on collective investment schemes) are devised with the aim of puncturing the Stock Market values which were well on their way to an orderly price correction and needed no external help to achieve a crisis driven value destruction.

Hereagain rather than admit mistakes, mis-judgements and imprudent behaviour the administration continues to ferment its arrogance depicting itself above all criticism and labelling critics as stupid morons.

Economic Stagnation

Yet the chickens finally come home to roost though economic leads and lags may obscure the correlation between cause and effect. But enough economic indicators are emerging which point to clear economic stagnation. Sharp deterioration in the balance of payments, loss of foreign exchange reserves by the Central Bank, meltdown on the capital markets,` contraction of the tourism sector, uncertainty in the domestically oriented industry, lack of any significant direct foreign investment, all these indicators point to one direction.

Arrogance can never be a substitute for argument. Much less can it underpin the national effort across political frontiers which is needed to overcome the structural economic problems which nationalist administrations running this country for the last 168 months, bar 22, must take clear responsibility for.

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