Between Shakespeare and Keynes Il Sussidiario 1 decembre

FINANCE/ FINANCE/ Between Shakespeare and Keynes
Giuseppe Pennisi
giovedì 1 dicembre 2011
Mario Monti, Prime Minister of Italy (ANSA)
Approfondisci
FINANCE/ The latest moves in the US vs. EU battle
MANAGEMENT/ The qualities that create jobs
AMERICA’S ECONOMY/ Two Principles for Reform: Limited State and Subsidiarity
HEALTH CARE/ To cure sometimes, to relieve often, to comfort always
The debate on the expectations raised by the Mario Monti’s government in Italy, and on the concrete programs that he will implement, which have so far been limited to macroeconomic issues and to the points raised in the exchange of letters between the previous Berlusconi government and the European authorities. The Minister of Labor and Social Affairs has pointed out that a reorganization of the social security system is not in the plan. Instead, they are planning a reinforcement of the series of reforms started in 1995 with the passage of the pay system changing from a fixed percentage of the latest salary to the capitalization of the contributions that were actually paid.


This brings a question to mind: Is it possible to make readjustments to the long-term public finance and the macro-economy without rethinking the welfare system? Or is there the risk that we will implement short-term measures designed to bring relief to the public accounts for two to three years (or even five) before returning to the present problem and once again grappling with what James O'Connor called "the fiscal crisis of the state"? James O 'Connor wrote in the seventies and, at the time, I criticized (with good foundation, I think) the cure he proposed. However, his diagnosis is even more relevant today than it was.


How can we rethink the welfare state? We can start from a line from Shakespeare and from economic theory. This may seem paradoxical, and therefore, deserves an explanation. The line from Shakespeare is central to Portia’s monologue in The Merchant of Venice, a monologue which is anchored on "the quality of mercy". In Italian, "mercy" is often translated as "clemency", while in English it has a nuance halfway between "clemency" and "misericordia" (the name - attention – that many of the charitable, religious organizations in Italy had in the Middle Ages and the Renaissance). The economic theory has two aspects: a definitional one and one about an economic policy initially proposed by John Maynard Keynes in a lecture delivered in 1930 in Madrid, but often forgotten about since.


The definitional one concerns the goods and services of welfare: they are "meritorious" in a technical sense, as they refer to "merits" recognized by the community in the various stages of social evolution in history (for example, until the beginning of the last century, education and health care were largely considered "private" goods and "on the market", not "worthy" of public intervention, but now are so "worthy" that the former is compulsory for everyone up to 18 years of age and the second has become a national service for all residents).

It is often forgotten that to have “the quality of mercy” and to maximize their effectiveness, most of the “meritorious” goods and services must be "relational", that is, based on a "relationship" between the parties involved. At school and at the university, people will learn more and better if a good "relationship" between teachers and students is established; in health care, the patient can be cured better if he has a "relationship" of trust with the doctor.

Let us now look at Keynes. In Madrid in 1930, he outlined, with foresight, a way in which technological advances could allow each person (in the Atlantic area) to meet their basic needs with three hours of work per day. The consequences: either the relentless growth of "new needs" (and some dubious ones); or an unequal distribution of working hours (many for some, unemployment for others); or free time to fill. In order not to waste away from boredom, Keynes suggested "meritorious" and "relational” activities.


The circle closes. We can avoid "the social crisis of the state" and the bitter predictions of Keynes if the "spending review" of welfare, central to the new government’s plans, is not just an accounting exercise done to identify waste and suggest cuts. It should lead to a step back for the bureaucratic machinery in order to make volunteer and semi-volunteer work, organized by agencies of social promotion, take a step forward. It is a challenge that we are committed to following and monitoring.







Giuseppe Pennisi
giovedì 1 dicembre 2011
Mario Monti, Prime Minister of Italy (ANSA)
Approfondisci
FINANCE/ The latest moves in the US vs. EU battle
MANAGEMENT/ The qualities that create jobs
AMERICA’S ECONOMY/ Two Principles for Reform: Limited State and Subsidiarity
HEALTH CARE/ To cure sometimes, to relieve often, to comfort always
The debate on the expectations raised by the Mario Monti’s government in Italy, and on the concrete programs that he will implement, which have so far been limited to macroeconomic issues and to the points raised in the exchange of letters between the previous Berlusconi government and the European authorities. The Minister of Labor and Social Affairs has pointed out that a reorganization of the social security system is not in the plan. Instead, they are planning a reinforcement of the series of reforms started in 1995 with the passage of the pay system changing from a fixed percentage of the latest salary to the capitalization of the contributions that were actually paid.


This brings a question to mind: Is it possible to make readjustments to the long-term public finance and the macro-economy without rethinking the welfare system? Or is there the risk that we will implement short-term measures designed to bring relief to the public accounts for two to three years (or even five) before returning to the present problem and once again grappling with what James O'Connor called "the fiscal crisis of the state"? James O 'Connor wrote in the seventies and, at the time, I criticized (with good foundation, I think) the cure he proposed. However, his diagnosis is even more relevant today than it was.


How can we rethink the welfare state? We can start from a line from Shakespeare and from economic theory. This may seem paradoxical, and therefore, deserves an explanation. The line from Shakespeare is central to Portia’s monologue in The Merchant of Venice, a monologue which is anchored on "the quality of mercy". In Italian, "mercy" is often translated as "clemency", while in English it has a nuance halfway between "clemency" and "misericordia" (the name - attention – that many of the charitable, religious organizations in Italy had in the Middle Ages and the Renaissance). The economic theory has two aspects: a definitional one and one about an economic policy initially proposed by John Maynard Keynes in a lecture delivered in 1930 in Madrid, but often forgotten about since.


The definitional one concerns the goods and services of welfare: they are "meritorious" in a technical sense, as they refer to "merits" recognized by the community in the various stages of social evolution in history (for example, until the beginning of the last century, education and health care were largely considered "private" goods and "on the market", not "worthy" of public intervention, but now are so "worthy" that the former is compulsory for everyone up to 18 years of age and the second has become a national service for all residents).

It is often forgotten that to have “the quality of mercy” and to maximize their effectiveness, most of the “meritorious” goods and services must be "relational", that is, based on a "relationship" between the parties involved. At school and at the university, people will learn more and better if a good "relationship" between teachers and students is established; in health care, the patient can be cured better if he has a "relationship" of trust with the doctor.

Let us now look at Keynes. In Madrid in 1930, he outlined, with foresight, a way in which technological advances could allow each person (in the Atlantic area) to meet their basic needs with three hours of work per day. The consequences: either the relentless growth of "new needs" (and some dubious ones); or an unequal distribution of working hours (many for some, unemployment for others); or free time to fill. In order not to waste away from boredom, Keynes suggested "meritorious" and "relational” activities.


The circle closes. We can avoid "the social crisis of the state" and the bitter predictions of Keynes if the "spending review" of welfare, central to the new government’s plans, is not just an accounting exercise done to identify waste and suggest cuts. It should lead to a step back for the bureaucratic machinery in order to make volunteer and semi-volunteer work, organized by agencies of social promotion, take a step forward. It is a challenge that we are committed to following and monitoring.