Friday, 29 September 2006

Where Is the Consumer in all This

29th September 2006
The Malta Independent - Friday Wisdom

Between Maltacom and Melita Cable there was never any love lost. This week, however, they accused and counter-accused each other in the public eye in a way which is not meritorious of two of the major corporate organisations that prize being well regarded by the general public. The obvious question is where does the consumer fit in this evolving saga.

The consumers’ interests are supposedly being safeguarded by the regulator of telecommunications who has this week imposed a hefty one-off fine of Lm10,000 on Maltacom and accruing a fine of Lm200 per day for delaying to conclude with Melita an interconnection agreement giving telephony customers of both organisations the possibility to phone across the exchanges in a wholly transparent manner.

Maltacom announced that they would appeal the fine while Melita commented that the fine was not punitive enough to force Maltacom to accede to grant them interconnection facilities. They announced that they would be taking up the matter with the EU directorate that guards true competition on EU markets.

One marvels why this is happening so soon after the privatisation of Maltacom. Surely government should have cleaned up the stables before privatising, ensuring that the new private owners know exactly what rights and obligations they were buying. Without such clarity, the price obtained would generally be discounted due to the uncertainty of the business model being acquired.

Until such time as Maltacom was a government-controlled entity, official or de facto monopolies could be condoned on the basis that what the consumers were suffering due to lack of competition was being returned to them through corporate profits which flowed back to the government as major shareholder.

However privatisation changes all that. While public monopolies can be tolerated, and often accepted as a matter of fact given the lack of economies of scale on our miniscule market, private monopolies become a dangerous species.

How the government privatises Maltacom and leaves behind in private hands a de facto monopoly in fixed line and broadband communications which has to be challenged by other operators through legal disputes in different fora, cannot be easily understood.

Indeed it is turning out that Maltacom’s privatisation was a long-drawn out affair which has left behind great uncertainties as to what rights and obligations have been passed on to the new owners.

We had the case of the real estate that Maltacom do not use for its core telephony business. After criticism that this property should have been lifted off Maltacom prior to privatisation with fair compensation to the company which would have increased the share price value and consequently the privatisation price, the minister announced in parliament that there was an agreement for this to happen in the post-privatisation stage as a package deal against granting of full title to some other property which Maltacom rents or leases from the government.

Nothing has been heard of this again and it is unlikely for the exchange of property rights indicated to sail through plainly, as in agreeing to such exchange the Board of Maltacom could be compromising the interest of its shareholders, especially the private ones that were not involved in the privatisation negotiations with government.

Then we were told that the new owners would invest Lm30 million in new technology. Again nothing has been heard since other than whispers that these investments would be financed from the company’s own cash resources and future cash flows rather through share capital investments by the new owners.

So basically, Maltacom would be investing its own money, something which it could have done without necessarily being privatised.

Now we find out that the new owners of Maltacom are permitted to drag their feet to the opening up of competition rather than have it imposed on them through the privatisation contract that they have to let go of their monopoly without delay to ensure that the consumer benefits from true and fair competition. If this dragging of feet is related to the condition not to enforce redundancies for a period of three years, then it means that the consumer will be footing the bill for the company’s over-manning for another three years.

What the consumer was expecting was that rather than Maltacom freezing itself during the long-drawn out privatisation process amassing cash resources and postponing investments, it should have carried out promptly the mission given to it in the days when I was a director under the chairmanship of Maurice Zarb Adami, for Maltacom to invest in a media division which would give some real competition to Melita in its core business which was theoretically liberalised before the liberalisation of fixed telephony.

The landscape of telecom companies is changing rapidly.

The period where mobile operators were growth leaders over fixed line operators seems to have run its course with mobile diffusion reaching saturation levels and with uncertainty over whether the consumer is willing to pay for media facilities over the mobile through expensive 3G technology.

Growth leadership is now shifting to the convergence of fixed line and media where the fixed line business rather than dwindling to a natural death as it gets replaced by mobile communication, is re-inventing itself to become the carrier of media offering competition to the pure cable companies which to survive have to offer fixed telephony and data transmission on their cable network in their client package.

All this increased competition is working to the advantage of the consumer all over the world. But over here my cable TV bills and telephone bills keep eroding a larger portion of my disposable income. Why should we be different?

