The reading, albeit in large blocks rather than in an orderly sequence, of the beautiful volume edited by Luca Paolazzi and Mauro Sylos Labini ("Italy at the crossroads. Reform or decline: the lesson of successful countries". Luiss University Press) made me it offers the right to return to a statement of mine which, several years ago, at least made my audience prick up their ears and perhaps even their hair to someone. About the constant call for reforms, I exclaimed: Enough of this reformite! One of the conference organizers was so impressed by my statement and the few considerations with which I tried to justify it that he invited me to write a book on the subject! Since I have written very few books and always with the collaboration of colleagues or journalists, I was happy to decline the invitation, also repeated by letter, in the manner imposed by courtesy. In truth, I was also frightened by the clarity of my assertion which in the heat of the discussion had gone far beyond my true feeling.
In fact, I was not, nor am I, against reforms, but I am hostile to the constant and obsessive preaching of the same, to their invocation as a thaumaturgical solution to all our problems. All those who have seriously studied the reform processes where they have been implemented, in emerging and developed countries, have found that they cause ex post a reform fatigue for the consequent costs not only economic and social but also psychological. However, there is also one reform fear which manifests itself former before when the specter of the reform(s) begins to materialize and becomes the subject of debate, often acrimonious, in the media and of solitary individual torment.
The constant preaching of reforms, far from promoting their implementation, increases and spreads the reform fear which takes possession of all those who have something to lose from the reforms; the more incisive, broader and more numerous the reforms that are promised, brandished or threatened, the wider the audience of those who psychologically resist and oppose them. Should we conclude, then, that nobody wants reforms? Not at all. They are desired, requested, demanded by those who are not affected by them or even hope to obtain an advantage from them; that is, they must concern others, not us. Often, in order to "sell" them on the political market, we advocate reforms that do not cost money; even when they are free of charge for the public treasury, which rarely happens, they cost the individual and the groups affected if not in the wallet, at least in habits. There reform fear it is fed…
Those most thoughtful of our future as a nation point out that the reforms we need most are structural ones, those capable of changing the basic parameters of the economy and of society, of restoring productivity and competitiveness to our productive system, of re-establishing a better balance between the reasons for solidarity between men and those for human freedom. As soon as one gets away from the bombastic formulations, one realizes that it is difficult to predict how the concrete schemes to be implemented will reverberate on those affected, how long they will take to produce effects, whether the equilibrium they will generate will be tolerably stable or will require other reforms or at least various adjustments… The reform fear still increases…
A schizophrenic attitude is then determined: there is constant talk and in a variety of contexts of structural reforms, but in concrete terms there is haste to set up commissions, organize conferences, thunder in debates, participate in talk Show television and various out on the network. Thus the danger is exorcised and the conclusion is often reached that the costs are high, the benefits uncertain, the times not ripe, so it is good to postpone their implementation…
One last consideration on reform fear. At the beginning of the 900th century, the reforms were the fixation of the socialists and the popular who, albeit from different political-ideological perspectives, had concerns and objectives of a social nature, while good administration and the liberation of the economy from the presence of the state were the goals which the right aspired. Today reforms have become the mantra of everyone, both on the right and on the left, with the result that the reform fear it does not vanish with the alternation of majorities and governments, indeed the reformist catchphrase continues with revisions, re-examination and postponements…
2. Through drawings and bills, not easy to understand for the heres and people, reforms (often incomplete) are passed in the Italian Parliament, but sometimes the effects of some legislature differ…; thus the reform fear fades away and gives way to the self-gratifying feeling that the duty to reform has been fulfilled, that a law has been passed, albeit one that has been postponed in its implementation dead father or passed without administrative cover, let alone the budgetary one of usually limited to one or two exercises. As soon as the economic facts, the social organizations, the international bodies that monitor us incessantly and the usual zealots reopen the dossier of structural reforms there are cries like: "We have already given, now it's the turn of others!" Instead, it still falls to them either because they are the weakest who always pay or because they are the smartest who continue to evade obligations or defer commitments in the long term, rather than honoring them hic and nunc.
Italians, as we know, were shaped by the Counter-Reformation, not by the Protestant Reformation; therefore for them orthodoxy and conservation are at a premium. So much so that as soon as a reform is launched, its defects are sought and found above all in terms of equity. So to make one's own ideal of justice in the provision come true de quo agitur everything and even more is done to counter-reform or at least to make the original reform less logical, more responsive to one's own interests, ultimately more difficult to justify and manage. The Government that emerges from the elections of 24-25 February 2012 – if one emerges… – will be mainly occupied with redoing what the Monti Government has done; for what reason? For the simple reason that the "strange majority" quickly forgot about the votes of confidence granted on the various measures and promised during the electoral campaign repeals, refunds and reductions in tax rates, as well as amnesties of graves and building amnesties. Even Sen. Monti indulged in some promises of tax relief during the legislature. All oblivious to the conditions of public finance, the low potential growth of GDP and the proud frown of the European Union? It seems so, in order to respect the script of the counter-reform…
So is it true that governing Italians is not difficult but useless? Perhaps yes, but for the opposite reason to the one commonly accepted: It is the rulers who do everything to ensure that the Italians, tickled in their own selfishness, close themselves in the hedgehog defense of their respective positions and of the "particular". In my opinion, the population cannot be kept under the nightmare of structural reforms for decades, which the whole intellectual class of political scientists, economists and sociologists, often with great condescension concocts and recommends from the most varied forums. Reforms, especially structural reforms, must be decided and implemented quickly. Nor can they be achieved all together, for reasons ranging from the administrative capacity to manage them to that of the population which is involved and which must adapt its behaviour. It is desirable that reforms that affect the interests of several groups are chosen, in order to avoid criticism of discrimination against only one; at the same time, however, if the interests involved are substantial, it must be avoided that their bearers coalesce and make the path of reform even more difficult. However, except in cases of gross errors, it is necessary to wait at least for the first results of the changes introduced, before thinking about reforming the reforms!
