When vices lead to nation prosperity
The Fable of the Bees by Bernard Mandeville, published in 1723, is a good pointer to elucidate the affluence and its evil sisters that Malta has just experienced.
Mandeville was an Anglo-Dutch philosopher, po l it ica l economist and satirist. The Fable’s overall influence on the fields of ethics and economics is, perhaps, one of the greatest and most provocative of all early 18th century works.
In his General Theory, the famous economist Keynes, cited Mandeville as a source for his position in emphasising the positive effects of aggregate demand. This stood in opposition to classical economics which believed that production (aggregate supply) as the motor of economic growth. Reading another chapter styled The Grumbling Hive, Mandeville describes a bee community that thrives until the bees decide to live by honesty and virtue.
As they abandon their desire for personal gain, the economy of their hive collapses and they go on to live simple “virtuous” lives in a hollow tree. Mandeville’s theory, which boldly predicts that vices create social benefits, caused a scandal.
Mandeville implied that people were hypocrites for espousing rigorous ideas about virtue and vice while they failed to act according to those beliefs in their private lives. He observed that those preaching against vice had no qualms about benefiting from it in the form of their society’s overall wealth, which Mandeville saw as the cumulative result of individual vices such as owning luxury yachts, backhanding and avarice, which, in the long run, lawsuits for remediation benefited lawyers and the justice system.
Another paradox states that an increase in autonomous savings and thrift leads to a decrease in aggregate demand and thus a decrease in output which in turn will lower effective total savings. The riddle can be explained that total savings may fall because of individuals’ attempts to increase their saving, and, broadly speaking, that increase in saving may be harmful to an economy.
This theory has found detractors saying that exercising thrift may be good for an individual by enabling individuals to save for a “rainy day” and yet not be good for the economy as a whole. Naturally, this can be explained by analysing the place, and impact of increased savings in an economy. If a population decides to save more money at all income levels, then total revenues for companies will decline. Such drop in demand causes a contraction of output, giving employers and employees lower incomes.
So how can we apply Mandeville theories about economic success, reached during the extraordinary lAqwa Zmien, during which time greed and avarice in certain sectors turned a decade of deficits to unprecedented national surpluses?
The coup de grace was four Panama companies commissioned in 2014 from Nexia BT (an audit firm). This was a potent scoop posted in a blog by a journalist, who was eventually assassinated in a car bomb five years ago. In her blogs, Caruana Galizia revealed how two of these Panama structures belong to the chief of staff and Dr Konrad Mizzi – then health minister. There is no doubt that a number of occurrences such as the intimate relationship by Castille to a top businessman (currently under arrest) implicated to be the mastermind of the assignation plot to murder her. This, and other suspicions of greed, culminated in a flood of civil society protests that led to the voluntary resignation of Joseph Muscat as prime minister. May I apologise for this long introduction.
In my opinion, this needs to be read in the light of Malta running an economy, which prior to the onset of the pandemic, was the envy of all EU states. A multi- million euro property market has been built over the past 10 years and Malta has never seen such grandiose projects in the pipeline.
Instances occur when public land worth millions were granted at fire-sale prices to encourage promotion of upmarket tourism or to build an American university owed by an obscure Jordan building contractor. Such pseudo affluence came delicately shrouded as a vice (refer to Mandeville’s theory), including the erection of soulless concrete structures that sent the average rents payable sky high. Importation of foreign labour kept wages low. Embracing thousands of third country migrants who would assiduously clean our streets and serve in shops, hotels, restaurants and for a cheap tip deliver fast food orders on scooters. An artificial sense of promiscuous living made us blind, hoping the party will never stop, but it did. Not everything is doom and gloom, progress was made on a reform of a number of institutions that freed us from the Grey List, notwithstanding observers did not mince words saying inter alia that Malta “clearly lacks an overall strategy and coherent riskbased approach when it comes to integrity standards for government officials”.
On a positive note, it reported that for a country of Malta’s size, it had an impressive arsenal of public institutions involved in checks and balances, while the unemployment rate is low, all thanks to JobsPlus.