Sunday, 24 September 2006

Government Spending is No Way to Measure Performance

24th September 2006
The Malta Independent on Sunday

The Prime Minister’s speech to close off the PN’s festivities to mark the 42nd anniversary of independence reminded me of the experience I had when a labour government, as soon as it was elected in autumn of 1996, tasked me to conduct a strategic audit review of the then MSU.

I had reported how the then MSU management used to measure their performance by the amount of money they extracted from central government to spend on IT even though a good slice was in fact spent on refurbishing, embellishing and maintaining their headquarters, then at Villa Portelli in Kalkara. In my report I had recommended an approach where MSU had to be paid and get measured by what it delivers rather than by how much it spends. It is satisfying that most of my recommendations in that report were adopted and implemented and they survived till this very day even though I would have expected MITTS, the new name I had given to MSU, to expand and sell its competences internationally rather than continue to rely solely or mostly on government contracts for its commercial viability.

In the same way the Prime Minister devoted a good part of his speech singing self praise for the increased government spend on various votes, recurrent and capital, expecting the people to judge performance by how much of our money the government spends rather than by the mileage we get for the amount of our money the government chooses to spend.

Clearly we are still doing politics the same old stale way. We use national feasts to divide us rather than unite us; to deprecate opponents rather than attempt to bridge over differences to ensure we can overcome external threats and challenges with singularity of purpose conserving our energies to progress together rather than to fight on how to share the spoils. In the same breadth that we are told that we should not get into an election mode so early as the election is probably some 18 months away, the Prime Minister delivers a fully loaded political speech in perfect election mode rather than deliver the vision of a national leader.

I don’t think we should be impressed because the government is spending so many millions on education more than what Labour had spent in their the last full year in government in 1997. What fails to deliver the bacon is the fact that of all EU members, in spite of our very substantial spend on education, we have the highest percentage of early school leavers (those who leave school with a low secondary level education and abandon all further studies) in the age group between 18 and 24.

In reality the amounts devoted to the recurrent spend on education gets absorbed largely by student stipends that are then spent mostly on ordinary consumption. All this while we starve practically all funding to our research libraries and devote pretty little to R&D and innovation.

I am little impressed by the far too may millions we have spent on the Mater Dei hospital which is probably holding the world record for the longest project under development. It took the Americans less time from inception to completion to land on the moon in the sixties than it will take to have our Mater Dei reasonably operational. And in the process, medical equipment excluded, the hospital will cost at least three times the investment needed to construct in fully operational mode a five star hotel of similar size if it were to be built with today’s money on the same site.

What the government will be judged upon is not how much money we are spending to build some decent roads but why is this being done in the 17th year, nearly consecutive, of the PN in government after these roads were done and redone several times literally throwing our money down the drain. What hurts our pride is the total absence of common sense of when such road works should be started and how soon they should get finished. This summer it has been a shame each time I had to go to the airport to welcome foreign guests struggling my way through the totally disorganised deviations in the main road artery just outside the airport.

The St Paul’s Bay bypass was again started off just before summer and now that summer is gone one wonders we did bother to start it off at this awkward time when so little work thereon has been completed.

Strangely the Prime Minister in his politically loaded speech could not find the time to refer to the problem which is pre-occupying all who realise that standard of living improvement must be based on sustainable economic growth which in our circumstances must necessarily co-exist with a strong performance in our tourism industry. Surely we deserved some re-assurance that government is sensitive to the problems in this crucial sector where we are falling behind just as our main competitors are moving ahead.

I hope we have not built any false illusions that low-cost airlines on their own will be enough to return our tourism industry to a growth path. The problem is much deeper than that and we have to ensure that we realise our strengths and weaknesses and then focus on the market segment that can appreciate our strengths and overlook our weaknesses. What has caused the malady in our tourism performance is that we have kept selling ourselves to the same old price-sensitive segment which has now a wider choice at a cheaper price. We need to know what we can offer that distinguishes us from competitors and build value in that distinctive competence and project our marketing strategy to the sector which could be interested to pay a premium price for our uniqueness.

Lovely weather, sun, sea, sand and hotel rooms offer no comparative advantages. It is our unique history, our culture, our way of doing things, our hospitality ( is it still there?), our joie de vivre and our ability to converse in several languages that should be the basic ingredients to our long term brand building. But we cannot start by selling the brand before polishing the basic ingredients that go into our brand recipe.

