In 1971 Richard Kahn, perhaps the most acute and cultured interpreter of Keynes' thought, together with Joan Robinson, published an essay entitled The relationship between investment and unemployment. Given the topicality of the subject and also given for certain that our four horsemen of the apocalypse (Conte, Salvini, Di Maio and Toninelli) are not aware of it, today it is worth taking it up again to have a sure point of reference for assess the likelihood that the budget maneuver proposed by the Government, considered as a whole and not by individual components, achieves its main objectives: growth of youth employment and monetary GDP; reduction of the public debt stock; reduction of the spread between the German Bund and the Italian XNUMX-year BTPs.
The aforementioned essay also helps to evaluate the incessant utterances of the many improvised and often hilarious cronies of the government who, assuming the guise of macroeconomists, convey the idea of a maneuver with a Keynesian flavor that leaves many listeners astonished.
Taking Richard Kahn's analysis into account, it should be considered that the Italian vernacular on public investment "implies that roads or other public works such as high-speed railways, gas pipelines, subways, waste disposal plants, etc. are actually built and completed in certain times to allow the contractors to make the necessary investments suitable for completing the works". And here the first political and technical bottlenecks arise. The first concern the multi-declared grilline hostility to public works, never convincingly denied. The second, and more important, concerns the normative confusion that regulates the matter which favors the prevalence of administrative justice in this field and its paralyzing right of veto, frequently invoked by the grillini with the cry of "honesty honesty".
It should be added that the necessary regulatory revision that currently regulates public works will require politics, see the case of the Genoa bridge, not short political and technical times, thus placing for a long time in Stand by each potential contractor company and related investment decisions. This is a structural reform that is a precondition for any supposed multiplier effect, but neglected by the Keynesian beggars. The vaunted acceleration of the procedures therefore sounds like real fake news.
The clearly contradictory provisions between public expenditure and financial markets will prevent the achievement of the set objectives. In fact, every macroeconomist knows that companies do not have enough liquidity on hand to finance investments, to which must be added the all-Italian reluctance to finance investments with risk capital. It will therefore be necessary for each contractor company to apply for bank credit. The problem lies in the fact that, in the highly probable case that interest rates on government bonds do not fall rapidly and the perverse effects on bank assets cease, bank credit to businesses will shrink with inevitable effects on the growth of real GDP.
The famous self-defeating declaration of Salvinian memory "I don't care about the spread" it still sounds like the death knell for corporate investment decisions and related decisions to increase the number of employees. It is another fake news conveyed by Keynesian beggars when they assume that the reform of the Fornero law, in the presence of the effects on the financial markets of the maneuver itself, entails an automatic replacement of the elderly with the young unless business investment increases.
The most obvious and well-known condition for the increase in household consumption due to basic income to have an effect on consumer prices is that the supply of consumer goods is perfectly elastic, i.e. that there are no bottlenecks once the inventories, in the production of the same goods intended for household consumption. If this does not happen, an increase in prices and wages in monetary terms will follow. Price increase desired by the current government to reduce the weight of public debt as a percentage of monetary GDP.
At the end of this misadventure for Italy, and once the hope of the four horsemen of the apocalypse has come true that the public debt has remained entirely in Italian hands thanks to foreign disinvestments, they will realize only three economic policy options are needed certainly not of the Keynesian type, for the reduction in absolute value of the public debt stock: the consolidation of the same with which the payment of interest is recognized but not the repayment of the capital; a wealth tax on the movable and immovable wealth of Italian savers whose proceeds will be dedicated to the repurchase by the state treasury of a certain percentage of the public debt stock; or so as I wrote on FIRSTonline last July 2nd, all that remains is to appeal to the love of country to "give gold to the country once again". After all, today's sovereignists are imitating Mussolini.
Rating, Fitoussi: "solid Italy, too much noise"
GIOVANNI SERAFINI 50 minutes ago
“Tone down, stop threatening. Let the European Commission do your job and the Italian government yours, without mutual interference. A danger to Europe? This is nothing new: the danger has persisted since the time of the Greek crisis and if things are worse today it is not Italy's fault. As for the rating agencies, in my opinion they don't count for anything.' This is the judgment of Jean-Paul Fitoussi, French political scientist and economist.
The EU Commission and the Italian government are at loggerheads.
“They're both wrong. Too much noise, too many shouts, too many public scenes. This is not the way to do politics. If Europe has something to say, do it using spokesmen, sherpas, diplomatic circuits. Same on the other side. But in the end, let's be serious, where is the problem? No one will ever be able to convince me that a deficit of 2,4% of GDP instead of 2% is a catastrophe with momentous consequences. Let's go! Much Ado About Nothing , as they say in English: much ado about nothing».
So how do you explain the tightening up that has come about?
"It's a party game. Does the Commission want to assert its authority? But he chose badly because he cannot treat Italy like any other country. Italy is a strong country despite the crisis, it has resources, it is solid, and everyone knows that if it collapsed, all of Europe would collapse en bloc».
So Salvini and Di Maio are right to keep going straight?
«They do what they have to do, carry on the Def without much talk. They should stop threatening and vehemently replying: in this way they risk further increasing the spread, endangering the country's economy».
Was the Commission wrong?
“He missed a great opportunity to keep quiet. Furthermore, you don't have much credibility since you are represented by Jean-Claude Juncker, the king of tax evasion, winner of the first prize in this field ».
In your opinion, did French President Macron, an enemy of Salvini, force Commissioner Moscovici's hand?
"I do not believe. Moscovici is more a friend of Hollande than of Macron".
Are Salvini and Di Maio right when they say that the Commission has attacked the Italian people?
"For nothing. The Commission has attacked a project that violates the rules agreed by member countries, including Italy. The people have nothing to do with it."
What do you fear most for Italy at the moment?
«The confusion, the unpreparedness. There is a big unknown: we don't know if it is moving towards a liberal democracy or not. Many ambiguities remain."
How much can we hold with a spread above 300?
"I don't know, I don't have a crystal ball."
Is there a risk that Italian banks will collapse?
“The risk exists in theory. But the European banking system is systemic, if the Italian banks collapse, the European ones also collapse. So Europe has an interest in making Italian banks survive».
The article mentions fake news... but I read with sadness this sense of belonging in writing economic opinions... a bit like blinders that cloud the road, not perceiving the speed with which the world travels. In my opinion with today's absurdly greedy technology you should use it to your advantage, like oil in rusty joints and alas outdated economic visions.