watersbroken

With eyes wide shut

Posted in 1 by Editor on August 31, 2010

Should one not criticise Finance Minister Tonio Fenech – when he reassures us that Malta is out of the recession – for rushing in where others fear to tread? On August 16, in this column, we observed that the economies of some of our most important trade partners are not recovering fast enough for our comfort. Moral of the tale: It is premature to suggest that all is OK now. Understandably, this is the cautious view expressed today by persons in positions of responsibility in the private sector.

A few online commentators took exception, some vehemently. There were those who are so utterly blinded by ideology and by our pathetically insular and vicious tribalism that reasoning with them is as easy as walking through a stone wall. How right Daniel Bell is when he observes that “ideology looks at the world with eyes wide shut, a closed system which prefabricates answers to any questions that might be asked”!

For these a statement stands or falls not because of what it says but because of who says it. Being a “bespectacled doomsayer”, part of the “arrogant intelligentsia” and a “Socialist crocodile tear-cryer” (sic, readers will find other truculent epithets in the comments below the article at http://www.timesofmalta.com/articles/view/20100816/opinion/premature-cries-of-pleasure), whatever I say is, by definition, at best a “vacuous claim”. They counter my vacuous claims with “facts” such as “the ‘living it up feeling’ of Friday and Saturday nights”, which “feeling”, they assure me, is “in sharp contrast to the feeling in major cities like Athens and London”.

Dear reader, wipe that smirk off your unpatriotic face and remember that, as one of them peremptorily puts it, “there is nothing to be sceptical about – facts are facts”. Got it?

from Stanley Kubrick’s intriguing film Eyes Wide Shut (1999) inspired by the novel Traumnovelle (1926) by Arthur Schnitzler

There is another sort of critic, however, that deserves closer and sympathetic attention. Albert Leone Ganado, who contributed critically but rationally to the online discussion, politely suggests that “rather than presenting a spectre of doom and gloom we should congratulate ourselves that, compared to other countries, we, as Maltese, have so far weathered the storm quite admirably and successfully”. No less politely I submit that while we should be pleased with the ingenuity of the Maltese entrepreneur and the productivity of the Maltese worker – a point Prof. Leone Ganado himself makes – we ought to be less impressed with Minister Fenech and his government.

Of course, a Finance Minister should inspire enthusiasm and confidence in the economy and not demoralise firms and households by taking a doom and gloom stance. If he is to succeed in doing so, however, it is necessary for him or her to be believed, to be credible. If, however, a government is insufficiently credible, then ministerial statements about how well we are doing – at a time when both firms and households are experiencing the contrary – will further depress consumer and business confidence. That is exactly what Mr Fenech is doing.

What must he do to save his political credibility? He should do what a minister of finance must do. He should ensure that funds distributed to his colleagues for both current and capital expenditure yield maximum value for money. He should ensure they are spent on what they were meant to be spent and, if not, he ought to discipline the ministers concerned. He should ensure that households and firms are not made to pay for inefficiencies in the public sector. He should ensure the greatest transparency and the highest standards of governance especially in the management of public procurement.

A 'living it up' feeling? More than meets the eye in Schnitzler's work.

If he does what he should do, then the minister’s efforts to boost morale will translate into greater investment and consumer confidence, into greater labour productivity and national competitiveness. If he does not, then his insistence that all is well will be interpreted by the stakeholders as a sure indication that all is far from being well. Households and firms will take it with the same large fistful of salt with which any reasonably intelligent person will take vacuous claims such as that “the ‘living it up feeling’ of Friday and Saturday nights” is evidence that the Maltese economy is in good shape.

Minister Fenech’s endorsement of the brutal increases in water and electricity tariffs inflicted on households and firms – thus encouraging monopolistic utility providers not to reduce inefficiencies, depressing consumer confidence, forcing employees to demand higher wages, further eroding our national competitiveness on foreign markets, discouraging local and foreign direct investment – is a clear indication that he is not doing what he should do.

His apparent failure to prevent infringements of the EU procurement regulations in the case of the BWSC contract award for a power station extension is another case in point. National economic recovery will have to be achieved in spite of this government and not thanks to it.

Meanwhile, orders for durable goods in the US increased less than forecast in July and sales of new homes dropped, fuelling fears of a renewed recession in the world’s largest economy. When it finally emerges from the recession, possibly with a “jobless recovery” for a few other quarters, the US economy (and that of our major trade partners) will be more competitive.

Paradoxically for the naïve among us, the post-crisis world will not be a rose garden for Malta. It will mean greater pressure on us to become more competitive. We will need a government that is as productive as our most productive workers and as entrepreneurial as our best business persons.