I suggest that the next time government checks with the people whether it has earned its stripes for its performance it uses different benchmarks than the mere quantum of spending of our money. I strongly suggest that government offers to get measured by the progress being made in achieving the targets of the Lisbon agenda to which we are committed but which remain as elusive as ever.

Friday, 22 September 2006

An Honest Liar

22nd September 2006
The Malta Independent - Friday Wisdom

This quote made news headlines this week:

“There is not much choice. There is not, because we screwed up. Not a little, a lot. No European country has done something as boneheaded as we have. Evidently, we lied throughout the last year-and-a-half, two years. It was totally clear that what we are saying is not true.

You cannot quote any significant government measure we can be proud of , other than at the end we managed to bring the government back from the brink. Nothing. If we have to give account to the country about what we did for four years, then what do we say? That divine providence, the abundance of cash in the world economy and hundreds of tricks are keeping the economy above board?

We lied in the morning, we lied in the evening.”

Presumably the quoted person implied that they did not lie at night because they do not talk while sleeping.

I do not blame you if you think that this is a public apology by our government for promising us before the 2003, through large billboards and glossy brochures, that government finance were on solid footing, only to admit soon after being elected that we had a totally unsustainable public deficit which is still being nursed back to health through increased taxation and which is slowing our economic growth and threatening our credentials to join the Euro in 2008.

But unfortunately the quote has nothing to do with domestic politics as whilst we have an abundance of political liars we have no honest liars.

The quote comes form the Hungarian Prime Minister Ferenc Gyurcsany who uttered these words at a meeting on 26th May 2006 just one month after his government coalition had won the election by a majority of 210 out of 386 parliamentary seats. Mr Gyurcsany was musing how to tell the truth to the electorate about the hard and painful reform measures needed by the Hungarian economy to avoid a financial melt-down so soon after painting an artificially rosy picture in order to win the electoral mandate.

In an effort to come clean about the matter he seems to have taken the initiative to admit to his lies and even posted a full transcript on his own web log of what was said in the honest soul searching post-election meeting.

The Hungarian Prime Minister went on national TV last Sunday telling his people “we have to stop the deluge of lies which have covered the country for many years” and that people should not believe those politicians who offer “happiness as a gift”.

Hungarian police had to use tear gas and water cannon to quell violent protests in Budapest in which buildings were attacked and cars set alight. The worst fighting came when protesters stormed the state television building. Dozens of people were hurt, including many police officers.

The clashes happened following a rally demanding the resignation of the Hungarian Prime Minister. The main opposition party threatened to boycott parliament.

It was the first such unrest to take place in Hungary since the failed uprising against Soviet rule in October 1956. Hungarians are showing their disgust for being taken as fools by their politicians who willfully mislead them in order to steal their vote.

If in Malta we had honest liars amongst our political breed we will probably not react as violently as the Magyars as we have become so much used to political lies that they have become the accepted standard. How else could one interpret the big hole in our finances discovered by an incoming Labour government in 1996? And what about the big lie that the financial deficit was the works of the 22-month Labour government? Or what about more current lies that we are in good shape to qualify to join the Euro in 2008 or that our economy is performing wonders? Or that the free public health service would remain sustainable after 2008 when Mater Dei becomes fully operational? Or to flip the coin on the other side that the pension problem is not urgent and that it can wait a few more years of study even though knowing fully well that democratically it would more difficulty every year to undertake the necessary reforms as the population ages and nobody would like to vote against his/her own narrow interests?

The absence of honest liars in our political breed will inevitably lead to disenchantment with a growing section of the population disenfranchising itself from the electoral process. In fact current surveys shows that the most popular political grouping in Malta is currently NOVUN ( Non Voters and Undecideds).

Friday, 15 September 2006

Stuck in the Mud

15th September 2006
The Malta Independent - Friday Wisdom

There is nothing wrong with the government conducting a wide consultation process to take as wide feedback as possible in shaping its public budget for 2007.

What is wrong is the government giving the impression that it is on top of the economic situation which is reportedly getting better to the extent that the next budget can be expected to turn things round and deliver the bacon in time for the next election. Glossy pictures of young smiling families looking with confidence at the future are a million miles away from the reality that most families are living every day, stressed as they are with their inability to make ends meet through high energy surcharges and little opportunity to increase earnings.

For economic observers who wish to rise above the noise of a single budget and the electoral positioning that it brings – especially if it happens to be, quite likely, the last one before a general election – more robust and meaningful economic data is necessary to understand better why the government’s repeatedly expressed optimism has not rubbed on the negativism prevalent on the high street.

