Monti's bitter medicine has thrown many Italians into despair: everyone complains of too many taxes, many believe that there is a lack of sufficient equity in the distribution of sacrifices, still others complain that adequate measures have not been taken to resume a path of development. In short, one wonders, have we hit rock bottom and can we hope to see some light again as soon as possible?
Pessimism is increased on the one hand by Mrs. Merkel's deafness to the need to balance the policy of rigor with expansionary measures, and on the other by the data that is beginning to arrive from the various research centers on the recession in which we are plunged.
Just today, Confindustria predicted a 2012% drop in GDP in 1,6, an increase in unemployment, and a tax burden destined to rise to 54%. To increase the confusion there are then the demagogic outbursts of the various extremisms of the right and left, that is the uproar of the League which tries to make us forget that it was precisely the Government to which it belonged that pushed us to the brink of the abyss, and the movementism by Di Pietro and Fiom who refuse to discuss any measure aimed at increasing productivity.
Of course, Monti's maneuver is not free from defects and gaps that need to be examined without prejudice. To do this, we need to carefully examine the underlying reasons for the Government's choices and therefore understand how we can move quickly to a second phase, capable of overcoming the recession and restoring reasonable job and income prospects to Italians. The Government had to act on taxes because we were close to the breaking point after which we could no longer place our Bots on the market.
Maneuvers based mainly on cuts are in fact not credible given that investors are well aware that after more than 10 years of more or less linear cuts, public spending has continued to rise quietly, reaching 800 billion euros, more than 50% of GDP. Having completely lost credibility, it was therefore necessary to adopt certain measures. And taxes give a revenue that can be estimated with a good approximation.
Monti's objective was therefore to avoid the "bankruptcy" of the state and obtain within a reasonable timeframe, a drop in interest rates towards levels more similar to those of other European countries. He reassures that the general manager of the Bank of Italy Fabrizio Saccomanni has shown reasonable optimism on the possibility of achieving such a result. After all, if a drop in interest rates is not achieved, no maneuver to relaunch the economy will be able to succeed.
However, many say that the maneuver lacks structural reforms, that too little has been done on liberalisations, that the cuts in policy have only just been hinted at, that the stimuli for growth are largely insufficient and that indeed we risk getting caught in a recessionary spiral which will make even the sacrifices that we are now called to make to bring the public budget back into balance. These are not unfounded remarks. And these are precisely the measures that will have to be part of the second phase which will have to be ready as early as January.
But to avoid not hitting the target of economic recovery, we need to carefully analyze the underlying reasons that have so far closed our economic system in a suffocating cage. The first is undoubtedly the excess costs not only of politics, but of the State and bureaucracy, which leads the public system to intermediate an enormous mass of resources with waste and clientelism of such a level as to distort the functioning of the market and merit assessments of individuals. It is therefore necessary to proceed with robust cuts in public spending, to eliminate the subsidies distributed to the many parasites that revolve around political power.
We can start with those mostly useless given to private companies, to get to municipal or regional companies that provide services at exorbitant prices because they are often places where customers settle or are a source of non-transparent business (to say the least ). It is impossible to think that out of a mass of 800 billion in spending, 20 or 30 billion cannot be cut immediately, without too many additional studies. This is more than enough to significantly reduce taxes on workers and businesses and in any case such as to make our companies recover some of the competitiveness lost in recent years and thus restart the investment and hiring machine.
It has been calculated that this maneuver alone would make it possible to recover at least half a point of GDP, as it is equivalent to a devaluation carried out for fiscal purposes instead of with the change in the exchange rate, as was done when there was the lira. And even the possible increase in VAT, while having negative effects on inflation, if used to reduce taxes on individuals and businesses would help our exports and curb imports.
If to this we add the reform of the labor market which, in addition to solving urgent problems of equity for young people and unprotected categories, would stimulate significant increases in productivity, and a serious infrastructure management policy, then the stimulus package growth would be robust and sufficient to reawaken the desire to undertake Italians and their creative imagination.
Mario Monti certainly remembers having invented the expression “hidden banker” in the XNUMXs to indicate the crowding-out effect that public bond issues had on the capital market available for private investment. Many things have changed today but the problem is similar: we are faced with a crowding out operated by public finance in relation to the much wider private sector because it concerns not only financial flows, but also people's professionalism, the possibility of undertaking without being a client of this or that political boss, the impossibility of freeing oneself from the thick web of connivance and corporatism. And the only way to reform politics out of business or advocacy of special interests is to reduce its power to broker huge masses of resources.
We are in an international situation of extreme uncertainty. Many, starting with the British, are betting against saving the Euro. But for Italy there is no alternative: we must recover competitiveness because in this way we will be more guaranteed whatever happens in Europe. And to do this there is only one way: cut public spending ruthlessly and reduce taxes on workers and businesses, thus operating a real devaluation by taxation.
