Ideas for dealing with crises and governing the future

Twenty-five interventions between ted talks and interviews, four hours respected perfectly, no intervals, a barrage of notes, off-the-cuff interventions and slides, a room of columns in the Banco BPM headquarters full, attentive, participating. There was some doubt that the formula chosen by Il Foglio really worked, but it didn’t and, despite the theme chosen (“Governing globalization, capital, the future”) the trap of the talk show was avoided, without falling into the pompous academic panel . Current events broke in, from the financial turbulence – in the headquarters of the third Italian banking group – to tax reform, from the fight against evasion to migratory flows, along the thread of a political-cultural reflection that leads beyond the labyrinth of the day -by-day. With the common belief that “the size of the problems determines the size of the solutions”.

This is the key phrase of the speech delivered by the economist Nicola Rossi who, among other things, in 2016 at the head of the supervisory board, managed the transformation of the then Banca Popolare di Milano into a joint-stock company. The dimension of the problems was recalled by Professor Francesco Giavazzi: the environment, migrations, the new international balances, inflation, the recomposition on different bases of the value chain, what many call de-globalization or, in the version above all American, “globalization among friends”.

The size of solutions is the one that makes your wrists tremble. Architect Stefano Boeri presented a graphically effective picture of how the urban question arises today: 50 percent of the world’s population lives on 3 percent of the territory and cities generate 75 percent of CO2. In Africa there are plans to create a green belt to block the expansion of the Sahara towards the south. Geneva plans to develop as a ring around the mountain following the path of the particle accelerator. Vast projects that cannot be developed with a local or national perspective. No one can do it alone, not even the great powers, not even the United States. The difficulty, the incapacity, the unwillingness to seek answers however partial feeds “the terror of the future” and pushes one to withdraw into a restricted if not individual perimeter. “We are steeped in risk – underlined Nicola Rossi – But we have taught young people to be afraid”. In Italy since the 90s the demographic balance has been negative and not only for people, because more businesses die than those that are born.

Risk brings us immediately to the financial markets. And on our notebook we find the word contagion underlined. No one can rule it out a priori, according to Massimo Tononi, president of Banco Bpm, but Italian and European banks are more solid and today there are more instruments for intervention. The comparison with 2008 and the collapse of Lehman is improper, we must not put all the banks in the same basket. The Silicon Valley Bank is in many ways an extreme case, more than a bank it was a sort of investment fund. Supervision of American regional banks is lacking and they do not comply with the Basel capital criteria, as underlined by Alessandra Perrazzelli, Deputy Director General of the Bank of Italy responsible for Supervision. Irene Tinagli, MEP of the Democratic Party, has hit the American model hard, emphasizing on the contrary the virtuous European example even if the banking union is to be completed and there is no single capital market. Saving Credit Suisse by overturning the golden rule of making shareholders pay could set a dangerous precedent, even if “it is not possible in Europe to do as in Switzerland,” said Perrazzelli. The EU is more effective in ex ante supervision, the US in ex post interventions. But this is also the result of a cultural difference between statist Europe and a “market-oriented” America. For years in Italy there has been a squabble over the bail-in pilloried in particular by the right, from the League to the Brothers of Italy also passing through Forza Italia. And now it turns out that you can do without it? The Swiss one is an anomaly and the bad example will not be followed in the rest of Europe, on this there was yesterday a broad opinion and an explicit commitment from the Italian supervisory authority. The bail-in is also necessary for Tononi, however it cannot be denied that the question remains open. Regulators paid more attention to capital ratios than liquidity, SVB itself had apparently solid capital, but was short on dollars.

On the increase in interest rates, the widespread opinion is that it is inevitable to fight inflation, if anything, the central banks have intervened too late; according to Nicola Rossi, the real anomaly is a decade of zero or sub-zero interest rates. We must not forget that the banks have benefited from it, Tononi recalled, underlining last year’s boom in profits. However, the increases have been very, perhaps too rapid, creating a sort of counter-stress. In any case, a break is necessary, indeed “we are already seeing it”.