Such data was provided this week by Eurostat in a report about EU Labour Force Survey in 2005. What strikes impartial observers is
Malta having an employment participation rate of only 53.9 per cent in the age bracket of 15-64 years. Only Poland performs worse at 52.8 per cent and we are way, way out of the EU-25 average of 63.8 per cent EU-15 average of 65.2 per cent and Euro area average of 63.5 per cent.

While the male participation rate of 73.8 per cent is in line with the average, the female participation rate of just 33.7 per cent is the lowest in all the EU and miles away from the EU average of 55 per cent to 57 per cent. The simple truth is that there cannot be a solid foundation for a sustained increase in our standard of living unless we create the right social environment and the economic opportunities for a much higher female participation in the economy.

Is it any wonder that the countries with the best economic performance in the EU are those that feature the highest level of female participation in the labour force?
Denmark leads with 71.9 per cent (more than twice our record) followed by Sweden at 70.4 per cent and The Netherlands at 66.4 per cent. Denmark, Sweden and the Netherlands have the best-balanced macro-economic performance within the EU and beyond.

Why is our record so dismal? Is it just our culture for women to stay at home caring for the family? I very much doubt it. If our culture is changing with regard to church attendance on Sundays it cannot be expected to stay still with regard to females seeking to participate actively in the economy and seeking employment.

It is very much the case that in spite of the very many, far too many, millions spent to achieve an education system which should give an employment passport to all those who want to work, in reality the result is shoddy and face reddening.

How else can one explain that 41 per cent of our youth aged 18 to 24 are classified as early school leavers, meaning that they are not receiving any education or training, ending their schooling with at most a lower secondary level of education? We rank on top in this shame statistic followed by
Portugal at 39 per cent. Countries like Poland, who have a lower employment participation rate, are on the other hand leading in the education of their youth with only 5.5 per cent of their youth not receiving some sort of tertiary education. In Switzerland, where very few students actually go to university only 7.8 per cent of the youth are not receiving tertiary education as most youths attend vocational schools even while they are working.

Can the country afford to continue offering elitist full-time tertiary education to the few and denying part-time vocational training to the youths who cannot make it to university, but can very well do with vocational training even while they are working? Unfortunately, the recent moves in this direction by MCAST are too little too late. Furthermore, the culture we have built of being paid for pursuing full time tertiary education leaves full timers enough time to enjoy the good life whilst part time MCASTers have to toil it out in their little spare time. We have built a strong culture against part-time vocational training when in reality we should have made such training as the core of our education system.

No single budget can work out miracles to correct wrong policies pursued over a long number of years. The government is making the mistake of thinking that control of the public deficit and entry into the Euro would on their own generate economic growth which sets the right background for reaching the
Lisbon agenda targets including the increase in female participation rate in the employment market.

Unfortunately, nothing of the sort will happen. Results can only be delivered through a long-term programme which revises our educational focus from full-time tertiary education to part-time vocational training and through building a social environment which makes it possible for our females to pursue their career irrespective of their status, by creation of child care centres and the promotion of flexible working hours.

Until we do that, we are likely to be stuck in the mud, happy with mediocre economic growth rate and nursing structural macro-economic imbalances which act as a drag to higher growth in balanced sustainable manner spread across all economic sectors, rather than imbalanced growth focused on financial intermediation and the construction industry – which cannot keep the championship of growth without causing undue stress on other economic sectors. “Stuck in the mud” we will remain until we adopt sensible and productive education policies.

When and if I will ever see the Tal-Qroqq car park over-crowded at seven in the evening and quite vacant at
12 noon, then I will be able to say we are starting to get there.

Alfred Mifsud

Sunday, 10 September 2006

Hello September

10th September 2006

The Malta Independent on Sunday

August has come and gone. This week, many operators returned to their desks, the holidays over and facing the reality of the economic sector, which in the end is the foundation for our quality of life, holidays included.

And it was a return with quite a bang. In the US, following the Labour Day holiday on Monday, the big operators returned to their desks to discover that quite atypically for August, while they were away, leaving behind thin trading markets, equity prices edged up significantly, particularly in the technology sector. It is difficult to square this with the general feeling that the US economy is slowing down, interest rates have stopped rising and the bond markets are indeed already pricing interest rates cuts for next year, as they anticipate that the economic slowdown, particularly in the housing sector, will force the Federal Reserve not only to pause its interest rate hike cycle started in June 2004, but to start cutting them back in order to avoid a housing crash.

