"The public budget is determined by law, while the GDP does not grow by decree because it depends on a complex series of factors". Yesterday, Economy Minister Tremonti repeated his classic position on the issue of growth which, while not being wrong from a formal point of view, lends itself to a series of misunderstandings and becomes completely wrong if it is experienced by the Government and by political forces as an impossibility to really do something that is needed for the growth of the economy.
The position of the President of the Republic, Giorgio Napolitano, is quite different. Yesterday he returned to lash out at the political forces, and in particular those of the majority, so that "courageous, coherent and shared choices" are adopted, precisely those which would be needed "in the face of the seriousness of the problems and the challenges that await us”. In short, it takes a snap, "a profound turning point if only for national survival instinct".
It seems that the Government refuses to analyze the signals that the markets are sending out and which are instead very eloquent. President Emeritus Carlo A. Ciampi deciphered them in a brief statement in which he underlined that, in order to make the recently approved budget adjustment maneuver credible, measures are needed to stimulate growth. Even if they do not have immediate effect, however, it is precisely these measures that reassure investors about the future of the country and its effective ability to repay its debts.
The Government, therefore, with the constructive contribution of the most responsible oppositions, can and indeed must put in place a series of reforms capable of raising Italy's growth potential, as Governor Draghi said in his last Final Remarks.
In the first place, it is not at all true that the ways in which the law to bring the public deficit under control and bring it to zero in 2014 have no effect on growth. In fact, it is one thing to break even by increasing taxes, it is another thing to do it by cutting expenses, especially unproductive ones. Sen. Baldassarri, president of the Senate Finance Commission, has been trying to explain for years the deception of the cuts made on trend expenditure, ie on expenditure forecasts for future years which are always much higher than current ones. The cuts therefore consist in slightly reducing the rate of growth of expenses, for example by reducing it from 10% to 5%: but it is always an increase. Instead, as is done in all companies and also in families, cutting means spending less than what is being spent now. But evidently the political-bureaucratic forces that thrive on the intermediation of public money are opposed to this simple truth and prefer to continue making fun of the Italians by saying that many cuts are being made which instead are only on paper and therefore do not affect their role and their power.
The proof lies in the story of a rule originally contained in the Tremonti decree approved two weeks ago, which required Roman ministries to cut expenses by 5% compared to 2009. Baldassarri hailed the rule as a first true turnaround and indeed proposed to extend it to local authorities. The result? the rule has been canceled and we will continue with the cuts on the trend and therefore with the increases in taxes that follow the continuous increases in spending. “In recent years – Baldassarri says – we have made seven/eight maneuvers to cut expenses but the results are not visible. In healthcare, for example, expenditure for the purchase of goods and services has increased by 50% in the same period of time. There is
maybe it was a serious epidemic in Italy even if we didn't realize it?
So you have to really cut costs. It is what in the current controversy passes under the heading "costs of politics". But it's not a question of focusing attention only on the salaries of honorable Members or on the cost of the Montecitorio canteen. We need to affect the 80 trillion euro of goods and services, the costs of bureaucracy and incentives for businesses which are often just useless gifts.
Therefore, with the law on the public budget, much can be done to favor or to frustrate our growth potential. But there is a second line of interventions that depend on the laws and therefore on the will of the political forces. Suffice it to mention the privatizations and liberalisations, the reform of the labor market, the effective streamlining of the bureaucracy, done by revising office by office all the baroque procedures existing today and not limiting oneself to striking the "slackers" as Minister Brunetta does, and finally , the most important reform of all, with the reduction of the tax burden on labor and on companies that invest, shifting it to tax evaders and also to indirect taxes.
So the laws, i.e. the decisions of the policy, can do a lot for development and can restore that trust on the part of investors which today has been lacking above all due to the inaction of the Government and its obstinacy in not wanting to address the knots truths of the Italian system, while we continue to play around (arguing bitterly) on ridiculous issues such as moving ministries to the North, or changing the name of the PDL, or worse, dealing with the long process or other issues that are certainly not priorities for the survival of the country.
