Economic inequality, among other similar definitions, is usually taken as meaning inequality among individuals and groups within a society. When we talk about the economic situation of our economy (something that is happening very often recently as part of a more holistic political debate), we tend to limit the discussion to economic growth, unemployment, the rate of inflation and other “basic” economic indicators that today everyone has, more or less, somewhat learned to understand to a certain extent. However, given the very volatile and unpredictable economic times we are experiencing, people are sometimes confused in linking these economic indicators to their everyday life and to their increasing or decreasing purchasing power.
The present Nationalist Administration is persistently reiterating the economy is doing well despite the global crisis. Are the people in our country really feeling the economic well-being our economy is said to be experiencing? This is precisely where the political debate needs to take a different twist and centre around ensuring that if there is growth (a debatable issue on its own merits) this must be enjoyed and felt by everyone, otherwise it’s just about political slogans and rhetoric on how the Administration is doing well given our economy and finances!
This also involves drawing a distinction between income and wealth and their imbalances in the economy as we tend to focus on the first rather than the second. Consequently, we must discuss how best to direct government policy to ensure economic growth is enjoyed by all members of the society and not just boast of positive economic indicators that may just mean the rich getting richer and those most vulnerable in our society sliding further down the economic and social ladder.
Tax policy is a case in point and it is probably the right time to fulfil the electoral promise of cutting the higher marginal tax rate rather than postpone the move simply to, maybe, coincide with convenient electoral timing more near to the next general election.
Another area is the setting of the minimum wage in relation to the poverty line and ensuring a mechanism is in place that monitors suitability consistently and take action accordingly, a positive proposal made by the Leader of the Opposition. Unfortunately, the debate on the introduction of a “living wage” did not take the form of a mature discussion but took a propaganda twist, majorly catalysed by the Nationalist Party, intended to shoot down any serious and concrete debate in this regard at the outset.
Inequality may also take the form of the government’s inability to protect the citizens or consumers through proper legislation in the many areas. There were a lot of examples recently within the telecoms-TV and the energy-gas sectors. The respective regulators/authorities, it absolutely must be ensured, are there to safeguard the rights and interests of the people and, where necessary, promptly intervene through new or amended legislation.
An example par excellence of a reactive response rather than proactive action by the government is the stand it took within the Malta Council for Economic and Social Development, which will be studying the state of inflation in the country and issue a report by not later than March.
The present Administration should establish an environment that allows the MCESD to take a more proactive stance rather than a reactive one.
Also, given the considerable investment in the establishment of several regulatory authorities, the government should have the political will to give such authorities more autonomy and power to safeguard the consumers by ensuring real competition in recently liberalised sectors.
The success of any government, including the present Administration, should be measured by whether the majority of the people feel connected to what is being said about the state of the economy. In my opinion, this is something clearly not happening now when disposable income is constantly under threat by increasing costs in fuel, gas and other products/services, including government-induced higher costs, threatening not only those so vulnerable in our society but even families who may be classified as “middle class”!