The last four decades have seen the prevalence of neoliberalism – the economic-political movement built on the mantra that the purpose of business is to “maximise shareholder value”. Political thinking is slowly, but surely, moving away from this direction. Neoliberalism has often caused immeasurable social and environmental destruction in many developed economies. Now, neoliberal economic orthodoxy must evolve to protect people’s livelihoods.
The political and economic focus needs to shift to stakeholder value related to broad issues of lives, livelihoods and learning. The pandemic has shown that many people, and indeed nations, cannot cope well with volatility, uncertainty, complexity and ambiguity. Business and political strategies need to be more people-centric if society is to prosper.
Malta’s economy, like that of many western countries, has performed well in the last four decades. But many have not benefitted from the economic growth. Today, social and economic disparities continue to become more pronounced. It is time to build an economic blueprint that promotes economic growth while building stronger social equity.
Our economic growth has become increasingly dependent on the construction industry, mass tourism, private consumption, foreign investment attracted by low-tax regimes, the sale of passports and the promotion of economic activities that some more prudent countries shun. All these sectors present risks that need to be managed by diversifying into new activities that give workers better prospects of long-term financial security.
The European Commission rightly argues that member states need to accelerate the transition to digital and green economic activities to bring about long-lasting positive effects. The Labour and Nationalist parties, not surprisingly, say that they will follow this strategy but, at the same time, fail to get involved in discussing how they will implement it.
Malta’s tax competitiveness is coming under growing threat as global political pressure builds up to stop international companies from avoiding the payment of their due taxes. Massive public investment is needed in all countries to build greener and more resilient economies. Political leaders who need to finance their public infrastructure investment resent what they perceive as the beggar-thy-neighbour tax strategies of some smaller nations.
We need to attract foreign investors who would be more impressed by our competitive advantages, in the form of better-trained and qualified workers, the offer of a pleasant working environment, reasonable living expenses, efficient legal and business processes and an unimpeachable reputation for good public governance.
All these desired competitive advantages must be underpinned by a culture that, so far, is still alien to mainstream political and business thinking. Arguing that never-ending property development is the motor that propels the Maltese economy is not a good starting point. The Dubaification of the Maltese economy is a crucial mistake and it needs to be corrected, even if much of the damage caused in the last few years is irreversible.
The tourism industry continues to aim for volume. Glitzy PR efforts try to hide this fallacious strategy by wrapping it with pious declarations on the importance of excellence as the bedrock of future planning.
So long as quality standards and their implementation remain mere declarations of intent, we will continue to underachieve and reap the minimum socioeconomic benefits from this critically important industry.
Our political leaders need to start defining a new Plan B for our economy. This plan would gradually lead to a departure from high-risk and volatile activities to more sustainable ones that offer better prospects for ordinary people’s livelihoods.