We can ask ourselves: When is the best moment to usher in a season of structural reforms? After a shock. See Germany with the unification after the fall of the GDR, Poland with the collapse of the communist regime, Chile with the end of the Pinochet dictatorship. With the liberation of 1945, Italy largely eliminated the corporative and autarkic superstructure, embraced the liberalization of international trade, rebuilt the country and transformed its economy from agricultural to industrial. Subsequently, it has had only inflationary and balance of payments cycles, from which it emerged with credit crunches and exchange rate devaluations or depreciations until the adoption of the euro. Another shock could have been terrorism with its years of lead, but it worked the other way around, that is, it led to aggravating the existing imbalances in public finance to keep unions and workers on this side of the fence through public spending. Entry into the Eurozone could have been a shock to make our economy competitive without the manipulation of the exchange rate, but this has not happened. On the contrary, the belief has developed that the single currency confers a collective guarantee on our public debt (in addition to the Greek, Portuguese, etc.), so much so that it is exchanged or issued under conditions not substantially different from that of "virtuous" Germany . From here arose the conviction that what had been done implicitly and erroneously by the markets could be voluntarily replicated through the communitarization, in whole or in part, of the sovereign debts of the Eurozone through the Eurobonds.
3. There is no doubt that Italy has been in a state of substantial stagnation for fifteen years, that both labor and total factor productivity is unsatisfactory or negative is indisputable, that unemployment, especially youth unemployment, is reaching alarming levels, although inferior to the Spanish ones, it is undeniable. Everyone invokes growth, but this does not materialize, like rain, just because it is invoked. The cure once again recommended is reform. Two economists of the International Monetary Fund write in the conclusions of their work: «Italy needs far-reaching reforms (comprehensive local public services, barriers to entry, investment in productive infrastructure. Obviously, for work the emphasis is on further flexibility, on bargaining at company level, on the preference for an increase in employment over that of wages, active policies in the labor market, especially for women; for taxation it is recommended to shift the burden from work and business to consumption. Is something missing from this merciless list? Perhaps yes, the improvement of human capital which, barring oversights on my part, is not given great importance, even if we mention our modest performance in the PISA survey According to the simulations made by Lusinyan and Muir, the reforms currently underway in Italy could potentially increase real GDP by 53/4% in the next five years and by 101/2% in the long term. Even taking these exercises with all caution, it cannot be denied that, in the light of the inconclusive electoral round of February 24-25, if we go back on what has been done, the advantages in terms of GDP shown by the simulations will remain on paper, not to the story…
Italy, together with a large part of old Europe, needs to go back to having minimal growth – let's say on average between 1 and 1,5% – if it does not want to retreat too quickly in the concert of nations. However, we can look again, as we did a few decades ago, at growth as a deus ex machina that solves every Euripidean tragedy?
The answer could be negative if one follows Robert Gordon, according to whom growth in the last 250 years could be a unique episode in the history of humanity, since in this long period it was the consequence of three industrial revolutions: the first drew the boost from steam boilers, cotton spinning, and railroads; the second was powered by electricity, an internal combustion engine and running water in the house; the third has relied on computers and the Internet, but with an impact on productivity that has weakened significantly in the last eight years. The growth of production per capita in the USA it has been slowing down since the middle of the last century and due to the fall in productivity it will continue to slow down. For the first two revolutions the effects lasted for at least 100 years. The third does not seem to have the same propulsive capacity and, moreover, six adverse winds are blowing in the American economy, but also in other developed countries like ours: a) the end of the demographic dividend; b) growing inequality; c) the equalization of factor prices, as a result of globalization and the Internet; d) educational problems resulting from the rising costs of university education and the low performance of high school students; e) regulation to protect the environment and taxation; f) consumer and government over-indebtedness.
Unlike Gordon, Krugman is not pessimistic about the growth potential that could be triggered, for example, by artificial intelligence, but he is concerned about the distributive effects that it could generate. Can we assume that the two positions regarding the potential of the third industrial revolution to fuel growth tend to balance each other out? Certainly yes, until the energy chapter is taken into consideration… According to Tim Morgan,
globalization that has separated the places of production from those of consumption, the difficulty of obtaining reliable data to interpret reality and the dynamics of energy are preparing the perfect storm and putting an end to growth. There is little to add on finance, considering that it is at the origin of the Great Recession which is extending over time beyond any initial negative forecast. Nor can we delve into the complexity of globalization or the everlasting informative inadequacy of the data that is collected. On energy, however, it must be said that the EROEI, i.e. the energy obtained over that used, which initially in Saudi Arabia was in the ratio of over 100 to 1, today for the most part shale oil and gas (shale hydrocarbons) is 5 to 1 and for the tar sands (tar sands) by 3 to 1. The United States is trying to regain its energy independence by drilling horizontally for gas from shale. This raises not only environmental but also economic problems; it is calculated that if Americans depended entirely on the shale for hydrocarbons, energy costs would be equal to 16,7% of GDP, against 2,4% in 1990 (EROEI estimated at 40:1). Does the price of energy, which gave us two shocks in the 70s, have other unpleasant surprises in store for growth and well-being? Fingers remain crossed!
