Banks, Ryanair and imaginary liberals
Banks, Ryanair and more: is the government altering the market or is the market already altered by interventions such as those of the ECB and the EU Commission? The italics of Battista Falconi
Among the many considerations that are crowding the debate on the latest measures adopted by the government – in particular: the tax on extra bank profits , the rules on the increase in flight prices and the minimum wage , on which a discussion is being held today at Palazzo Chigi between the majority and the opposition – we can underline one relating to the common denominator of these rules: the so-called market law, heralded by various observers as a beacon that a truly liberal executive should always keep present and close, so as not to alter the dynamics between supply and demand which results in the right price for goods and services. It is a rather scholastic vision, which refers to the optimistic paradigm of the brewer's selfishness, according to which the sum of private interests determines public or at least collective well-being.
However, regarding the merits of the current situation, it escapes us that we are not in a situation of real confrontation between supply and demand and that the market system is already greatly altered, not only due to political decisions. The most evident and relevant distorting element is in fact the decision to increase interest rates by the central banks, the European ECB and the US Fed, to contain inflation. A seemingly sensible objective but pursued with a tactic that is far too basic, which obviously reflects the risk of depressing investments and therefore economic growth on which, we all agree, the quality of public services and of our lives depends. The hypothesis of increasing the tax burden is truly impracticable, in Italy and in many other countries; that of moving pawns on the chessboard and scraping the bottom of a barrel to obtain a minimum of resources to be allocated to the needs of another, the most frequently pursued path, has a very short breath. So the only hope is clinging to the possibility of increasing wealth by creating better conditions for development: whether this can then be done with the help of rules and instead the reality of innovation does not allow it, is a completely different matter.
In addition to the depressive risks, the rise in interest rates also has a relative effectiveness on the objective of not eroding incomes on which, more than inflation in the abstract sense, the rise in prices weighs, which seems to follow partially independent dynamics or, better, relating to individual and specific phenomena, which are also partly speculative. This is where the measures we are talking about come into play, in particular those on flights which are subject, like the entire mobility and tourism sector, to sudden increases dictated by a purely financial logic. As is known, the price of a ticket increases as we learn about how much it costs, since the software (which we now like to call algorithms) identifies that certain route, date and time as a most requested asset, for which therefore one can ask a higher price. It will be objected that demand always has a weapon at the ready, not buying the good or service, and that if requests really did drop, due to the phenomenon mirroring the one just described, the claims of the airlines would also drop. But the issue is much more complicated: in some cases, for example to and from the Islands on which part of the government interventions take place, the consumer's freedom of choice and alternative options are very limited.
A moment of reflection is enough to verify how the entire economic world, and above all the fastest developing one, is subject to similar contradictions. If you look at the web, today we are beginning to ask ourselves if and how the profits of so-called influencers can be taxed, but we have been struggling without significant success for years in an attempt to force the big operators to leave at least a minimal part of the wealth they make in the countries where they actually deliver their services. The delivery sector, which has experienced enormous growth after the pandemic, makes very high profits by imposing terrible contractual and wage conditions on its workers, generally socially weak people and therefore prone to accepting any harassment. Today's meeting on the minimum wage at Palazzo Chigi, we note on the sidelines, has a purely political intent and once again demonstrates Giorgia Meloni's greater political intelligence (or cunning, if you prefer) compared to her opponents, stuck in the corner of a box offer they can't refuse.
After all, the banks have only easily adapted to this trend, increasing their profit margin thanks to the progressive gap between lending and passive interest rates. It is obvious that they are complaining today, as are the airlines: but the government's response, which wants to change the tune, is equally correct. With regard to the positions that have emerged in recent days, the dubious attitude, with a request for clarification, of the European Union makes us smile, always fearful that Italy will implement policies to support businesses or in any case intervene in the free market, when it is Brussels the first to do so. Think of the colossal round of funding and penalties that moves around the so-called green policies. But then, which free market are we talking about in times of Pnrr or super bonuses? And we recall that the first extraordinary tax proposal was raised on drugs, after a pandemic that allowed companies exponential increases in profit only by virtue of public health choices. At least in recent years, the European and international economy have been drugged by political choices far beyond the limits of overdose.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/mondo/banche-ryanair-liberisti-immaginari/ on Fri, 11 Aug 2023 07:04:22 +0000.