A fundamental premise upon which the study of economics is based is that there is no such thing as a free lunch. Everything has a price and consequently everything comes at a cost.
In simple terms, the concept of opportunity cost is based on the premise that for every choice one makes, there are a multitude of forgone opportunities. Consequently, the true cost of one's choice in effect should be determined by the sum total of lost opportunities incurred.
This basic premise holds true not just in the study of economics but permeates every other aspect of life. The bottom line being that choices are necessary and just because the resources upon which they are based are finite, choices tend to be very difficult to make.
But politics is all about making choices, and although it is said that politics is the art of the possible, in actual fact often enough politicians tend to find themselves placed between a rock and a hard place having to make hard choices which will inevitably leave their mark on their ability to stay the course.
Given that we are just hours away from when the Honorable Minister of Finance sets out this government's blue-print for the year ahead in next Monday's budget speech, it may be opportune to remark that given the present state of affairs of the economy, the Honorable Minister will indeed have to steer the ship of state through treacherous waters, in the full knowledge that whatever choices he makes will necessarily leave behind casualties.
Admittedly we already know that the budget speech will not be the beginning and end all of the financial exercise of state. Already we know that come 1st January 2010 we will be faced with new and potentially (the new tariffs still seem to be a state secret kept under lock and key with the Malta Resources Authority) significantly higher water and electricity tariffs, something which more than likely will not be featuring in Minister Fenech's speech next Monday.
This notwithstanding however, the budget speech remains an important annual statement of intentions of the government of the day. It is perhaps the closest that our Parliament comes to a US styles State of the Union address. Consequently, through the budget debate, the country as a whole can gather a glimpse of how the Government of the day is carrying out its responsibilities towards its electors and, more importantly still, grasp a true understanding of the priorities being set. Indeed it is one thing for politicians to spend hours on end pumping up their supporters with propaganda, but quite another to come up with the necessary finances in the budget to translate words into actions.
Thus, come next Monday, the Gonzi administration will have to reveal its cards. In these times of a deep economic recession, the Gonzi administration will have to tell us the choices it has made, and consequently the economic cost thereof. Given the times, I trust that in spite of all the hype, the Gonzi administration will still manage to get its priorities right!
I hope that Prime Minister Gonzi and his Ministers have not completely detached themselves from the reality being experienced by the people and truly invest in the people of Malta and Gozo by devoting all their energy towards sustaining employment (the figures are clearly showing that unemployment is spiralling out of control), incentivising economic growth through productive economic activity, taking on the fight against excessive bureaucracy and suffocating red-tape, and above all ensuring that the government reigns in as much as possible the extent of government induced costs which costs are breaking the metaphoric backs of the middle class and venture capitalists. in Malta.
In all honesty, I do hope that come next Monday evening we all can breath a sigh of relief in the realisation that we are not being led by a political class that is chasing chimeras, devoting precious millions to unnecessary projects such as the new Parliamentary building planned to be cited in Freedom Square, whilst at the same time allowing the middle class to go to the cleaners.
In simple terms, the concept of opportunity cost is based on the premise that for every choice one makes, there are a multitude of forgone opportunities. Consequently, the true cost of one's choice in effect should be determined by the sum total of lost opportunities incurred.
This basic premise holds true not just in the study of economics but permeates every other aspect of life. The bottom line being that choices are necessary and just because the resources upon which they are based are finite, choices tend to be very difficult to make.
But politics is all about making choices, and although it is said that politics is the art of the possible, in actual fact often enough politicians tend to find themselves placed between a rock and a hard place having to make hard choices which will inevitably leave their mark on their ability to stay the course.
Given that we are just hours away from when the Honorable Minister of Finance sets out this government's blue-print for the year ahead in next Monday's budget speech, it may be opportune to remark that given the present state of affairs of the economy, the Honorable Minister will indeed have to steer the ship of state through treacherous waters, in the full knowledge that whatever choices he makes will necessarily leave behind casualties.
Admittedly we already know that the budget speech will not be the beginning and end all of the financial exercise of state. Already we know that come 1st January 2010 we will be faced with new and potentially (the new tariffs still seem to be a state secret kept under lock and key with the Malta Resources Authority) significantly higher water and electricity tariffs, something which more than likely will not be featuring in Minister Fenech's speech next Monday.
This notwithstanding however, the budget speech remains an important annual statement of intentions of the government of the day. It is perhaps the closest that our Parliament comes to a US styles State of the Union address. Consequently, through the budget debate, the country as a whole can gather a glimpse of how the Government of the day is carrying out its responsibilities towards its electors and, more importantly still, grasp a true understanding of the priorities being set. Indeed it is one thing for politicians to spend hours on end pumping up their supporters with propaganda, but quite another to come up with the necessary finances in the budget to translate words into actions.
Thus, come next Monday, the Gonzi administration will have to reveal its cards. In these times of a deep economic recession, the Gonzi administration will have to tell us the choices it has made, and consequently the economic cost thereof. Given the times, I trust that in spite of all the hype, the Gonzi administration will still manage to get its priorities right!
I hope that Prime Minister Gonzi and his Ministers have not completely detached themselves from the reality being experienced by the people and truly invest in the people of Malta and Gozo by devoting all their energy towards sustaining employment (the figures are clearly showing that unemployment is spiralling out of control), incentivising economic growth through productive economic activity, taking on the fight against excessive bureaucracy and suffocating red-tape, and above all ensuring that the government reigns in as much as possible the extent of government induced costs which costs are breaking the metaphoric backs of the middle class and venture capitalists. in Malta.
In all honesty, I do hope that come next Monday evening we all can breath a sigh of relief in the realisation that we are not being led by a political class that is chasing chimeras, devoting precious millions to unnecessary projects such as the new Parliamentary building planned to be cited in Freedom Square, whilst at the same time allowing the middle class to go to the cleaners.
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