The economics of now

There is a growing body of literature encouraging us to embrace the present. Psychologists, philosophers and mindfulness practitioners increasingly argue that many of our anxieties stem from living either in the past or in the future. We spend too much time regretting what has happened or worrying about what might happen instead of appreciating what we have today. Economics, however, has always taken a rather different view. 

At its core, economics is about making choices across time. It asks how much we should consume today and how much we should save for tomorrow. It examines whether investing in education today produces higher incomes in the future, whether governments should sacrifice short-term popularity to build long-term prosperity and whether societies are prepared to postpone immediate gratification in exchange for greater opportunities for the next generation.

Every investment, every reform and every budget is ultimately an exercise in balancing the needs of the present with the aspirations of the future. 

This distinction has become increasingly relevant in Malta. 

Over the past decade, the country has experienced an extraordinary period of economic expansion. Employment has reached record levels, incomes have risen, businesses have flourished and public finances have benefited from sustained growth. These are genuine achievements that deserve recognition. Economic growth is not an abstract statistic. It matters because it creates opportunities, raises living standards and allows people to enjoy a better quality of life. 

Yet success changes the questions that countries need to ask themselves. 

The challenge facing developing economies is often how to create growth. The challenge facing successful economies is how to sustain it. These are fundamentally different problems requiring fundamentally different policies. As economies mature, the emphasis gradually shifts from quantity to quality, from expansion to productivity and from creating prosperity to ensuring that prosperity can endure. This is what I like to describe as the economics of now. 

It is not an ideology but a way of thinking. It celebrates the outcomes that citizens experience immediately—higher disposable incomes, stronger consumption, record employment, buoyant tourism and economic growth. These are all legitimate measures of success. The difficulty is that they are largely the consequence of decisions taken years earlier. They tell us how well the economy is performing today, but they tell us far less about how prepared it will be for the next decade. 

If there is one event that perfectly illustrates the Economics of Now, it is the recent electricity outages. 

It’s the infrastructure, stupid 

James Carville’s famous campaign slogan, “It’s the economy, stupid,” became legendary because it reminded politicians to focus relentlessly on the issue that ultimately mattered most. Perhaps Malta now needs a different reminder. 

‘It’s the infrastructure, stupid.’ 

Not because electricity is suddenly the country’s greatest challenge, but because electricity has become impossible to ignore. The recent power cuts are not simply an energy story. They are the first visible manifestation of something that has been quietly developing across much of the Maltese economy—infrastructure stress. 

There is a temptation to reduce the discussion to overloaded distribution cables, substations, technical failures or emergency repairs. Those are undoubtedly important operational questions. They are not, however, the most important economic question. 

The more important question is why our infrastructure is increasingly finding itself operating so close to its limits. 

Infrastructure is the invisible operating system of an economy. Roads, electricity networks, water distribution, digital connectivity, ports, hospitals, schools, universities and public administration are often discussed as separate policy areas, yet economically they perform exactly the same function. They reduce friction. They allow people to move efficiently, businesses to invest confidently, institutions to operate effectively and innovation to flourish. When infrastructure functions well, nobody notices it. When it begins to fail, the costs spread rapidly throughout the economy. 

That is why infrastructure is one of the few investments that only becomes visible when it has already become insufficient. 

Nobody celebrates a new electricity distribution centre. Few politicians win votes because additional redundancy has been built into the grid. Replacing underground water pipes rarely generates public excitement. Expanding digital capacity before demand requires it is often criticised as unnecessary expenditure. These investments appear expensive precisely because their success is measured by the crises that never happen. Until one does. 

Perhaps the recent outages tell us something uncomfortable. Malta has not run out of electricity. It has started running out of spare capacity. 

Spare capacity is one of the defining characteristics of resilient economies. It is easy to dismiss redundancy as inefficient when demand is comfortably below available capacity. Yet resilience is built precisely by investing before systems become constrained. You do not build additional electricity capacity because you need it today. You build it because you know you will need it tomorrow. 

