A homeless man sleeping on Liberace’s star

Back in the 1980s I had the opportunity of studying journalism at Stanford, in California. It was a truly beautiful place and a memorable experience. Back then, economically, California was doing well – San Jose and San Francisco were the fourth and sixth richest cities for young people in the United States.

When we think of California, what comes to mind for most people is Los Angeles. We all have images in our minds: the mansions in Beverly Hills, the golf clubs in Bel Air, the beach houses of Venice Beach, the high life of Santa Monica and the buzzing commercial downtown. It’s truly the land of opportunity for many young people.

On the tourist route, many flock to one place in particular – Hollywood Boulevard, home to the Chinese Theatre. This is where the Oscars take place and there is the renowned walk of fame with the names of the greatest actors and stars. 

This street is in parallel with the equally popular Sunset Boulevard, which needs little introduction. This is the glitz capital of the world where movie hits are launched and the Hollywood elite congregate. However, what struck me back then was the falsity of it all. Because a few blocks either way from the Chinese Theatre, you will find, is poverty and homelessness. Skid Row is a mere ten minutes away by car. People pushing carts with all their belongings in them, deprived of basic necessities and sleeping on sidewalks. Poverty is in abundance, including all that it brings with it – drugs, prostitution and abuse of all kinds. What was true in the 1980s is even truer today. The rapid inequality between people is stark with such extremes in such a small amount of space. It really is quite difficult to comprehend.

There are parallels with the system that has dominated public affairs this generation. Economic neoliberalism has reigned supreme for the past 30 years. Across the US, Europe and Malta, there was more space for private business to expand and for government to take a minimal role. Tired and often stagnant public enterprises were replaced by energetic and adaptable private businesses. The neoliberal capitalistic mantra that failures fail and winners win has been ruthless in cleaning up inefficiencies and sprucing up creative and innovative ways to develop our societies and communities. Poverty across the world has shrunk, economies of previously third-world countries are driving progress and advancement in technology and medicine is taking place at the speed of light.

However, it’s increasingly clear that the system is not working for everyone. There is a reality out there which is quite daunting: the inequalities within our own societies. These inequalities are having adverse effects in politics: across America and Europe the populist narrative being delivered is getting traction with those who are at the wrong end of today’s economies. These dangerous populist narratives are not just empty talk – as we have seen in the UK, once anger can no longer be contained it quickly is transmitted into the voting ballot, and everyone be damned with the consequences. It would be overly simplistic, and quite condescending of us, to simply say that those who voted Brexit were simply ignorant fools from ‘up North’. There are real issues of inequality, which populist politicians have cunningly paired with immigration. 

So what is the way forward? Is this the end of the Third Way as we know it? In my view, the economic progress achieved cannot be underestimated. However, policies, including those of European countries, should focus primarily on development in its different shapes. Social development, environmental development, human development and, yes, even economic development. A sustainable mix of those three has to be achieved if we want our societies to progress. One cannot be overly-influential on the other. The European Union’s Stability and Growth Pact must be reviewed to allow public investment to be made to create wealth and share it. We cannot talk about a Social Europe and then constrain governments, and hand over electorates to populist politicians castigating the EU for punishing citizens with austerity.

If that means policy-makers stepping in, so be it. Let us take a clear example of government intervention which has worked wonders in Malta: the free childcare scheme introduced two years ago. The government has paired with the private sector and financed free childcare for all those who are working or studying. This has been a winning solution for everyone: private childcare centres have more business, working parents are getting a break, more women are in the labour market, industry is better off, parents who wanted to return to education can do so and children are exposed to an educational environment in the crucial bracket of 0-3 years. The initiative is close to paying for itself. It’s a clear example of how the government can contribute to the free market economy with positive results.

And this is the problem with compartmentalised economic theories such as neoliberalism: the potential of a country is limited to what that theory subscribes to, not to what actually makes sense. 

When governments stand aside as inequalities increase in the name of the free market they are letting down their people. When extreme deregulation in the name of neoliberalism, under Bill Clinton and George W. Bush, were the order of the day in the US financial markets, the consequences were there for all to see. The government, and more specifically policy-makers, do have a role in a free-market environment and that is to push development and ensure equality and progress for all. The government has the obligation to create balanced free market structures which are fair, competition-based and sustainable. Regulation, when done right, can help businesses flourish and grow but also ensure there are safeguards for other forms of development to grow in parallel. The influence of business lobbies must be proportionate with other influences promoting social, environmental and moral development.

Earlier I mentioned that San Jose and San Francisco were the fourth and sixth richest places in the US for young people back in the 80s. Today, thanks to the technology industries, San Jose is number 1 and San Francisco is number 2. Back in the 1980s, the number one and number two spots were reserved for Flint (Michigan) and Detroit. They were, back then, what Silicon Valley is today. The free market took over and, in the name of neoliberalism, there was no fight-back. I urge you to go on Google Images and check what Flint or Detroit’s peripheries look like today. Make America Great Again? For the people in these cities, and many others in similar situations, it needs to be and it would be dangerous if we didn’t listen to them.

Evarist Bartolo is Minister of Education and Employment