Governing capital turns out to be difficult, as always. But is it really necessary? “Should globalization be governed? And why not?” Serena Sileoni puts the cards on the table bluntly with the consent of part of the audience and many guests (such as Nicola Rossi, Franco Debenedetti, Carlo Stagnaro, Oscar Giannino). Jurist, professor of constitutional law at Suor Orsola Benincasa in Naples, echoing the Kantian “crooked wood of humanity”, Sileoni warns against the standardization of law which generates a real paradox. It is said that in this way a legal cartel generates efficiency, so why doesn’t this also apply to the economic cartel? If the answer is because the legal good is different from the material good, then we need to analyze the social dimension of law, which brings us back to questioning the idea of ​​abstract norms which in turn have fueled the populist and sovereignist wave. It is a robust objection to the idea that globalization should really be governed.

Another thing is to govern its socio-political consequences. Populism is deceptive, but it is short-lived, underlined former Labor Minister Elsa Fornero. The economist Veronica De Romanis has dismantled the link between globalization and inequality, the latter in Italy in many ways a political choice: for example, the 100 quota pits young and old against each other, the basic income keeps young people and women away from the Work. The new version called Mia does no better, penalizing women with children and those over sixty. Marco Leonardi returned to the State University of Milan after his experience as coordinator of economic policy to the presidency of the Council, attacked the false myths about precarious employment, low wages, the jobs act. Carlo Cottarelli, senator for the Democratic Party, in placing costs and benefits in a column, explained that the advantages of globalization far outweigh the disadvantages. The idea that we are witnessing a great retreat of globalization needs to be scaled down, there is undoubtedly a reduction, but not a collapse. According to Giavazzi, nearshoring and the shortening of the production chain can have effects on both employment and technological innovation. Provided that a return to protectionism and the creation of conflicting economic areas is avoided.

As for the alarm over Chinese power, according to former ambassador Pasquale Salzano it is the consequence of a political choice that turns out to be a sensational mistake: it was Russia which, by invading Ukraine, gave Beijing a political role it had not previously he had, so now he’s running for leader of the global south. Giovanni Tria, former minister of the economy, took a long-term look at the more than centenary pendulum between the north and south of the world that today brings Asia to the center and called for a new Bretton Woods for international trade and for currencies .

You fly high, but then you still land in Italy. Stefano Firpo director of Assonime showed the data on the weakness of the capital market with a growing gap between Italy and the European Union which in turn is far from the United States. Andrea Tavecchio highlighted the negative role of the tax system. And so we come to taxation, a highlight of the morning with speeches by Deputy Minister Maurizio Leo, author of the reform, and by Ernesto Ruffini, director of the Revenue Agency. “Legal certainty is the polar star of enabling law, neither individuals nor companies have certainty with indented legislation,” Leo underlined. If we add a reduction in tax rates to the simplification, Italy also becomes more attractive for international investments. The goal is to reduce the tax burden, but by how much? So far there are no figures. It will be the Economic and Financial Document next month and the update in September in view of the Budget Law, which will establish the necessary resources and find them, but the deputy minister confirms that the path of reform will begin next year even if it is long here at the end of the legislature when the flat tax will be extended to all. The EU has given the green light to the ceiling of 85,000 euros per year and according to Leo, this “shows that the road is not wrong”. The incremental flat tax will be extended to everyone and the excess income will be taxed proportionally.
The deputy minister rejects the accusation of turning a blind eye to the evasion and defends what he calls “the transition from the punitive to the preventive arrangement”. There is a tax payer’s report card, anyone with at least 8 is reliable and a return path can be agreed with him. For others the music changes. Leo would also like the lexicon to change: no longer the agreed bureaucracy, but “membership 4.0”.

As for the fight against tax evasion, the deputy minister underlined the results of 2022 when 20 billion euros were recovered. But in any case there is always a shortage of 75 to 100 billion euros in state coffers. And here Ruffini enters the scene. In recent years, evasion has been reduced thanks to the use of information technology and the reorganization of the agency with the increase in staff. So it is not true that nothing changes and much will still change. Globalization has not made the “flight of income” easier, on the contrary today it is possible to trace or if we want to chase the tax evaders across the globe (pseudo-quote to be attributed only to myself). The tax jungle remains an ideal habitat for tax evaders, so it is also necessary to act with a machete, but according to Ruffini there is also a maturation in the conscience of taxpayers. The friendly taxman is perhaps a wishful thinking, paying less paying everyone remains the great hope and the goal to be achieved. However, so far it has been a continuous Charlie Chaplin pursuit and the recovered resources have not reduced the burden of the taxman, but have ended up in the cauldron of public spending. But that’s another story, it has to do with the government of the nation even before globalization.