Growth without equality, a trap that has made our societies more unjust. To design a better future we must restore value and political weight to work and remember that "without equality, growth itself slows down and the cracks in social cohesion feed populism, putting democratic stability at risk". This is the core of former premier Romano Prodi's reflections in a book-interview with Giulio Santagata and Luigi Scarola, entitled "The inclined plane" and released in recent days in the Voci de Il Mulino series (pages 155, €13 ). The inclined plane is that of the country and of lost faith in a better future because growth is modest and inequalities are increasingly strong and increasingly unacceptable. But Prodi is convinced that "we can and must change". We see how in a short excerpt from the pamphlet that we publish with the kind permission of the publisher and the author.
Professor Prodi, there is a lot of talk today about inequality. Can anything be done to counter it?
We should not be surprised that the sense of injustice towards the economic system is growing everywhere, starting from the United States, which also seemed able to react better than any other high-income country to the challenges of the transformation of the economy. The nuances are different from country to country, but the picture is the same: we are facing a general crisis of the economic system in which we live. This dissatisfaction finds its political outlet in a growing criticism of the traditional parties, which nevertheless have brought us widespread prosperity and, at least in Europe, have contributed to the construction of a social security system that has no precedents in history.
Those who feel marginalized and hopeless today are therefore looking for new havens and the categories most affected rely on those who, even without proven recipes, promise a miraculous way out of the crisis. For this reason, Michigan's metalworkers rely on Donald Trump and Brexit was not voted for by the opulent part of the City but by the workers and retirees of the suburbs and smaller towns. And we see that in Austria the populist candidate Norbert Hofer loses in Vienna but wins hands down in the campaigns. From Denmark to France, from Germany to Great Britain, from Spain to Italy, passing through Austria and the Netherlands, the classic parties of the right and left are retreating, making room for the new movements which, by convention, we call populist but which , in any case, are the sign of a growing unease.
This happens because the reasons that generate discomfort in our societies, even if they present themselves with different characteristics, are the same. They are produced by a common malaise which has affected the entire West ever since the inevitable and necessary globalization has been tackled with unsuitable tools and without a long-term political vision.
Italy has not yet managed to define its own lasting and inclusive growth strategy. In a nutshell, what should be the priorities on which to graft a new course?
If we want to go back up the inclined plane into which we have fallen, we must put Italy back on the path of growth. Growth is the only possible way to effectively and politically acceptable influence on imbalances. The continuation of stagnation blocks the social lift and favors inequalities. In fact, the absence of growth does not mean that the balances remain stable. In phases of stagnation, resources tend to move even more easily from the middle and lower classes to the richer ones. With growth of around 2-3% per year, if well managed, it would be possible, over five years, to dry up a large part of the pocket of unemployment that has widened with the crisis, and at the same time implement adequate measures can also improve the quality of work.
However, in order to restart growth in a robust manner, there is a need to primarily affect two elements: internal demand and productivity.
Domestic demand has been asphyxiated for too long. We need a more equitable redistribution of income in favor of the middle class and the poorest members of the population. In other words, we need to restore confidence in our citizens through decisive support for wages and pensions.
But that's not enough. For growth to be lasting, it needs to be driven by the real economy and this only happens if the productivity of our businesses increases, which is still too low. To this end, one can only aim constantly and without second thoughts on knowledge and training, creating the ground for a true recovery of productive investments. Attention must therefore be concentrated on a fiscal rebalancing in favor of the real economy, facilitating companies able to stay on the market and generate quality work. Low productivity means less wealth and greater inequality.
Equally essential for the goal of a better income distribution is social cohesion, which has been severely tested precisely by the existing imbalances….. The best tool for recovering social cohesion remains an effective and accessible welfare system, not only to the middle class……
The task of politics is to build consensus around these issues while today the wars between the poor have the upper hand... populism causes the majority of the 99% to approve policies in favor of the 1% of the population.
The greatest obstacle to achieving a more balanced development is precisely the difficulty of politics in regaining possession of a central role in the governance of economic and social processes.
As I have repeatedly stated, in all countries politics has had a heavy responsibility in favoring (or at least not opposing) the growth of injustices, by failing to adequately govern the impact of the great generators of inequality.
Citizens have perceived this weakness and have progressively moved away from public participation, thus leaving room for populism and authoritarian tendencies. Continuing like this we will all find ourselves in a trap with no way out.
The growing polarization of wealth and the progressive reduction of the role of the middle classes have progressively eroded the social basis necessary to promote a serious path of reforms.
Yet there are signs of a greater awareness of the seriousness of the situation. Growing parts of public opinion are awakening from the long hypnosis that had led them to uncritically adhere to the sole liberal thought to the point of taking sides against their own interests. But there is still a long way to go from here to being able to rebuild a sufficient basis of consensus to govern with a program that reverses the course followed up to now.
The consensus necessary for change necessarily passes through a rediscovered role of the middle classes. It is not just a question of earning their vote but of a process of reaffirmation of their centrality…..
