Public intervention is not the right recipe for relaunching the economy or even for restoring companies. The speaker is not a Chicago Boy but a very serious and well-known industrial economist who in past years was also vice president of IRI, like Professor Riccardo Gallo, now President of the Business Observatory of the Engineering Faculty of La Sapienza University. This is true for Ilva and is even more true for Alitalia, for which Gallo's studies have shown that, even if the planes of the Italian company were always full, a balanced budget would remain a chimera, due to the unsustainable structure of costs that ballast Alitalia. Other than nationalisations: "Just throw public money at Alitalia: it has already gone bankrupt twice" argues Gallo with civil passion. But here is the interview he gave to FIRSTonline.
Professor Gallo, in the insert The Economy of the Corriere della Sera, You argued that "public intervention has never been a solution, neither as a state enterprise, nor for the growth of the economy, nor to restore company management, nor to look for buyers". Coming from you, who was vice president of IRI, it has the flavor of a rejection without ifs and buts of direct state intervention in the economy: is that right?
"Up The Economy of the Courier I carried out an analysis of two specific business cases and came to the discouraged conclusion that you mentioned. It would be correct to be cautious and not to generalize simplistically. And yet yes, that's right, I don't remember many cases of entrepreneurial relaunch and managerial restructuring of industrial companies by an official or public official. The best example, indeed an exception, is the one I experienced in Fidia Farmaceutici of Abano Terme (PD), declared bankrupt by the Court of Padua in December 1993 and brought back to performing status, through a bankruptcy arrangement approved by the Court of Appeal of Venice in February 1999, with interesting profits at the end of 1998. I think it was the first if not the only case of a parent company placed under commission and returning to the bonis archives of the Mise. It would be interesting to explore the reasons for its success. I think there were many: under the ashes of the bankruptcy at the end of 1993, there was still a strong flame of enterprise, a high propensity for research, the workforce was on average young (around 35 years old), it had a naturally international culture, the productivity was high, it was in most of the Veneto, I extraordinary commissioner set the example of abnegation, moderation, ambition for quality. But I repeat that is a rare example, even in my multiple professional experience”.
Why doesn't state intervention work either in the economy or in companies?
“Especially at Fidia Farmaceutici there was no money. You see, I believe that economic miracles are possible only if there are no financial resources, a bit like after the war. The direct intervention of the State and the unlimited availability (or at least perceived as such) poisons the enterprise, indeed etymologically enterprise is the opposite of financial comfort. Think of IRI in the 5s, under the presidency of Romano Prodi: it pumped an average of 11 trillion lire a year, its subsidiaries (especially Stet) made investments of XNUMX trillion lire a year, according to a spraying philosophy related industries, not only and not so much to respond to specific technological needs. The losses of the iron and steel industry and of Alitalia were already the same as today”.
Let's see what the consequences of his reasoning would be on the two cases of corporate crises - Ilva and Alitalia - which dominate the political and economic scene. For Ilva, Prime Minister Conte and ArcelorMittal talk about the need for a new industrial plan to reclaim, save and revitalize the Taranto plant: what should the new plan look like in order to work?
“I can't answer, because I don't know the company facts from the inside. But I did a simulation of the income statement and I found that when ArcelorMittal agreed to acquire Ilva, to hire 10 employees, to produce only up to 6 million tonnes a year against a production capacity well in excess of 10 million and to maintain this low capacity utilization for as long as necessary to carry out the environmental renovation, has taken into account an annual operating loss of 427 million euros. So an important effort, a sort of additional investment to the plant, with a view to remunerating it when fully operational. Well, ArcelorMittal should have been respected by the state and the public. Instead, everyone insulted her, the judiciary persecuted her. I believe that the Indian shareholders thought: but we are leaving Italy, what are we kidding?”
You have argued several times that Alitalia, due to the high cost of expenses - especially for personnel - which it has to bear, cannot achieve a balanced budget even if the seats on its planes are always 100% occupied. So what should the conclusion be? If there are no buyers, would it be better to bankrupt and liquidate the airline and redeploy the workers?
“Don't 'make it go bankrupt', because Alitalia has already gone bankrupt, twice. Rather, understanding that it could not be remedied and selling the assets (tangible and above all intangible, such as slots, rights, patents, trademarks) in the best and most transparent way, paying the creditors as little as possible and resorting to temporary income support instruments for the workers displaced from work. By now, on the other hand, the guiltily lost time, the pre-deduction loans granted by the State and guiltily accepted by the commissioners have destroyed every margin of satisfaction of the creditors. In short, a total disaster. It would be necessary to ascertain the political, ministerial and professional faults. I have always been intransigent about these things that touch public money".
