Background
Tuesday 31 May 2011. Mario Draghi invites the country to "grow again" and lists the public policies "that do not encourage, but often hinder," the evolution of the Italian productive structure and its adaptation to globalisation: justice, education, competition, infrastructure, labor market and social protection.
Thursday 29 June 2011. The Council of Ministers approves the economic maneuver for the three-year period 2012-2014. Revenue boosts and spending cuts for 1,5ml. euros in the current year, and for 5,5, 20,0 and 20,0 billion. euros in the three-year period 2012-2014.
In between, a referendum that swept away twenty years of efforts to open up the market for local public services and to curb, if not limit, municipal capitalism. The appointment of Mario Draghi as president of the ECB. The collapse of the Stock Exchange and the attack of speculation on Italy and the euro. The passage of the spread between the yield of Italian and German government bonds to over 300 basis points with very serious effects on public interest expenditure. The spread of tensions from the public debt sector to that of private finance.
In the short span of a month, “rising learning levels” turned into a constraint on support teachers, “female participation in the labor market” took the form of an increase in the female retirement age, and so on (on the other hand, the social partners have deservedly thought about industrial relations). In the short span of a month, the issue of public finance has fully recovered the scene.
The maneuver
It was not reasonably conceivable that a majority that had been divided and uncertain for months and a government that had been in the balance for months would suddenly find the will and the strength to immediately keep faith with the commitments undertaken in Europe. It was not reasonably conceivable that, on the other hand, the Minister of the Economy would renounce the principle of a multi-year economic maneuver capable of guaranteeing a balanced budget in 2014.
Ergo, do not be surprised if - as has happened on other occasions in the past - the maneuver approved by the Council of Ministers combines rigor (in sales) and laxity (in timing), substance (e.g., in the field of social security) and fluff (e.g. as regards liberalisations), presence (e.g. a more sensible version of the stability pact for local authorities) and absence (e.g. as regards the dualism of labor market), the old (health care bills) and the new (eg, the idea that progressivity does not necessarily have to do with the number of tax rates).
And it is good to bear in mind that nothing is yet taken for granted (translation: it could still be worse, if the resistances that punctually appear on the path of any measure of this type prevail).
However, it was reasonably hoped that, faced with the seriousness of the situation - because, it is useless to hide it, the situation is serious - politics would find the strength to overcome, just once, its limits and to fully and jointly assume its responsibilities. Instead, in a nutshell, the picture is the following: the government launches an economic measure, postponing its impact by 90% to the next legislature and therefore to the next government and, at the same time, both the majority and the left-wing opposition announce their their intention to renegotiate, in some form and as soon as possible, the commitments undertaken at the European level, hoping that present and/or future European governments will contribute to this.
And the authoritative intervention of the Head of State is not enough ("There is no doubt that those who make decisions today on the economic situation will also take responsibility for tomorrow") to dispel the doubt that, both the majority and the main part of the opposition, cultivate the hope, in some way, of escaping reality.
If this were the case, it would be difficult to imagine that one could play on the skin of the country with this ruthlessness. In the last month, the spread between Italian and German yields reached 330 basis points, which means that – while the majority spoke of tax cuts and the minority of development policies – both, jointly, were what is necessary to burden Italian taxpayers well over 10 billion euros for the service of the public debt.
If that were the case, it would be difficult to conceive of such a level of irresponsibility. A few years ago France and Germany (with Italy's approval) culpably loosened European constraints intended to limit the possibility of inappropriate fiscal policies at the national level. In all likelihood, Greece would not be facing the problems it faces today if that path had not been chosen then.
The Draghi agenda, one month later.
Have we therefore set aside – forced by more pressing problems – the idea of “going back to growth”? In my view, no. Because, in reality, behind the reluctance with which almost all the political forces have approached the maneuver there is a fundamental question without which the Draghi agenda itself would be difficult to understand and appreciate.
All of Europe, or nearly so, is grappling in different ways and forms with just one problem: redefining the role of the state in the economy. It is not a new problem reproposed in much more definitive terms by the developments of the 2008-2009 crisis. With all due respect to those who thought that the crisis had re-proposed a new centrality of public intervention, the interventions carried out in the emergency today make it essential to reflect punctually on the costs and benefits of each field of intervention and of each method of intervention of the public sector .
The goal of a balanced budget in 2014 is therefore the necessary opportunity to ask ourselves what we want the perimeter of public presence to be in our country (and, consequently, to review and strengthen the already very worn-out relationship between the State and citizens ).
We begin by distinguishing between current primary public expenditure (net of social security which must find its source of financing in the social contribution) two major categories. On the one hand, the items of expenditure corresponding to the functions for which we want a State to exist or which the Italian Constitution itself places at the basis of the contract between the State and the citizens: defense and public order, justice, education and research, healthcare, assistance, protection of cultural heritage. For these items of expenditure, every effort must be made to prevent any form of waste and to make spending efficient and effective but, at the same time, not a single euro must go short of what is necessary to provide Italian citizens with a service corresponding to the taxes that we ask them to pay. Because the Italians rightly see in those taxes the consideration for those services and expect them to be adequate in terms of both quality and quantity. Because they know well, among other things, that when those services are not rendered, they will have to be purchased, if possible, on the market (in the form of arbitration, private security, private healthcare, private education) with the result of paying two and take one (if it fits).
On the other hand, all other expense items. From the functioning of the constitutional bodies and, more generally, of the political system in a broad sense (the National Council of Economy and Labor is a good example) and of the levels of government (the provinces, yes, even the provinces...), to transfers to businesses, to the many items that do not correspond to functions that are not guaranteed by the Constitution. Euro plus euro minus, about a fifth of the entire volume of public spending (net of interest and the capital account component already reduced to a flicker). For these expense items, there can only be one principle: that of zero-based budgeting, i.e. the questioning of the expense items themselves and not their marginal variations. And the constraints only two. First, where possible, the aim should be to replace disbursements with a lower tax burden (lower transfers to businesses and lower corporate taxes, for example). Second: it should not be possible to bail out a non-essential spending program because it is "small or marginal" in some sense. The resources that finance public spending belong not to the political class but to the Italians: every euro that could be returned to them in the form of lower present taxes or lower debt (i.e. lower future taxes) should – must – be returned to them without delay .
In this sense, the Draghi agenda is, in every respect, alive and well. In fact, it re-proposes the need for the State to be the State where we need a State and abandon the field in all those sectors in which we can easily do without the State.
It has been rightly said in recent days that financial stability is a precondition for growth. What the Draghi agenda reminds us is that this relationship strictly involves a concentration of the few resources available on those sectors of public spending that can more directly favor the evolution of the country's productive structure. For all the others, there is simply no place. And there is no choice.
* Economist and former parliamentarian Pd
