Friday, 7 December 2012

"Because of" vs. "In spite of"

In Maltese that would read: minhabba vs minkejja.

That basically symbolises the main argument between the two main political parties contesting the next elections.   All their billboards, all their meetings, all their TV ads,  all their brochures and fliers can be condensed in a such a simple statement.   The because of the PN against the in spite of the PL.

The PN will argue that we have better economic growth than the average in the EU because of government's competent handling of the economy.   The PL will argue that the little economic growth we have results in spite of the government as its incompetence, corruption and creation of layers over layers of bureaucracy is really slowing down the private sector's drive for economic growth.

Nobody has a monopoly over the truth.

But it is a bit rich for the PN to argue the 'because of' line when one considers that:

  • Our level of government debt is far higher than government's own estimates at the start of this legislature as explained in the Budget Speech for 2009.   In fact our debt level is as bad as that of Spain and not much better than that of Portugal and Ireland.   What we have better than other EU countries in distress  is the ease with which such debt can be financed internally at low rates without recourse to foreign banks or external investors.   The merit for that belongs to the private sector who has always maintained high level of savings and shows valuable home-bias in investment choices.

  • Government has shown gross incompetence in carrying out relatively simple projects like re-organisation of the public transport and the energy policy including the extension of Delimara power station.   If government cannot handle such relatively straight forward projects how can it claim credit for competent handling of a complex macro-economy?

  • The World Bank has classified us as the most bureaucratic European country.   Rather than use the advantage of our small size to make the necessary bureaucracy lean and effective we have gone to the other extreme.   Bureaucracy, certainly the excess of it, breeds corruption and one finds difficulty to find credible other reasons for keeping in place excessive layers of bureaucracy which add no value whatsoever.

  • In the last Budget speech the Minister sung himself praises for projecting real economic growth of 1.6%  in 2013.    Our economy has potential for real growth in the order of 4% and we should be happy with nothing less.   We have always thrived amidst adversity.    During the first oil price shock in the seventies we had the biggest inflow of foreign direct investment from German manufacturing. Even in 2012 we had good year in the external sector of the economy as our exports increased and tourism reached record levels.   The problems in other tourist destinations render us more attractive and competitive.   The low growth being experienced is more related to domestic demand and domestic consumption as government instability has forced people to postpone investment and consumption decisions till after the elections.

For me we should be proud we are better than others in spite of the government,  and we are not where we should be and have the potential to be because government is burdened with the heavy  baggage that long tenure in power inevitably brings.    Even for that reason alone I side for the 'in spite of' side of the equation.

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