On the sidelines of the G-20 summit held in Saudi Arabia, a document was made public dell’Institute of international finance which greatly worried heads of state and government who, due to Covid, followed the meeting from afar. According to the figures that are read in these papers and which are confirmed (or directly provided) from the International Monetary Fund, global public debt this year will exceed GDP for the first time: 101.5%. The number of countries where indebtedness exceeds gross domestic product will grow from nineteen to thirty. And the data gets worse a lot if the analysis extends to aggregate debt which includes those of households and businesses. clear, everyone said in more or less explicit ways, that those debts incurred for the battle against the virus and the creation of the vaccine will be sterilized, made without expiry, or more directly canceled. Once the health crisis is over, no country, as committed as it will be to rebuilding its economy, will want to hear about reimbursement or interest payments. So why did the almost unanimous community of Italian economists harshly criticize the president of the European Parliament David Sassoli who, on the eve of the G-20, had hypothetically advanced the cancellation of the debt caused by Covid? Why nobody – except Leonardo Becchetti on Sole 24 Ore – reproposed the study by Carmen Reinhart and Christoph Trebesch which documented how, in the last century, out of 48 cases of debt cancellation, economies have always benefited from this kind of measure?
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The Italian media have advanced the hypothesis that Sassoli’s sortie was intended to curry favor with the Five Stars (which in fact reacted with jubilation) in view of his own candidacy for the most prestigious chair of the Campidoglio, Palazzo Chigi or even the Quirinale. Impossible. Sassoli as an experienced (former) Rai journalist and as such with a good political nose, knows well that this move would be too early for all three races. And it should be noted that Nicola Zingaretti this time was really abrupt in giving him a halt. Just as energetic was Christine Lagarde in bringing to mind article 123 of the EU Treaty which prohibits the mere consideration of such a hypothesis. An ingenuity – we allow ourselves to say – on the part of Lagarde since all the heads of state and government in connection with Saudi Arabia were aware that that clause will be reconsidered at this juncture. At least in part. So?
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probable the disapproval with which the idea of the President of the European Parliament was accepted is due to his country of origin, one of the most indebted – even before Covid – in the earthly world. A country that has not established impassable boundaries between its pre-pandemic debt and its current one. Which suspected of wanting to put at least part of its past debts in the basket of possible cancellation. And the proof, according to those who doubt our intentions, would be in the fact that our government, at the moment of presenting a gritty, severe, rigorous plan to deal with this gigantic crisis, niche, hesitates, postpones, goes away whistling close to the walls. We are convinced that, if the same proposal had come from Angela Merkel, the reactions would have been different. Perhaps the Stockholm Academy would award her the Nobel Prize.
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But why is Italy so frowned upon? Not just for what we have behind us but because here in Italy a sort of local Keynesianism has spread according to which economic problems would be solved by devising every possible trick to contract debt, debt and more debt. Which debt should generate resources for development. A development produced by magic which, in turn, will repay the debt. Simple, isn’t it? Needless to say, the author of the General Theory of Employment, Interest and Money would be horrified if he learned of these crude ways of applying his teaching. And it would energetically distance itself from a modus operandi that – here in Italy – in the last forty years of debt has produced excessively but of very little development. John Maynard Keynes is no longer there and now, in his name, there are those who take advantage of Covid 19 to escape the problem inherent in the term of debt itself: who pays in the end?
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We add that Europe is currently engaged in a complex definition of the Next Generation Eu cio that money that was half (approximately) donated, the other half (approximately) loaned which would cover the exceptional expenses for the fight against the pandemic. The fact that the Italian president of the European Parliament shows with such ease his predilection for that part of money that will be given to us (and implicitly announces that, as regards the other part, a way will be found to transform that part into a gift too ) risks somehow legitimizing the resistance of the so-called frugal countries.
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And if you are able to read between the lines of what Sassoli said, you understand why in Italy there has been such strong resistance to the ESM in recent months. We know very well that no European country has so far considered accessing the Salvastati Fund. But in other countries there has not been an ideological battle as lively as the one we have witnessed here. After all, it can be said that those who fought for the use of the European Stability Mechanism (adequately revised for the times of the Coronavirus, that is, deprived of the now famous conditionalities) were courageously exposing themselves for the use of a loan that would have had repayment times well defined. True, the Recovery Fund will also have a portion of the loan to repay. But there is, between loan and gift, a boundary that can always be moved or, if necessary, made invisible.
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At this point we would have to make a specific speech about our country as well as the immense debt incurred long before we engaged in the battle against the virus. For too long here we have been playing with words and arguing – not without resorting to some sophistry – that that shortfall of money is called debt only for convenience. Which, unlike actual debts, there is nothing to repay here. And no one to whom to eventually return it. Which is why … a government that has fallen from who knows where it can continue to accumulate debts, debts, more debts and spend, spend, spend more with impunity. Covid offers us a formidable opportunity to throw money out of the helicopter without control, to reward this or that clientele by inventing new bonuses every day and putting money into initiatives that no one will ever check their usefulness. For an infinite time. In the absence of an opposition that does just this way of seeing things (indeed, it does the opposite), getting in the way of this drift today appears to be a losing battle. We hope that when in the end we find ourselves gazing at piles of rusty and unused scooters and wheeled benches abandoned to their fate, and a unanimous chorus will rise to say that the debt (contracted for noble causes) is not paid, there is still someone to defend the memory of Keynes. And to explain that this crime cannot be blamed on him.
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November 23, 2020 (change November 23, 2020 | 21:45)
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