GUEST POST/Economics 101 with Joseph Muscat

By H. P. Baxxter

A lot is being said about the reasons behind the government’s shockingly despotic and crazy policy decisions. A lot of what is being said is not entirely correct.

Muscat’s policies are attributed to his desire to appease the lobbies which brought him to power, or by his desire to make more money for himself, or by his spiteful nature. All this is there, true, but it’s just the icing, the positive side effect.

Muscat can be read like an open book, if only we would zoom out to the big picture.

It’s really very simple. He was handed a country with an economic roadmap that was unsustainable. That is to say, the economic roadmap followed since 1998 cannot be sustained any longer. It is easy to forget – and the Maltese have phenomenally short memories – that Malta went from a North Korean economy to a free market economy with European living standards and aspirations in just a decade or so.

No one, not even the greatest economic genius, can undo history. And no one could undo sixteen years of North Korean economics, plus 7000 years of relying on foreigners to draw up our economic policy. Malta entered modernity when it was still part of the British Commonwealth of Nations (let’s give the empire its correct term). Some of the solutions formulated by the Maltese government at the time became taboo after 1964.

What resulted was a kind of rerun of the 20th century on speed. Malta leapfrogged technologies like crazy in the hunt for the quickest solution to the modern challenge of the nation-state: the GDP.

Some of the policies worked. Others worked, but at a terrible price. Vide the many jobs in the tourist and building industry, the boom in hotel construction and the destruction of the Maltese coastline and countryside. Concrete, even more than diamonds, is forever.

Others were simply a case of only having so much money to work with. Vide the decision to skimp on public transport and urban planning, and to spend it instead on such things as free healthcare, education and stipends.

Other policies provided short-term benefits, but created a massive financial black hole that keeps sucking money. Vide the creation of so many local councils.

In the run-up to 2003, Malta discovered the services industry. Since then it’s been a free-for-all headlong rush. We did finance, banking, trust management, gaming, igaming, you name it.

The government churned out law after law to attract more firms and more money. In the process, it turned fiscal liberalism – in reality fiscal profligacy – into the new national creed. Taxes became the Sum of Evil. Every party, PN, MLP or AD, pledged to cut taxes even further. We practically did away with corporate taxes, and one day we’ll do away with income tax. Give me your billionaires, your rich, your yachted masses yearning to hide their money where taxes are low. No questions asked.

Once we’d done that, what next?

Suddenly it’s March 2013 and Muscat is sworn into office. He is handed a country without a sustainable economic policy. He knows that this fragile edifice cannot be sustained beyond the short term.

But he wants to fulfil that sacred mission – so he thinks – of all national leaders. He’s seen how those Qataris live. He’s seen Dubai and its shopping malls, Brunei and its zero income tax, and Switzerland and Luxembourg.

His challenge is to increase the GDP and lower unemployment, so everyone would feel like they’re doing as well or better than before.

How to do it?

He had hatched a plan in the five years since 2008, and it was a big and ambitious plan. Just how ambitious it was is proved by the address of the very first person he went to consult right after he was elected MLP leader.

Once in power, he set his own roadmap in motion.

It was simple. Just sell anything that can be sold.

He knows it is a devilishly cunning plan. Gonzi might have tried selling fiscal advantages. But he will sell stuff. Things. Including real things. He will sell things no one thought could ever be sold. Including stuff that wasn’t his to sell.

Since 2008 he had built a network of buyers for whom money was no object.

So he set off. He started selling passports. Maltese nationality is yet another commodity, isn’t it? If buyers can be found, then why not and what the heck.

He sold land to the Chinese so they could turn it into a little extraterritorial corner of the People’s Republic, complete with maritime access.

He sold off Malta’s power grid and the right to Malta’s energy generation and supply.

He sold land and academic accreditation to his wealthy Jordanian contact.

He sold off Malta’s foreign policy.

He sold the future LNG terminal, so China could fit the final link in its nefarious Silk Road.

He will shortly start selling organs to any transplant clinic that’s willing to buy.

If there’s a buyer, why not sell?

Why not sell the Caravaggio? There are plenty of Qatari billionaires who love to fill their homes with European art.

Why not sell Skorba and Mnajdra, so they can be shipped and rebuilt in China’s new Park Of The Oldest Structures In The World?

No one has ever sold a UNESCO world heritage site. We’ll do that. We’ll sell the city of Valletta. The money we will earn we shall put into the national coffers. Who’ll complain against an increase in the GDP?

Mdina’s so pretty, and so useless. Let’s sell it to the Saudis. They’d love a European city with an Arab name, to remind them of the glorious Islamic heritage.

And if we take a little commission on the side on each sale, that’s not illegal, is it? Nothing wrong in getting rich yourself while the nation gets richer.

My fellow countrymen and women, we who claim as our right free healthcare, free schooling, a free university and stipends, who refuse to pay anything for medication provided by the government, who ask for subsidies and for the removal of taxes – it is our fault.

It is our fault that we have not come up with a better economic policy, that we haven’t petitioned our politicians, that we have never proposed policies, or discussed the subject or asked questions when our MP visits the kazin on a Sunday morning. It is our fault that we never questioned or doubted our bespectacled academics and professors of economics. It is our fault that we applaud when the newest six-star hotel complex is unveiled, when we should be asking questions.

We’re told these people are clever and they know best. Why doubt them?

Muscat never did anything particularly clever. He just filled the void in economic policy, and pushed Malta’s economic model to its limits.

He is safe. Because that model is our credo.