In my previous post on FIRSTonline on November 3rd (“Consolidate the public debt? No thank you"), I retraced the avenue of memories to support the inappropriateness of adopting policies for the administrative management of the public debt in order to lengthen its maturities and to reduce the burden of interest payable which weighs on the Italian public budget (in 2010, 4,5 % of GDP in Italy, 2,4% in Germany, 2,5% in France, 2,4% in the euro area excluding Italy, as well as in the EU area again excluding Italy).
The same avenue of recollections can be taken again (without going as far as 1926, the year of the consolidation of the public debt) to rediscover ideas and suggestions which, suitably adapted to today's problems, allow once again not to venture down the road of administrative management of the public debt, but having instead the sole objective of bringing the spread of our ten-year BTPs with the German Bund back below the threshold of fifty basis points (as it was between November 1997 and July 2008, the year in which the public debt began to rise from 103% in the previous year to 120% today) Value of the spread which, as in the past, would place the Italian public debt in the safety zone in the eyes of the international financial markets.
Like today, the years 1992 and 1993 show that just moments before the precipice, the governments in office know how to take the extraordinary measures to avoid sinking into the abyss. On the avenue of remembrances we thus encounter effective measures, which avoided the ravine, of the type which today, suitably adapted to the present, could be re-proposed. Think about:
a) the taxation of social security contributions (in 2010 equal to 14% of GDP in Italy, 17% in Germany, 18% in France, 16% in the euro area excluding Italy, 14% in the entire EU area excluding Italy) to reduce labor costs and give new impetus to exports and with them to GDP growth. Today such a measure could be adopted without burdens for the public budget by financing the reduction in labor costs with all the proceeds from the reintroduction of the ICI on first homes (abandoning the suggestive hypothesis of the patrimonial property for which we do not have the administrative tools avoid the fiasco) accompanied by a new increase in VAT. As known, since the VAT is refunded to exports, such a maneuver is equivalent to a real devaluation. It is reasonable that the effects of the VAT increase on consumer prices are offset by lower labor costs and made more difficult to pass on to prices by stagnant demand;
b) the transformation of the time (1992) with the law decree of the economic public entities together with the Andreatta Van Miert agreement (1993) on the debts of IRI spa, suggest that analogous provisions can be extended to the case of companies owned by local authorities to reduce local government debt (approximately 6% of gross general government debt equivalent to 7% of GDP). It is a matter of making the companies owned by the local administrations subject to the budget constraint, which today has dissolved due to the fact that the public body constitutes the debtor guarantor of last resort and therefore allows the plethora of directors who sit on the CDA, any type of moral hazard. In analogy with the past, the steps to be taken by decree law could be the following: 1) prohibition of setting up new spas owned by local authorities and obligation for the local authorities themselves who hold shareholdings (Regions, Provinces and Municipalities, Chambers of Commerce, etc. . ) to confer to a special holding spa (with no more than three directors) the shares held in the investee companies and the related debts charged to the conferring body, which should retain no more than 5% of the capital of the holding company for not be, pursuant to the civil code, the shareholder with unlimited liability for the debts of the holding company itself. The number of directors of companies owned by the holding companies should be reduced to three components also to reduce the useless costs of politics; 2) the holding companies (like IRI in the XNUMXs) will have to dispose of the equity investments held to pay any debt of the investee companies and placed at their expense. At the end of the process, the holding company should be placed in liquidation (like the old Iri spa) and the proceeds, debts paid, transferred to the conferring local body with reduction of the local body's stability pact;
c) cherchez l'argent. As judges Falcone and Borsellino taught us in the early XNUMXs, instead of pursuing the individual criminal, it is better to pursue the money that leads to the criminal himself. Similarly, it is easier to search financial intermediaries of all kinds for the evader's funds that lead to the evader. The banking and financial industry operates on technological platforms that connect all institutions in real time. It would be sufficient to inform the Revenue Agency of the average monthly movements of each customer operated in the last two years (or other indicator constructed for this purpose) to verify the adequacy of the movements with the income reported by the customer. The accounts held abroad would remain uncommunicated but the return of capital from Switzerland should benefit from agreements such as those stipulated between Switzerland and other countries more attentive to containing tax evasion;
d) finally, continuing in the spirit of the government provisions of the early XNUMXs which concerned pensions, it now seems reasonable to renounce old-age pensions with beneficial effects on public finances. Many have already proposed it and the oppositions are badly understood.
As can be seen from having retraced the avenue of memories, the control of the public debt has never been a technical problem, but an exquisitely political one, and it would not even require the humiliating commissioning of Italy by "enemy banners" who, as it is right either, they serve their interests in the absence of a Community policy.