This article appeared in Dr Vella’s regular column in The Times of Malta on August 3o, 2010. The original may be accessed at http://www.timesofmalta.com/articles/view/20100830/opinion/looking-with-eyes-wide-shut

Premature cries of pleasure?

Posted in 1 by Editor on August 19, 2010

I have already commented on Finance Minister Tonio Fenech’s mid-July declaration that Malta had already come out of recession (All Is Well Now. Or Is It?, July 19). The minister, to be fair, had merely echoed the Prime Minister’s smug mid-March assertion that the country was already then “out of recession” (The Times, March 12). I submitted that Mr Fenech ought to be more cautious and explained why. I did not refer to Lawrence Gonzi’s earlier statement but it follows that if it was far too early for the Finance Minister to pronounce us safely out of the tunnel in July, then it was all the more less cautious of the Prime Minister to do so in March.

Nobody has come forward to defend Mr Fenech – nor, for that matter, Dr Gonzi – and to argue that all is really and irreversibly well. On the contrary, the experienced Karmenu Farrugia, speaking to another English language newspaper just over a week ago, opined that “we are not out of it (the recession) yet”. Speaking to the same newspaper, Gordon Cordina observed that “growth is not as yet widespread across all sectors of the economy” and Michael Pace-Ross, director general at the National Statistics Office, warned that “economic uncertainty persists in some developed economies on which Malta is dependent”.

Mr Pace-Ross did well to remind the minister that we do not live in a glass bowl and that we depend on major economies.

After the US Commerce Department’s announcement last week that US economic growth slowed between April and June, with GDP growing by an annualised rate of 2.4 per cent in comparison with an annual rate of 3.7 per cent in the previous quarter, the minister should be even more cautious. The US is the fourth most important market for goods produced in Malta, after Germany, Singapore and France.

In 2009, the value of exports to the US exceeded €152 million and that was a bad year when compared to the €183 million of 2008. Growing fears about the strength of the US economic recovery with unemployment standing at 9.5 per cent are not good news for us. Our exports to the US tend to be industrial products that are then incorporated into finished goods produced by US workers and bought by US consumers. High unemployment in the US and – as has also been confirmed – a fall in sales of goods such as cars are bad news for us.

In these circumstances, we are justified taking more seriously what the US Federal Reserve stated last week than what our own Minister of Finance and the Prime Minister say. The Fed warned that “the pace of recovery in output and employment has slowed in recent months”. No wonder that already in July, Fed chairman Ben Bernanke spoke of an “unusually uncertain” recovery. The International Monteary Fund even suggested that the US might have to increase its stimulus spending to support the recovery and warned that “the outlook remains uncertain”.

Last week, we also had bad news from Britain. The Bank of England’s inflation report disclosed that the UK economy will grow by about three per cent year on year in the second half of 2011. That’s half a percentage point less than the Bank forecast in May. Preparing Britons for slower growth and for inflation significantly higher than what the Bank previously told them, Governor Mervyn King spoke of a “choppy recovery”. The decision in June to increase VAT from 17.5 per cent to 20 per cent will not make Britons – households as well as firms – feel any better.

This is not the first time the Bank has failed to accurately forecast inflation and this is very worrying and not just for Britons. Economists are worried that this might be a signal that the Bank of England (the UK’s Central Bank) may lose control of monetary policy. That would be a prelude to a double-dip recession.

Now, why should this worry us too and discourage our responsible statesmen from premature cries of pleasure?

There are at least two reasons.

First, Britain is our second most important tourism market. The average number of arrivals from the UK between 2007 and 2009 stood at about 450,700. High inflation and a choppy recovery in Britain – to say nothing of a recessionary double-dip – will mean less tourists dipping in our own sea.

Second, Britain is our fifth most important export market. In 2009, the value of exports to the UK stood at €96.5 million and that was a bad year (they amounted to €167 million 2008). A choppy recovery in Britain is bad news for export industries in Malta.

We don’t often think of Japan when we discuss Malta’s recovery prospects. That’s short sighted. In 2009, Japan was our seventh most important export market absorbing over €58 million (a very bad year when compared to the almost €158 million of 2008).

News that economic expansion is poised to slow down in Japan is not good news for us. On the other hand, recovery prospects in Germany, a vital trade partner and tourist market, are exceptionally good but their sustainability depends on demand in the US and China.

It is a complex and uncertain world. One more reason why the minister of finance and his boss ought to measure their words.

