Friday, 2 January 2009

Happy New Year?

(Photo: Livorno - Piazza Cavallotti by alelinea)

As the economic crisis strikes Italian families and businesses, a growing interest is focused on who is going to pay its dim and sad effects.

Significantly, the movement of students
L'Onda, opposing the school reform proposed by the Minister for Education Ms Mariastella Gelmini, chose the following slogan to explain its view: We are not likely to pay for your crisis. (1)

Provided that richness is lowering, does the distribution of richness has any relationship with the problem? Mr
Giovanni Sartori wrote that “Economics as a science began to run off the rails with its politicization: let’s say that it was made by the Left. A politicization inducing economics to place the problem of the distribution of richness before the problem of the creation of richeness and, thinking along these lines, inducing economics to muddle up the two problems. And it is because of this confusion that a fairly convinced public opinion grew up over the fact that richness exists (just like, for example, plants exist) and that the problem resides in its distribution, because richness is distributed in the wrong way” (corriere.it).

We can of course agree on the subject: creating richness is a fundamental issue, so that you can distribute it to disadvantaged citizens allowing them and their sons to create additional richness for the whole country as well. But what if prices, wages and taxes establish a system granting economic parasitism and political conservatism as well as depressing the most dynamic, cultivated and progressive elements of society?

To begin with, inflation has fallen to 2.7% in November on a year basis from 3.1% in October. But inflation measured from January to November is at 4.7% on a year basis (
repubblica.it). In spite of the general and concrete consensus over the risk of deflation (lavoce.info), we are actually facing a disinflation process (ilsole24ore.it).

According to a report released on December by
IRES – CGIL, during 2008 workers' incomes increased nominally by 3,4-3,5%, which corresponds more or less to the current inflation rate in Italy: prices are not falling, they are actually still rising as ever. All the more reason, between 2002 and 2008 businesses’ year incomes increased by an avarage 9,000 euros, while workers’ year incomes decreased by an avarage 1,600 euros. (repubblica.it).

While gross domestic product is foreseen to fall by 2.4% in 2009, Italian business confidence reached an historic low in December, moving to 66.6 from 71.6 in November (
The Wall Street Journal Europe). Retailers are now facing the effects of the crisis, with spending plummeting by 10% in December 2008 compared with its amount in December 2007 (repubblica.it).

Actually, businesses are complaining for their own mistakes. Nobody is indeed likely to buy anything more than what is needed, if nothing is left on his wallet.
ISTAT, the Italian National Institute for Statistics, has recently outlined that at the end of 2007 5.3% of Italian families were in trouble at buying basic food (corriere.it) . But while waiting for this year data, you can see it through your own eyes: every day more and more people rummage through garbage in markets, looking for the remnants of putrid fruit and vegetables.

Given that the Italian public deficit for 2008 amounts at 52.9 billion of euros, the debt/GDP ratio is now over 104% (
corriere.it) and the spread between Italian Btp and German Bund is at 140 points (repubblica.it), you would expect the government to spend the few resources at his disposal to promote investments by the the most dynamic industries and to sustain the poorest families affected by the crisis. But while every European country is trying to do what it can to struggle against the crisis (lavoce.info), the Italian government has instead set measures that will increase taxes (lavoce.info).

In the meantime, the party is not over for tax dodgers: even though the
Agenzia delle Entrate was able to get back 2,3 billion of euros unpaid, tax evasion is still estimated at about 200 billion of euros every year (repubblica.it), which is roughly equivalent to a four year public deficit covarage. No need to remember that dodging taxes is almost impossible for workers, while it is very common amongst businesses.

Casting our mind back to history, we realize that economic growth came when the most vivid social elites were able to enlarge democracy: according to this pattern, the Italian Government distributing a social card to the poorest citizens (
repubblica.it) resembles nothing but an old monarch who is unable to realize that the world is changing.

That is why we think that the distribution of richness has actually a concrete role in creating new richness in a contest of more freedom and justice in a civilized country.


"Infatti, scrutando i volti degli invitati di mia madre, ebbi ad un tratto, precisissima, la sensazione che non una ruga, non una inflessione della voce, non un tremolio del viso, non un solo tratto, insomma, non fosse direttamente determinato dal denaro che, come aveva detto il vecchio grasso, gli invitati rappresentavano là dentro in maggiore o minore quantità. Sì, pensai, il denaro si era fatto, in questa folla, sangue e carne; guadagnato col lavoro onesto e fortunato oppure rubato con la furberia e la prepotenza, esso produceva sempre lo stesso risultato: una volgarità disumana riconoscibile così nelle più pasciute grassezze come nelle magrezze più risecchite."

[Indeed, scanning the faces of my mother's guests, I had suddenly the exact feeling that every wrinkle, every voice inflexion, every face quivering, every lineament in short, was directly determined by the money that – as the old fat man had told – the guests represented there in larger or smaller quantity. Yes, I thought, money had turned, within this crowd, into flesh and blood; earned with honest and lucky work or stolen with slyness and arrogance, it had always the same effect: an inhuman vulgarity recognazible in the most nourished fatness as well as in the most withered slimness.]

(Alberto Moravia, La Noia, 1962).

__________

(1) “Non pagheremo noi la vostra crisi”. Read more about the linguistic meaning of this slogan in repubblica.it.

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