The returning big players immediately started to talk the markets down forcing a reflection on whether the August advance was overdone and waiting for clearer signals from the economy to see if the slowdown will in fact materialise and if the
US consumers will continue spending regardless even when losing the comfort of increasing equity values in their immovable residences.

In the
UK where the economy is still sailing impressively forward at a consistent speed without the imbalances inherent in the US economy, we had an explosion on the political front. A mini-revolt in the ruling Labour party has forced Tony Blair hands to set a one-year time frame for his departure as party leader and Prime Minister.

Blair had gone on record before the third successive election victory of May 2005 that he would not contest another election. However he never gave the exact date of his departure. On the contrary, recently he has gone on record stating that he regretted committing himself the way he did, as this took away moral authority from leadership in this third term. Loyalty gravitates round the prospective incoming leader rather than the present incumbent with a short expiry date of tenure Tony Blair found out.

Now that he has been forced to put a one-year time frame for his departure, it is not inconceivable that pressure will mount further, arguing that once he has to go it would be better to do it sooner rather than later to give to his successor time to reorganise the troops for the next election.

A comparison with the situation in
Malta is hard to resist. Tony Blair took over the British Labour Part leadership in 1994, just two years after Alfred Sant won the MLP leadership. They were both New Labour flag carriers and both won their first electoral test in 1996 in Malta and 1997 in the UK. There the similarities end.

While Tony Blair is still in power after two full terms and after winning a mandate for the third successive term currently being executed, Alfred Sant could hold on for less than half a term and has since lost two successive elections. How different are the British genes from the Maltese genes? After three electoral wins, Tony Blair is being forced to quit while still in the role of Prime Minister, whereas in Malta, despite Labour losing two consecutive elections, following its inability to complete the mandate of the only election won when he was still a relatively unknown quantity, Sant still rules the MLP unchallenged. This despite evidence that he is the only stumbling block between Labour and the next government, with personal popularity ratings below that of Prime Minister Gonzi in spite of the PN floundering all over the place.

September has also returned with a raft of statistics and other news about the state of our economy. It started with bad news on the inflation side, which shows that we are travelling well above the relevant strict EMU criterion for euro entry, and that unless there is a sharp correction in the next six months there is great probability that the euro entry date of 2008 will have to be postponed in the same way Lithuania was forced to do earlier this year. International rating agency Fitch was quick in issuing an opinion that 2009 was a more likely date for
Malta’s entry into the euro monetary union.

It might seem no big deal if we make it in 2009 rather than 2008, but in reality it is. In between there is an election which could bring in a new government with different policies for euro entry, if not in the final destination, but certainly in the timing and in the appropriate level at which the Maltese lira is to be exchanged for euro on accession date.

Government finance statistics continue to show progress for ending the year with a deficit under the three per cent of GDP necessary for euro entry. But for those who can look beneath the surface, as those who have to decide on our euro adoption will certainly do, this is being done only due to postponement of capital expenditure payments and through the booking of unrepeatable grants from foreign sources. Basically, rather than safely cruising toward an ultimate budget neutral position, our fiscal position is being artificially suppressed to meet a particular criterion, building up pressure which will be released after we are judged for euro entry by June next year.

Balance of Payments statistics for the second quarter show that the deficit on current account is still increasing and during the first half of the year it still amounted to 12.5 per cent of the nominal GDP, a truly unsustainable figure by any standard.

GDP statistics show that during the second quarter of the year the real rate of growth slowed down from 3.1 per cent in the first quarter to 2.2 per cent in the second quarter, giving an average of 2.7 per cent for the first half of 2006, which is not impressive but better than the 1.1 per cent projected at last budget. However the composition of the GDP growth gives little room for comfort. All the growth is explained away in inventory build-ups equivalent to a real constant 2000 money value of Lm18 million in each quarter while the value of the overall growth averaged Lm14 million per quarter. Somewhere in the economy, increased production is resulting in an inventory build up rather than increased sales.

