The choice of an economic policy based on the increase of the deficit made by the Government with the update of the Def is already causing very negative consequences on the markets with a rise in the spread over 270 points it's a collapse of stock market prices by more than 2,5%. Especially strongly turned out the credibility of Economy Minister Tria was undermined, on whose firmness many bet in order to curb the most bizarre requests of the two consuls Di Maio and Salvini. But the real question that must be answered is: is it really a maneuver capable of making the Italian economy grow more by restoring "confidence, energy, hope and work" to the population, as Salvini said, or there is the strong likelihood that the increase in public debt spending could bring about a halt in the current growth rate, albeit modest and thus make it more difficult to find a job?
The maneuver of the people - as the grillini say - instead of spreading the right to happiness risks turning into a nightmare, starting with the hopes of young people who are already struggling to find a job suited to their aspirations. And this not so much and not just because our budget risks being rejected in Brussels, but for the simple reason that public expenditure in itself does not create development, especially if it is current expenditure and not investment.
Unfortunately, the economy doesn't work by handing out borrowed money. On the contrary, in this case the weight of the debts will crush, as has already happened for many years in Italy, the possibilities of using the money in a more productive way. In short exchange the increase in welfare or pension expenditure for investments in the future (as Casaleggio said) it's a big mistake which, as often happens, reality will painfully refute. The truth is that too much debt means impoverishment, as not only classical economists know, but all people with common sense. And it's not so much a matter of discussing whether with a 2,4% deficit the debt will be reduced to less.
It is not a question of decimals, but of the overall sign of the manoeuvre, of its so-to-speak ideological setting, of its conceptual paucity which is based on a largely erroneous analysis of Italy's real evils and therefore leads to recipes capable only of aggravating the evil and not to cure it. In addition, it is really annoying to hear the concert of lies with which the statements of the exponents of this government are peppered. For example, it is said that the 10 billion provided for the basic income (and the basic pension) should eliminate poverty for 6,5 million Italians. But doing a simple division we realize that the 10 billion would make it possible to give only 128 euros per month per person. A sum not sufficient to heal the scourge of poverty.
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But to answer the basic question, namely whether our country will be able to grow more with this maneuver, a few summary considerations are enough. First you must understand that Italy's main problem is the low productivity of the whole system. And this is linked not only to low labor productivity (except in exporting industries), but also to the overall productivity of other production factors ranging from government and public administration efficiency to justice, universities, vocational training, and finally up to the lack of infrastructure. None of these problems are addressed in the Def and, apparently, in the budget law that will follow within three weeks.
- assistance payments which, even in a civilized country, are a must, should be closely linked to professional retraining and the active search for a new job. None of this is expected because the reform of the employment centers will be very difficult since they depend on the Regions like professional training. There pension reform will cause an imbalance in the already precarious accounts of our social security with the risk that active workers, ie the younger ones, will have to be called to plug the hole with an increase in taxes and contributions. And this will certainly not facilitate the creation of new jobs. We could also continue with other measures adopted or envisaged by this government, such as the dignity decree or the Sunday closure of shopping centers which are all aimed at hindering businesses and the business world in general.
But a key point to understand the demagogic folly of these choices is represented by underestimation of the situation of banks and financial markets. The increase in interest rates (the spread means this) affects businesses and consumers as well as obviously the budget of our state, which is one of the largest debtors in the world. The value of the shares of the banks is collapsing on the stock market because the decline in the value of the Treasury securities they hold causes losses on their balance sheets, while it becomes more difficult for them to raise money on international markets. The consequence is that banks will be forced to ration credit to our businesses and make it pay more. Now our production system, based on small businesses, is historically dependent on banks and cannot go ahead without credit, and will therefore not only have to reduce investment, but also slow down production activity.
And this will happen just as economic activity is already showing clear signs of a slowdown caused by the international situation (new duties and an increase in the price of oil) but also by the uncertainty of our internal situation. It would therefore have been necessary to support our production and focus everything on increasing the efficiency of the system by curing poverty not with subsidies, but with the creation of new jobs.
Instead, what appears to be a shortcut has been chosen, but which instead risks leading to a dead end. Other than "maneuver of the people". Here more debt is loaded on the shoulders of the people, and above all of the young who will try not to pay for it by fleeing this country. Furthermore, the savings of the Italians are put at serious risk, as they are already suffering losses today due to the drop in shares and bonds, but who in the future can also expect more drastic measures against them, when the current rulers, to try to repair the damages that they are doing, they will be forced to turn to the reservoir of private savings which is worth 7-8 trillion euros between real estate and securities. A nice bite to whet the appetite of our demagogues, improvised statesmen.