The Economics of Now almost inevitably underinvests in this type of capacity because it is politically difficult to justify investments whose benefits are largely invisible. It rewards immediate outcomes rather than future resilience. Infrastructure that appears underutilised today can easily be portrayed as wasteful. Yet the infrastructure that appears excessive today often becomes indispensable tomorrow. Conversely, infrastructure that is permanently operating at full capacity is already telling you that it belongs to yesterday’s economy. 

The bill eventually arrives 

Electricity is simply the first system to make this reality impossible to ignore. Most infrastructure does not fail in such an obvious manner. It deteriorates gradually until society slowly adjusts to lower expectations. 

Traffic congestion did not suddenly appear one morning. It accumulated over years until longer commuting times became accepted as part of everyday life. Waiting lists lengthened gradually. Planning decisions became progressively slower. Public spaces became increasingly crowded. Businesses quietly incorporated delays into investment decisions because experience taught them that inefficiency had become part of the operating environment. Infrastructure rarely collapses overnight. It first becomes slower. 

Economists speak constantly about productive capacity, yet productive capacity is ultimately nothing more than the ability of an economy to absorb additional activity without creating unnecessary friction. Every additional worker, every tourist, every business, every AI data centre, every electric vehicle and every new housing development places another small demand upon national infrastructure. Individually these demands appear manageable. Collectively they determine whether an economy continues functioning efficiently or gradually begins operating under stress. 

The warning signs rarely appear simultaneously. One system reaches its limit before another. This summer it happened to be electricity. Next time it may be something else. 

This is precisely why Malta’s carrying capacity debate should never revolve exclusively around population. Carrying capacity is fundamentally about the relationship between demand and infrastructure. Population is only one variable. Tourism, demographic change, climate pressures, technological transformation and economic activity all influence the demands placed upon national systems. The real question is therefore not simply how many people Malta can accommodate. It is whether our infrastructure can comfortably support the economy we aspire to build. 

Perhaps the greatest danger facing Malta today is that we have started confusing ambition with capability. 

We increasingly describe ourselves as a financial centre, an innovation hub, a digital economy and a destination for global investment. There is absolutely nothing wrong with ambition. Small countries have always succeeded by thinking beyond the limitations imposed by geography. But ambition cannot substitute for foundations. 

No investor ultimately chooses a country because of the speeches it delivers about innovation. They choose countries because electricity is reliable, transport is predictable, digital infrastructure is resilient, institutions function efficiently, universities produce talent and public administration enables rather than obstructs enterprise. The world’s most competitive economies are rarely those with the loudest narratives. They are the ones whose infrastructure quietly allows everything else to function. 

From prosperity to preparedness 

This is ultimately why Vision 2050 matters. 

A national vision should never become a catalogue of aspirations or an exercise in branding. It should become the framework through which today’s investments are assessed against tomorrow’s needs. Before asking whether Malta should become a leader in artificial intelligence, advanced manufacturing, financial technology or the digital economy, we should first ask a much simpler question. Can our infrastructure comfortably support the economy we already have? 

If the answer is increasingly uncertain, then the priority becomes obvious. 

The next phase of Malta’s development will not be defined by how successfully we attract new sectors. It will be defined by whether our physical, digital and institutional infrastructure evolves quickly enough to sustain them. Infrastructure should never be viewed as a consequence of growth. It is a precondition for it. Too often we have treated infrastructure as something that eventually catches up with economic expansion. The opposite should be true. Infrastructure should remain permanently ahead of demand because once it begins chasing growth, it has already started becoming a constraint upon it. 

The real question is not whether Malta can continue growing. It almost certainly can. The question is whether we are investing in the invisible infrastructure that allows growth to remain sustainable. 

In the end, electricity was never really the story. It was simply the first warning that yesterday’s infrastructure is now being asked to carry tomorrow’s economy.