The myth we have spent too little because of European constraints it is, in fact, a myth: spending more immediately increases the debt, and perhaps, later, if we become very virtuous, we grow, and so the tax revenues to pay the debts grow. But who lends us a lot of money by betting on this “perhaps”?
Then to pay off debts one must grow, that is, produce more. There are several recipes on the table. The first is to make companies produce more. It can be done in different ways: by giving them money directly or by lending them to them or by reducing their taxes or by entering public capital directly into their capital (and goodbye competition, so we would really jump backwards). The problem is that if the market outlook is negative, businesses don’t invest either they bring money somewhere else. Obligations can be imposed on them, but they work little, they invest “pretend”, it has happened for many aids in the South. And giving taxpayers money to private individuals with the risk that if they get stashed is a big deal, too ethical. Among the alternatives, however, remove taxes avoid rewarding tax evaders, and it’s an important aspect.
But to make companies work there is another way: to make public investment plans, that is to create demand for industrial products. Here too there are problems: the Italian state has given so far bad evidence in this field, with patronage expenses and bailouts of decociated companies (see Alitalia, Ilva, the railways that take 12 billion per year to bring very few goods and people, aluminum and coal to Sardinia, etc.). The IRI had started well, but it ended badly.
That is, public investment must be at least as capable as private investment to grow the economy, generating resources to pay off debts.
But this is also a demand crisis of consumer goods, and it is necessary to support that too, giving money to families (also for sacrosanct social reasons). It will be necessary to understand which of the two interventions works best to grow, remembering that companies have the means to scream more, while families bring more votes. You will need to have steady nerves, and do the math. And in a situation of such great uncertainty, the flexibility and speed of the interventions assumes enormous value.
We summarize: money to families or businesses, and for the latter, direct money or via public investment.
Now let’s see what features it should have the investment plan, to be kept ready if businesses don’t move.
Making the list is easy: flexibility and speed first, then technological content (otherwise the impact is not lasting), short-term employment (also to reduce the cost of direct welfare), concrete possibilities of economic returns for the state. This is important for two reasons: it reduces the cost for public coffers and is a guarantee that what is produced is useful (we know that doing useless things is one of the risks of public investments). Having environmental values today would be a luxury (we are already among the most “virtuous” among developed countries), but it is added value. However, the plan should stimulate competition, which is the main driver of growth.
Two examples can be attempted, highlighting their values:
– Environmental renovation of buildings (rapidity of results-employment-technology-financial returns-environment. The government is already moving with bonuses)
– Refueling points for electric vehicles on the entire road network (rapidity of results-technology-environment-financial returns)
The logic is cruel, if you have a goal of growth in a short time: who would not favor school, health, the enhancement of artistic heritage, the maintenance of infrastructure and territory, the computerization of administrations and education, and the scientific research? But for growth they have far too far impacts, and no financial return direct.
In such an uncertain context, however, there is solid certainty: block the plan for major works on the table, especially railways, of 70 (or 100) billion that the government has in mind, with the approval of Confindustria and the opposition. It is also thought, “to avoid laces and snares”, to resort to “Genova model”that is without races. All with friends, all obviously Italian. Here the features we mentioned are all missing: little employment per Euro spent, no technology, no financial return (and demand for sure drop), environmental damage, and in addition, long times. But, as has been said, they would pleased A lot of friends…