This article appeared in Dr Vella regular column on The Times of Malta. The original may be accessed on http://www.timesofmalta.com/articles/view/20100816/opinion/premature-cries-of-pleasure

Premature cries of pleasure?

Posted in 1 by Editor on August 19, 2010

I have already commented on Finance Minister Tonio Fenech’s mid-July declaration that Malta had already come out of recession (All Is Well Now. Or Is It?, July 19). The minister, to be fair, had merely echoed the Prime Minister’s smug mid-March assertion that the country was already then “out of recession” (The Times, March 12). I submitted that Mr Fenech ought to be more cautious and explained why. I did not refer to Lawrence Gonzi’s earlier statement but it follows that if it was far too early for the Finance Minister to pronounce us safely out of the tunnel in July, then it was all the more less cautious of the Prime Minister to do so in March.

Nobody has come forward to defend Mr Fenech – nor, for that matter, Dr Gonzi – and to argue that all is really and irreversibly well. On the contrary, the experienced Karmenu Farrugia, speaking to another English language newspaper just over a week ago, opined that “we are not out of it (the recession) yet”. Speaking to the same newspaper, Gordon Cordina observed that “growth is not as yet widespread across all sectors of the economy” and Michael Pace-Ross, director general at the National Statistics Office, warned that “economic uncertainty persists in some developed economies on which Malta is dependent”.

Mr Pace-Ross did well to remind the minister that we do not live in a glass bowl and that we depend on major economies. After the US Commerce Department’s announcement last week that US economic growth slowed between April and June, with GDP growing by an annualised rate of 2.4 per cent in comparison with an annual rate of 3.7 per cent in the previous quarter, the minister should be even more cautious. The US is the fourth most important market for goods produced in Malta, after Germany, Singapore and France. In 2009, the value of exports to the US exceeded €152 million and that was a bad year when compared to the €183 million of 2008.

Growing fears about the strength of the US economic recovery with unemployment standing at 9.5 per cent are not good news for us. Our exports to the US tend to be industrial products that are then incorporated into finished goods produced by US workers and bought by US consumers. High unemployment in the US and – as has also been confirmed – a fall in sales of goods such as cars are bad news for us. In these circumstances, we are justified taking more seriously what the US Federal Reserve stated last week than what our own Minister of Finance and the Prime Minister say. The Fed warned that “the pace of recovery in output and employment has slowed in recent months”. No wonder that already in July, Fed chairman Ben Bernanke spoke of an “unusually uncertain” recovery. The International Monteary Fund even suggested that the US might have to increase its stimulus spending to support the recovery and warned that “the outlook remains uncertain”. Last week, we also had bad news from Britain.

The Bank of England’s inflation report disclosed that the UK economy will grow by about three per cent year on year in the second half of 2011. That’s half a percentage point less than the Bank forecast in May. Preparing Britons for slower growth and for inflation significantly higher than what the Bank previously told them, Governor Mervyn King spoke of a “choppy recovery”. The decision in June to increase VAT from 17.5 per cent to 20 per cent will not make Britons – households as well as firms – feel any better. This is not the first time the Bank has failed to accurately forecast inflation and this is very worrying and not just for Britons. Economists are worried that this might be a signal that the Bank of England (the UK’s Central Bank) may lose control of monetary policy. That would be a prelude to a double-dip recession.

Now, why should this worry us too and discourage our responsible statesmen from premature cries of pleasure? There are at least two reasons. First, Britain is our second most important tourism market. The average number of arrivals from the UK between 2007 and 2009 stood at about 450,700. High inflation and a choppy recovery in Britain – to say nothing of a recessionary double-dip – will mean less tourists dipping in our own sea. Second, Britain is our fifth most important export market. In 2009, the value of exports to the UK stood at €96.5 million and that was a bad year (they amounted to €167 million 2008). A choppy recovery in Britain is bad news for export industries in Malta.

We don’t often think of Japan when we discuss Malta’s recovery prospects. That’s short sighted. In 2009, Japan was our seventh most important export market absorbing over €58 million (a very bad year when compared to the almost €158 million of 2008). News that economic expansion is poised to slow down in Japan is not good news for us. On the other hand, recovery prospects in Germany, a vital trade partner and tourist market, are exceptionally good but their sustainability depends on demand in the US and China. It is a complex and uncertain world. One more reason why the minister of finance and his boss ought to measure their words.

