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Network News • 25-01-2024

Dreaming of a true democracy - power to the Polis

Author: George Mangion - Senior Partner at PKF Malta
Published on Business Today: 25th January 2024


Going through the annals of history, we meet famous philosophers that have left us beads of wisdom for mankind to emulate and revere. In ancient times, one cannot miss the name Solon who stands as a beacon of wisdom and justice.

This Greek philosopher, poet, and lawmaker of the 6th century BC Athens laid the groundwork for many principles that continue to shape modern society. Among his enduring contributions, Solon's ideas on democracy, the rule of law, and his insights into economic and moral issues remain remarkably relevant in our contemporary world.

This article delves into how Solon's legacy resonates with the challenges and complexities of our times. At a time, when Athens was marred by social inequality, corruption, nepotism, avarice and political strife, Solon devised a set of constitutional reforms that aimed to establish a fairer system of governance. His advice laid the foundation for Athenian democracy, which has since inspired democratic movements worldwide.

Back to modern times, where power in most countries rests in the elected party (or a coalition of parties) for the agreed electoral term. Rogue administrators abuse of democratic powers and breed insipid arrogance. Some democracies have important landmarks consisting of mid-term elections eg the USA, but this system is not popular in Europe.

Whether, it is a full five years or mid-term of two years, there is everything on the legislature to guide lawmakers in truly respecting desires of the polis. The concept that power rests with the people seems to morph into thin air, once a few elected candidates secure power in parliament.

Moreover, contemporary democracies face their own set of challenges. Issues like voter suppression, misinformation, populism and polarization have raised questions about the health and sustainability of democratic systems. Solon's emphasis on broad-based participation and the rule of law serves as a reminder of the need for inclusivity and accountability in modern democracies.

His commitment to the rule of law was instrumental in restoring order to Athens. He introduced a legal code that treated all citizens equally, regardless of their wealth or social status. This noble principle remains at the heart of modern legal systems, where justice is supposed to be blind and impartial. Gone are the abuses of power where elected cabinet members lord over state assets and abusively share some of them among nieces and nephews not to mention phantom jobs.

Why did ERA approve building permits over sensitive areas eg 27 apartments and underlying garages close to Ggantija - a world heritage site in Gozo? The executive and police have to act impartially and without looking at faces to protect citizens in their enjoyment of civil liberties, serenity and the rule of law.

Malta is a young democracy, so achieving this sounds Utopian. Issues like corruption, sleaze, political interference, and the erosion of civil liberties crack the foundations of justice and scares away multi-national investment. Solon's unwavering dedication to upholding the law underscores the importance of an independent judiciary and the need to protect the rule of law from undue influence and lack of resources.

Solon's economic reforms in Athens sought to alleviate the suffering of the poor and reduce disparities between the rich and the impoverished. He cancelled debts, abolished debt slavery, and implemented measures to prevent the concentration of wealth in the hands of a few in the Senate. Solon recognized that a just society could not flourish without economic fairness and good governance (undue enrichment must stop).

In modern times, economic inequality is a pressing issue. Income disparities, access to good education, and concentration of wealth in a few select families continue to challenge our society. Can we now consider how locally, a hidden tax has eroded the value of money and no amount of COLA instalments (which are again taxed) can fight the soaring cost of living. There are several ways in which inflation can be labelled as a hidden tax.

To start with the obvious symptoms are a reduced Purchasing Power. It can be seen as a silent tax; because the plebs effectively have to spend more to maintain the previous standard of living. But locally the finance minister went shouting over the roof tops boasting that no new taxes were loaded in the fancy red budget box. Banks are the bodies churning out super profits this year: while some of them do not share the bounty by increasing rates for depositors nor higher dividends to shareholders.

As expected, inflation erodes the real value of their savings. This can be especially problematic for retirees or people on fixed incomes and all low-wage income earners. They struggle to maintain a decent standard of living. Today, the OECD claims that 94 per cent of workers in the world’s supply chains are in low-wage, insecure and often unsafe work. Undoubtedly, the harsh reality is that the global economy is mired in a model of self-destruction, with the lives and livelihoods of working families in the eye of the storm.

The topic needs closer examination amid recent warnings from the International Monetary Fund that AI will disrupt 40% of jobs and increase inequality and redundancies. Malta badly needs transformational leaders who can fix the structural flaws in today’s model. This yearns for a new economic model.

A lost opportunity in the 2024 budget not to introduce a selective cut in indirect taxes and give tax credits to food importers to nip the problem in the bud. Taxing profits registered by supermarkets at a 35% corporate tax is the highest rate charged in the world. It does not encourage them to slash prices. A mere €125 monthly allowance offered to small shop keepers in order for them to offer a blanket 15% cut in a list of products - does not cut it.

One recommends that the government starts to strengthen the consumer protection agency MCCAA. It can recruit from other government agencies, a higher cohort of technical officers able to carry out an analysis of business margins on essential products and services to determine whether such margins are reasonable, when compared to what they were in pre-crisis times.

Author: George Mangion - Senior Partner at PKF Malta
Published on Business Today: 25th January 2024





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