Issue link: https://maltatoday.uberflip.com/i/1201983
10 maltatoday | SUNDAY • 19 JANUARY 2020 NEWS JAMES DEBONO ON Reno Bugeja's Dissett on TVM this week, Robert Abela described himself as "pro-mar- ket" and endorsed Joseph Mus- cat's economic model, but insist- ed that wealth at the top must now trickle down in people's wages. Yet how will he manage to do it without introducing a living wage? In his inaugural speech on Sun- day, Abela spelled out his eco- nomic vision, promising to help businesses to "make more prof- its, invest and succeed" but ask- ing them not to "forget workers". It sounded more like an implo- ration for capitalist generosity, than real socialist redistribution. New Labour, sure enough... Surely, he has fully endorsed Muscat's economic model. "We have a good economic model which I do not want to change," he told Bugeja on Dissett on Wednesday when asked about his views on his predecessor's neoliberal mould. This suggests a continuation with Muscat's economic mod- el, which relied on wealth gen- eration by the private sector to improve living standards and welfare, limiting state action to increased government spending on pensions, childcare, educa- tion and benefits sustained from the tax revenue generated by this economic growth. But does it really trickle down? Trickle-down economics is a term used to describe the belief that if more wealth is generated at the very top, then everyone in the economy will benefit as their increased income and wealth fil- ter through to all sections in so- ciety. It has been a mantra which Joseph Muscat has espoused well before his election as prime min- ister, gleaned not just from the new tradition centrist politics of European social democracy and the Blairist wave, but also in his own studies of the history of Maltese economic development: Muscat knew the key to eco- nomic success was based less on class consciousness, and more on industriousness and wealth redistribution. But critics like anti-poverty campaigner Matthew Borg, from Alleanza Kontra l-Faqar (AKF), argues that this approach actu- ally disempowers the working class and low-income earners. "Arguing for trickle-down eco- nomics to increase the stand- ard of living of workers and low-earning people subjugates their living condition to the needs of who employs them. In this way low-income earners are treated as simple recipients of benevolent employers who pass on some of the ever-increasing profits, and not as active agents contributing to the growth of the economy," Borg says. His appeal to Abela is to "do away with the idea that in or- der to improve the situation of workers we need to first and exclusively think of how to in- crease the employers' profits. This is what we mean when workers and low-income earners are a priority." Critics point out the reliance on trickle-down economics fos- ters inequality, something which is even recognised by Joe Farru- gia, director-general of the Mal- ta Employers Association. "Over the past few years it has been felt that the divide between haves and have-nots has widened, and that there are many people who feel materially worse-off in spite of the robust economic growth experienced over the past years." But Farrugia also insists that the "distribution of income and wealth" should largely remain the responsibility of government with the employers' role being mostly that of creating wealth, and to ensure that employees are employed under fair and decent conditions. Where new Labour leader Rob- ert Abela departs from Muscat, at least in his rhetoric, is through his greater insistence that he wants the wealth to seep through in a way which is reflected in higher wages and incomes. Mathew Borg insists that addressing wages is priority. "There are currently 80,000 peo- ple at risk of poverty and other hundreds in poverty: if all of Abela's trickle-down magic Robert Abela says he is 'pro-market' and endorses Muscat's economic model, but says wealth at the top must trickle down to wages... how can he manage it without introducing a living wage? "Arguing for trickle- down economics to increase the standard of living of workers subjugates their living condition to the needs of who employs them... they are treated as simple recipients of benevolent employers" Anti-poverty campaigner Matthew Borg (left) and right, Malta Employers Association director Joe Farrugia, who admits that the divide between the haves and have-notes has widened