One of the aims of any government in this country in relation to the economy is to stimulate upward economic mobility. This would mean that persons would be able to move up the economic ladder through increased income, earnings and wealth.
This can happen as a consequence of age. The older we get, the higher our income. Then when we reach retirement age, income would decrease but, very often, our net worth (our wealth) would be at its highest. On the other hand, there can be barriers to such mobility and some segments of the population become trapped in a state of poverty.
One can mention two policies that we have had in this country to stimulate economic mobility. First, there have been the measures taken by successive governments to stimulate home ownership. This would not have increased one’s income but would have increased one’s wealth. I was once told by a very respected banker (of what one would call the old school) that investment in one’s home is probably the biggest investment most people would have made.
This is why in this country we cannot allow property speculators to fleece young couples and thereby prevent them from getting on to the property ladder. The last years were ideal for such couples to buy property with low interest rates and banks offering home loans with a repayment period extending even to beyond 30 years. This should have made the monthly repayments very affordable.
However, property speculators took advantage of this and raised property prices at a faster pace than incomes, with the result that it became unaffordable for those who wanted to buy their own home without the support of their family. This thwarted any public policy aimed at stimulating home ownership and encouraging economic mobility.
Is this ‘Maltese Dream’ threatened in any way? The answer is an unqualified yes
The second policy aimed at stimulating economic mobility has been encouraging young people to move to tertiary education as this created increased opportunities for better paid jobs.
Over the years, it has become easier for young people to attend university or MCAST to obtain tertiary level or vocational qualifications: university tuition fees were removed some 50 years ago and the stipends system was introduced in the late 1980s. In the meantime, students have had an ever-increasing variety of educational courses to choose from. Providing these opportunities to lower income families was essential as having one’s children going through tertiary education does not only have a direct cost but also an opportunity cost. What could that young person have earned and contributed to the family’s income had one found oneself a job instead of going to university or MCAST?
There have been other policies that have stimulated upward mobility such as free health services, children’s allowances, subsidies to non-working mothers, free childcare centres and incentivising foreign investment that creates jobs.
Up to a certain extent, this represented ‘the Maltese Dream’ (to borrow the term from the American context). We sought to create a society where anyone who works hard can achieve economic success. And this in turn led to increased social mobility, increased occupational mobility and even increased geographic mobility.
However, is this ‘Maltese Dream’ threatened in any way? The answer is an unqualified yes. One threat is a belief which has started to creep in, that one can increase one’s income, earnings and wealth not thanks to sheer hard work but through speculation, cheating on one’s clients and work colleagues, backhanders and the like. Another threat is a weakening of our system of law and order that discourages investors from investing in this country, thereby causing a shrinkage of job opportunities.
Moreover, we still need to research thoroughly income inequality and poverty. We need to understand whether income inequality is increasing. We also need to understand what living in poverty in 2021 is all about, using measurements applicable to today’s realities. We need to understand whether we have an increase in the general well-being of the population, irrespective of the growth in people’s incomes and the growth in the gross domestic product.
As such, we cannot take economic mobility for granted as we need to ensure that equality of opportunity (which is the fundamental element underpinning such mobility) really exists in this country.