Issue link: https://maltatoday.uberflip.com/i/1198602
09.01.2020 12 OPINION George Mangion R eading through the weekend press, critics wax lyrical on the current political impasse to such an extent that one builds up a conscious awareness that politicians in Malta mired its once im- peccable reputation of a serious financial domicile -with full respect to rule of law boasting top marks on good governance and a true democratic country. Naturally party apologists in their en- tirety feel angry and betrayed by the gang at Castille (lately unceremoniously resigned) yet they are not able to com- prehend what went so wrong in a short period of Muscat's interregnum. ere has been angry protests in Vallet- ta since 26 th November when two min- isters and a chief of staff suddenly offered their unilateral resignations. e crowd bayed for justice carrying protest signs calling for Muscat to resign now and oth- ers less salubrious slogans concerning the effectiveness of police investigations into a journalist's murder. Reflecting on these sudden outbursts of protests linked to the macabre assassination of Mrs Caruana Galizia (a journalist) who focused her pen to publish shocking facts in broad day- light hitting top politicians. ese in tandem with a select group of property magnates ruled the roost and created in her own words, a web of corruption and sleaze. Court evidence spilled the beans on the alleged mach- inations by a top businessman (very close to the gang in Castille) who mas- terminded and financed the plot to as- sassinate the journalist. e 30 pieces of silver led to her mur- der by way of a powerful bomb placed inside her car and detonated by remote control. One may add to this shock- ing homicide, a number of other pub- lic scandals relating to concessions of prime land granted at fire sale prices in an surreal excuse to oil the wheels of commerce particularly in the luxury residential sector and other projects. A private-public partnership secret deal involved paying millions annually to an unknown foreign operator was discovered promising to rehabilitate and run three major hospitals. No such embellishments were done while the Opposition has taken three ministers to court to account for the millions so squandered. e coup de grace was four Panama companies commissioned from Nexia BT (the managing partner still enjoys full patronage from the justice minis- try), a rare scoop by the slain journalist .She revealed two of these structures belong to the chief of staff and Dr Miz- zi-then health minister. More court evidence shows that the prime minister was fully aware of these secret Panama companies before these were made public by the said journalist. No action was taken by the prime min- ister in 2015 to demand the resignation of the two protagonists. e journalist was murdered in October 2017. is long introduction needs to be read in the light of Malta running an economy which is the envy of all EU states. e property market in Malta has been fortified over the past dec- ade and has never seen such grandiose projects in the pipeline. Such affluence came with a cost, since the ensuing ef- fect of gentrification resulted in a hike in rents and an acute shortage of con- struction workers. In fact , the positive transformation under the Muscat government has ac- celerated GDP growth which almost doubled since 2013.As a matter of fact, according to the Central Bank of Malta, between 2009 and 2013, house prices entered a phase of what is called 'ane- mic growth', only registering a 0.2 per cent increase per year. anks to the brinkmanship of Muscat and his team the economy has turned the tables with house prices increasing by seven per cent per annum, respec- tively. During this period, the govern- ment successfully slashed poverty rates, with Family and Social Solidarity Min- ister Michael Falzon, often saying that the success last year was a result of suc- cessful policies, labelling the measures "prosperity with a purpose". Since 2012, being the last year of PN rule, the public debt then climaxed at 70.2 % of GDP whereas now with a modest surplus it receded to 45%. Un- employment is at its lowest rate among advanced economies. A seven-year plan costing euro700 million started last year in an extensive road widening project and building of complex flyover structures to ease the constantly in- creasing traffic. A concerted effort has started to reduce low carbon emissions and introduce subsidized schemes for PV installations for public and private users. is has gradually improved the electricity mix. Obviously more needs to be done while sterling work was undertaken when a private consortium has teamed with the state to provide clean electricity. Tourism has helped generate more wealth as almost a record braking 3 million tourists and 900,000 cruise liner visitors primed the trickle -down econ- omy. Such bonanza has not escaped Muscat's vision to continue increase welfare benefits and offer free childcare assistance-with pensions and minimum wages also improved in last year budget. So one may ask what went so wrong in the isle of milk and honey? Clarity to the dilemma came instantly to mind when reading the seminal (yet contro- versial) book -e Fable of the Bees by Bernard Mandeville. He was an An- glo-Dutch philosopher, political econo- mist and satirist. e Fable's overall influence on the fields of ethics and economics is, per- haps, one of the greatest and most pro- vocative of all early-eighteenth century works. In his General eory, the famous economist Keynes, cited Mandeville as a source for his position in emphasizing the positive effects of consumption (ag- gregate demand). is stood in oppo- sition to classical economics who held up production (aggregate supply) as the motor of economic growth. Back to Malta, we mentioned the di- chotomy -that while Muscat's seven year regime enriched all corners of the population (particularly his close friends) yet this strategy was rated by the Opposition as corrupt. e fruits of ill-gotten gains. Equally disturbing, one reads in the Fable's proposals that vices, such as vanity and greed, unscru- pulously result in publically beneficial results. State propaganda helps create a false sense of a virtuous administration. With hindsight, it transpires instead, to be self-interested at their core and therefore vicious. In this work, Mandeville gives his analysis of how private vices result in public benefits like expanded industry, employment and economic flourishing. A paradise where society flourished in many ways, but no trade was without dishonesty. Mandeville thought the discontent over moral corruptness, or the private vice of society, was either hypocritical or incoherent, as such vice served an indispensable role in the economy by stimulating trade, industry and upward economic improvement i.e., public ben- efit. e desire to create in a purely virtu- ous society was based on a vain Uto- pia, when in fact it is the desire to im- prove one's material condition in acts of self-indulgence that lies at the heart of economic productivity. Mandeville's paradox alleged, unapologetically, the tendency of men to hide vices behind socially acceptable forms of behavior, thereby appearing virtuous. For Mandeville, this was incorrect and preposterous: society could be prosper- ous and based on private vices, or poor and based on private virtues- but not both. e poem teaches us a lesson. In Mal- ta, that skillful politicians originally flat- ter the masses into believing that actions were honest when done in order to grat- ify selfish passions, and virtuous when in truth they were performed cloak and dagger to acquire private wealth. The fable of the bees George Mangion is a senior partner of an audit and consultancy firm, and has over 25 years experience in accounting, taxation, financial and consultancy services. His efforts have seen PKF being instrumental in establishing many companies in Malta and ensured PKF become one of the foremost professional financial service providers on the Island