These are flash figures subject to revisions and more detailed allocations; however, experience on the ground cannot but suggest that there is an impressive inventory building of unsold housing stock. The strength of the construction sector seems to suggest a strong pipeline of new housing stock that is not finding a comparable increase in demand is leading to a rapid build-up of inventories, which is impacting positively the GDP figures as if they are being sold normally. Any lending banker can tell you that rapid inventory building is ominous of inability to find markets for production and will eventually, if it persists, have to be revised in write-downs to a discounted price at which the market can be stimulated to increase demand and offload inventories.

The holidays are truly over and September brings us back to face the reality we have to grapple with during the crucial year of 2007, which will be a decisive year for the next election and for the adoption of the euro.


Friday, 8 September 2006

A War Against Truth

8th September 2006
The Malta Independent - Friday Wisdom

This is the title of a book authored by Canadian journalist Paul William Roberts, who experienced the invasion of Iraq from a very different perspective to that of most other journalists who were embedded with the US military and thus became an integral part of the media campaign of the invading forces in their quest to win public support for the invasion.

Roberts instead made his own way to
Iraq and experienced the invasion from the receiving end mixing with Iraqis and sharing their pain, deprivation, torture and death. Iraqi civilians who had already suffered under Saddam’s regime but where doubly hurt when the supposed liberation resulted instead in a harsher dose of the same further compounded with the humiliation of seeing their homeland occupied by foreign forces who more mindful of protecting the oil infrastructure rather than the historical and cultural treasures of Iraq which are now gone forever.

Roberts had in fact met
Iraq’s foreign Minister Tariq Aziz after the collapse of the regime but before he was captured by the “coalition” forces and knew where Chemical Ali was hiding before he was apprehended.

This book is an eye-opener on how the risks of certitude and excessive self confidence could led to grave mistakes which cause so much suffering to the innocent. There is no substitute for reading through its enjoyable prose but readers could get a taste by sharing some of its more striking quotes:

“Why did many
New York taxi drivers predict the consequences of Iraq war better than most in the US government? Ex-director of the CIA, Admiral Stansfield Turner, replied – the problem with this administration is certitude”.

How true. How could a super power that spends a fortune on intelligence get its information so wrong both on the pretext of going to war, the risk of the regime using weapons of mass destruction which where being concealed from UN scrutiny, as well as on the consequences of such war? The truth is that the Bush II administration had a pre-determined mind to take control of the Iraqi oil fields and intelligence was interpreted subjectively to suit this goal rather than objectively to lead wherever it had to lead.

Another quote:

“It (the invasion) was an unqualified fiasco, deeply saddening, and entirely the fault of
America, which had made one of the greatest misjudgements in history. Even Israelis began to worry that the region had been destabilised for another generation, and the future was now less certain than it had been when Saddam ruled Iraq”

This was written before the recent Israel Hezbollah conflict that confirmed that the Iraq invasion has in fact resulted in the exact opposite of US original expectations. The invasion was meant to bring stability to region by imposing a pro-US Saddam rebel like Chalabi and don on Iraq a pseudo democracy controlled by US, which could then be exported to other neighbour countries so that the US gets effective political control on the flow of oil exports from this crucial source of energy region. The result of the fiasco is evident in the price of oil that before the invasion was trading in a range of 22 to 28 dollars is now in the 70 to 75 dollar range.

And where do we go from here? This quote suggests it:

US will be forced to leave Iraq fairly soon. To remain there would entail a full-scale draft, and I am not sure the political will exists to break what was a key promise of the 2004 presidential election. A relatively small force would be left to maintain some of the desert bases the army has created in Iraq, so that troops can be flown in again if the Iraqi government requests assistance or the now US controlled oilfields are ever threatened.”

What is not suggested in this quote is whether the
US pull-out will complicate the civil war the country is already practically experiencing where Sunnis and Shiites kill each other daily leading to the inevitability of the country having to be broken up or dominated by nearby Iran.

An the final quote comes from an Iraqi Christian priest on the first Easter after the invasion. When asked by Roberts who was Saddan Hussein these words of wisdom were offered by the priest:

“Just another man who wanted to be liked like a god and found it easier to make people fear him than it was to make them love him, without noticing that he had forgotten the difference between love and fear. He thought he was loved. The Americans, British are the same. You thought we would not notice what you really wanted if you freed us from Saddam. You misjudged us. You have forgotten what things like freedom really mean. We have not. You thought moving us from one prison into another, no matter how modern or luxurious, would make us forget we are in a prison. It will not. You will never allow us to run our own country but you will make it seem as if we are running it. You will never fool the Iraqi people the way you can fool your own people. You mock our suffering by even trying to fool us.”