 

This article appeared in Dr Vella’s regular column on The Times of Malta on August 16, 2010. The original may be accessed at http://www.timesofmalta.com/articles/view/20100816/opinion/premature-cries-of-pleasure

Divorce: a plea for sobriety

Posted in 1 by Editor on August 2, 2010

The issue of divorce is one that many people feel, understandably, very strongly about, one way or the other. I have my own views about the subject and I feel very strongly about them too. Today’s article, however, is not concerned with arguing in favour or against divorce in general. Nor do I intend to argue in more particular terms for or against its introduction in this country in this or the next legislature. Nor am I concerned here with the closely-related question of how, if at all, we should decide this matter, once it will have been decided that we must indeed take a decision.

In other words, I will not discuss whether the decision ought to be taken by the ordinary means provided for by our system of representative democracy – that is by Parliament – or by exceptional recourse (exceptional, by definition, in a parliamentary system) to direct democracy, namely with a referendum.

What I am concerned with today is how the various stakeholders – individual and institutional – intend to behave between now and the democratic resolution of this issue.

Such decisions, whatever their outcome and however they are undertaken, are defining moments of our development as a nation. If we wish to think of ourselves – and if we wish others, not least our children, to think of us – as a society of individuals capable, as individuals, of making responsible, free and reasoned choices, then we have to be concerned with how the various stakeholders will behave in the period that separates us from The Day.

I am reasonably certain – but, admittedly, less than 100 per cent certain – that we are no longer quite the village society trenchantly observed by Jeremy Boissevain, friend and teacher, in the Ph.D. thesis he submitted as a graduate student at the London School of Economics to the University of London 48 years ago, Saints And Fireworks: Religion And Politics In Rural Malta.

If this is the case then today’s Maltese (be they ordinary citizens or MPs, young or old, Nationalists, Labourites or none of the two) will not allow anyone to think on their individual behalf. If this is the case, however they will decide, they will do so on the basis of their understanding of the pros and cons of the alternatives put before them. They will consider the facts as dispassionately as is possible and make their own judgements.

I am convinced that if they are allowed to do so, they will. And this is where the institutional stakeholders have a historical responsibility. Let’s not beat about the bush: I am referring to the political parties and the Church, centrally as well as locally. If these truly respect the ability of today’s Maltese, of the individual stakeholders in this country’s future, to discern, to evaluate and to judge, then they will make no attempt to rush, bully, pressgang, scare, awe, mesmerise or otherwise regiment them into deciding one way or the other.

Archbishop Paul Cremona wisely assured the country that the Church “would not be launching any crusade against divorce” (The Times, July 6). The stridently divisive billboard appearing on the parvis of a parish church shortly after contrasted sharply with the spirit of the Archbishop’s statement. The person responsible for the billboard is quoted by this newspaper as having paradoxically justified it as “reaction to the divisive debate” (The Times, July 20). Divisiveness as a response to divisiveness or a fulminating statement to foreclose a debate?

Which is not to say that I am denying anybody’s right to state a case in favour of this or that position. On the contrary, what I have said implies that nobody, be it individual or institution, has the right to attempt to silence, ridicule or vilify anyone speaking in favour of this or that position.

Archbishop Cremona also said that the Church “intended to take an active part in the debate and that it expected that in a pluralistic, democratic society, its right to take part in such a debate would be respected”. Nothing could be fairer.

In an earlier contribution to this column (Forgetting Peppone, March 16, 2009), I criticised a colleague who suggested that this “island of Don Camillo” needed a more resolute Peppone to champion the “secularisation of morals”. I argued that old-fashioned Cold War anticlericalism – Camillo and Peppone are the iconic products of the pen of Guareschi, a Cold Warrior per eccellenza – is retrograde. Only Guareschi’s Peppone would oppose the Church’s participation in the debate. Similarly, the idea of participating in a democratic debate in a pluralistic society with emotionally saturated slogans on a billboard on the zuntier – reminding one of an ancient catapult poised to hurl anathemas at the godless hordes threatening to overrun a militant Church – makes sense only in the context of Guareschi’s logic.  

All I am saying is that nothing should be undertaken that makes it more difficult for individuals to make up their mind with the serenity that such a difficult decision requires. Emotionally aggressive and invasive crusades of all sorts, in favour or against the introduction of divorce, should therefore be avoided. Wittingly or unwittingly to encourage such crusades is tantamount to disturbing the peace of conscience required for individuals to make a pondered choice. Quietly conducted, sober, civilised debate based on factual information and reciprocal respect, yes. Anathemas and anticlericalism, two sides of the same coin, no.

This article appeared in Dr Vella’s regular column on The Times of Malta on August 20, 2010. The original may be accessed at http://www.timesofmalta.com/articles/view/20100802/opinion/plea-for-sober-civilised-debate