Ideas walk on men's legs. And also the institutions. Without Mario Draghi, who he ruled the ECB in eight stormy years that have changed history, not only monetary, we would not have the same European Central Bank today. In fact, we wouldn't have it at all.
And we wouldn't even have the European Union itself. If already now in it sovereign impulses and social tensions tear the fabric of peace and well-being, solidarity and understanding finely woven in the post-war decades, let alone how that fabric would be torn to shreds in a region shaken by the end of the single currency and without the single market, torn apart by mega-devaluations, trade retaliation, protections for domestic industries, customs barriers and controls.
Tribalism would be the dominant sentiment and attitude, much more than it already is today. All of this is implied in the merit that is paid to Draghi for having saved the euro. This apocalyptic scenario, which we were very close to realizing, is the plastic representation of the affirmation of James Tobin, the Nobel prize-winning American economist: nothing is more political than money.
It is worth remembering this. Just as it is good to have clear in mind some teachings that Draghi has given us in word and deed, and with that impassive but equally empathetic expression which reminds many of the brilliant Buster Keaton. Here are three that have general significance and particular economic implications.
The first applies especially to young people: never give up. Unemployed kids and those who don't have stable or rewarding jobs come to mind. But also entrepreneurs facing the first bankruptcies or obstacles (which abound in Italy). The willpower that leads and spreads the progress of individual actors and economic systems.
The second applies especially to politics: transparency and candor are the keys that open the doors of credibility and consensus. They are indispensable for communicating credibly, and communication has become every central bank's third weapon, after rates and the money supply (intertwined with each other). We need to explain the how and why of economic policies, of reforms, of changes, and knowing how to do it well so that all those who want to understand understand and draw comfort and guide expectations and behaviors. Transparency and candor end up disarming the bitterest opponents.
The third is aimed at banks, but has a much wider range of application: the whole matters more than the sum of the individual parts. For example: low or even negative rates reduce the unit margins of credit intermediation. But without them bank balance sheets would have sunk under the weight of loans that are no longer honored, because it is with the support that the low cost of money gives to the economy that the banks have restored their income and balance sheet. And it is worth getting used to and learning to live with low rates, because they are destined to last a very long time: it is a paradigm shift.
Examples of further application of this third teaching? In the construction of Europe: if we wait until we have eliminated all the risks to proceed with integration, we do not exploit the reduction in risk that greater integration itself entails. In world trade: raising tariff barriers may be good for this or that sector, for this or that company, but it raises uncertainty about where it will end up and reduces the desire to invest, ending up hurting everyone.
Draghi proved to be a master in the art of the central banker, which requires great political skills even superior to the technical ones. Demonstrating how a great helmsman knows how to sail even with a torn sail. But in practicing that art he has provided lessons for all. Without ever giving the impression of wanting to impart it to anyone. Magister also in the method.