Iraq has been a war against truth and its consequences will continue until the deception is removed by the next generation of Americans who will revolt against it just as my generation had revolted against the war in Vietnam.

Friday, 1 September 2006

In Search of Values

1st September 2006

The Malta Independent - Friday Wisdom

The daily news flow confirms that, as a society, we have lost the values that were held dear by our ancestors and that such a loss of values is at the core of our social and economic malaise.

Last week we had a western style security-van ambush where bandits executed a professional job in booting the substantial cash loot from a bullet-proof vehicle that had just left the cash depot of one of our main banks.

We had a hold-up in an internet café that offers money transmission services to foreign guest workers where, again, a sizeable bounty was grabbed by those who feel entitled to take a short cut to riches without having to work hard for it.

We also had several reports of petty theft, including a bag-snatching crime that left a young tourist injured. Perhaps by coincidence, but maybe not, in the last two weeks I encountered two particular and separate cases of petty corporate fraud by relatively junior members of staff who pretend to have the right to make their official salary a small fraction of the total remuneration package they illegally help themselves to by fleecing their employer.

Unlike what happens in many of our competitors’ countries, banks here have to be guarded by armed personnel at the door in order to prevent armed hold-ups inside our banking halls, which partly explains why hold-ups on carriers with cash bounties en route to or from the banks are now more common.

The economic cost of such crime could be enormous, even though it is hard to quantify. Apart from the cost of the actual losses and the cost of the prevention measures in order to protect against such crime, there is the cost of lost opportunities of business which escapes us because of such crime.

Would tourists continue to consider us as a destination worth visiting if walking alone in the street becomes a security risk? Would new investment consider us as an attractive location if security becomes a considerable operating expense to prevent external criminality and internal fraud?

The question I ask myself is: what happened to the society of 40 years ago, when we were all much poorer but had no problem in leaving the front door unlocked, as the core values of society offered sufficient security to ensure that what’s mine stays mine and what’s yours stays yours, without having to incur considerable security costs.

Why do so many in our society feel the need to get rich quick, whatever the route, whatever the consequences? Why have we corrupted society to the extent that normal earnings from a normal job, even if it is high-paying – let alone if it is at near minimum wage – is not sufficient to support an average standard of living and many need to support their income with legal activities on the side and sometimes illegal tricks to supplement their income to maintain their consumption pattern?

Has it got anything to do with the gambling culture we have fostered, where we are spoilt for choice of casinos to make or lose a fortune on the spinning wheel or the one-armed bandit, and can bet on any sporting event in practically every corner of every village?

This insatiable urge for consumption has probably something to do with the alarming result of the census of church attendance on Sundays which is in evident freefall, clearly indicating that pretty soon we will be crossing a landmark threshold where less than 50 per cent of the population will be attending Sunday Mass.

This is not to suggest that the Sunday Mass is an indispensable source of social values, as we all know many people who skip Sunday Mass but whose daily life typifies more solid social values than those exhibited by many regular church-goers. But it is certainly an indication that the same loss of social values that is giving rise to the increase in crime that goes hand in hand with excessive consumption, is also at the heart of falling church attendances.

Maybe I am doing some mental gymnastics, but I feel quite sure that part of the general economic malaise we are suffering from has a bit more than a mere casual link to such loss of core social values.

This is showing up in falling savings ratios and increased consumption debt that is gradually eroding one of the key values bequeathed to us by our forefathers, the culture of thrift that has stood this country extremely well in financing its development without resorting to external debt.

What will happen when there is a generational transmission of assets from the current generation in their third age and who are still embedded with precious core values, onto a future generation that is incurring debt quite freely and for whom it is normal to spend and consume today what they could be earning a year or more down the road? A generation that even as of now is occasionally hitting unsustainable levels of debt and consumption and has to be baled out by parents and grandparents.

I am seeking rather than offering answers, in the same way that society, on an unstoppable slippery slope of loss of values, is searching for answers to where to search for the reinstatement of such values. Answers that do not seem to be coming from anywhere, even though we pride ourselves on being a near hundred per cent catholic society that masochistically denies itself the civil right of divorce enjoyed by the world over. Those who argue that the introduction of divorce would lead to a loss of values had better re-think. The free-fall in core values could hardly get any worse, with or without divorce.