It’s the economy, stupid

One of the secrets behind Muscat’s economic success is that rather than ditching whatever the previous administration did in the economic sector they continued to build upon it

Finance Minister Edward Scicluna
Finance Minister Edward Scicluna

“It’s the economy, stupid” is a phrase coined by James Carville, a campaign strategist of Bill Clinton’s successful 1992 presidential campaign against sitting president George H. W. Bush. It has now become a universal mantra for politicians using the economy as an issue in any electoral contest.

I suppose this is what keeps Joseph Muscat’s popularity on a high in spite of the scandalous messes that his administration managed to get involved in, all within the space of three years.

Last Wednesday, Finance Minister Edward Scicluna launched his pre-budget document inviting all and sundry to make proposals within the framework he set out for the 2017 budget that will be announced in three months’ time. The launching of a pre-budget document was an idea adopted by the Gonzi administration and retained by the Joseph Muscat adminsitration that even continued to build on the economic policies of the previous government. 

In fact, one of the secrets behind Muscat’s (and Scicluna’s) economic success is that rather than ditching whatever the previous administration did in the economic sector – as a Dom Mintoff would have done – they continued to build upon it. Luck played its part as well with the adminsitration’s term coinciding with a European economic revival. But this does not diminish the importance of the decision to build on the base that was already in place.

Sure enough, there were tweaks, notably the efforts to push people on the register of the unemployed to start working. The incentives seem to have worked, with Scicluna boasting that the labour market reforms launched by the government led to the astounding statistic: that between December 2014 and July 2016, 3,200 claimants had left the benefits system and found employment. How many of them were employed by the state or state corporations and companies, we were not told. Yet this was a massive success that pushed the registered unemployed to an all time low.

Scicluna also explained that it was not his policy to spend everything the country had gained through its strong economy. “It’s much wiser to save that wealth for times of need,” Scicluna was quoted as saying, while boasting that Malta continued to be one of the top economic performers in the EU, achieving a rate of economic growth that was more than three times the EU average.

The government seems bent on tackling the fact that the so-called ‘trickle down’ effect is lacking in that many low income earners have problems with the new economy, especially with the problem of high rents. People in this bracket cannot afford to buy their own house or flat, nor rent one, as property prices have soared. The large number of foreigners living and working in Malta has led to an explosion of prices in the real eastate and the rental markets. It is obvious that the government intends to tackle this issue in time to achieve results before the 2018 election campaign starts in earnest. That is my translation of Scicluna’s insisting that the 2017 budget will focus on ‘prosperity with social justice’. Muscat has already made it clear that he is not in favour of rent control – a typical socialist solution – and therefore more subsidies for rent must be on the cards.

With this background, one finds oneself agreeing with Scicluna’s stated objectives for the next budget of ‘progressively lowering the fiscal deficit whilst remaining one of the fastest growing economies in the euro area, and maintaining a growth-friendly consolidation strategy; becoming more competitive by sustaining productivity and supporting initiatives that make Malta more attractive; and investing in human resources and targeting new growth sectors’.

Where does this economic success story leave the Opposition? During the 2013 election campaign, the PN had made much of the fact that historically unemployment always rose to a high under Labour governments and that a socialist inspired economy would lead us to an economic disaster. ‘Dritt ghal gol-hajt’ (head-on into the wall) was the way the PN used to portray the economy under a Joseph Muscat administration. Prophecies that Malta would need a bailout were also made! Nothing of the sort happened – mostly because Muscat ‘stole’ the PN’s economic policies and tweaked them to get even better results.

The budget will not surprise anyone. This government’s positive economic record has surprised enough people already.

It is only a disaster for the PN because Muscat has brazenly stolen the PN’s policies, underpinning the overarching positive message that economic success can only be guaranteed by a PN government.

Simon Busuttil must be looking for another issue to deal with Joseph Muscat. 

* * *

A national embarrassment

Those who thought that we Maltese go over the top during the general election campaign, are clearly off the mark. I am disgusted by the way exchange of insults is the only palpable characteristic in the Trump vs. Hillary duel.

One Trump supporter (TV pundit Alex Jones) has claimed  on the Alex Jones Show, that Hillary Clinton not only looks like she has Down Syndrome, but also that she has had a lobotomy. Young people wear T-shirts with slogans such as ‘Trump the bitch’ and every time she is mentioned the crowd chants: ‘Lock her up’.

Trump himself even described Hillary Clinton in this manner: “She’s really pretty close to unhinged, and you’ve seen it a couple of times, but the people in the background know it. The people that know her know it, and she’s like an unbalanced person.”

Trump is trying to capitalise on the emotions of high school educated whites who have seen their jobs and job opportunities continually shrinking as a result of globalisation. They are angry and afraid of the future. Anger and fear lead to hate and hate is a very strong emotion.

Trump is poised to get the votes of these people as Ronald Reagan did in 1984. But according to ‘The Economist’, back then, no-college whites represented 62% of the electorate; now they represent only around 34%.

Trump’s electoral strategy seems to be based on hate to the extent that Clinton insisted that “Haters don’t build. Haters tear down.” 

Meanwhile, well-known Republicans are abandoning Trump because he is ‘a national embarassment’ as Republican Congressman Richard Hanna put it.

[email protected]

More in Blogs