Giavazzi discovers that public debt is good, but only European debt. Gulp
Surprising and opportunistic comment by the economist Giavazzi in the Corriere della Sera: he actually claims that European public debt is a good and right thing. In truth, Giavazzi supports the use of the ESM more than anything else… Liturri's italics
Every day has its punishment. Today we have to read Professor Francesco Giavazzi's editorial in Corriere della Sera who performs something between a U-turn and a triple pike jump with double twist.
Ours fears that Europe is too weak in the face of Putin who wants to water his horses at the Trevi fountain and XiJinping's China which dominates the technology we use every day.
So how do we get out of it? By making a common debt, because the latter would "oblige" (yes, he used this verb) to "compose opposing interests". Following the example of what happened in the USA at the end of the war of independence from Great Britain, by the first Treasury Secretary Alexander Hamilton.
And democracy, parliaments? Not received. It would be interesting to know the opinion on this matter of anti-fascism professionals in active permanent service who are currently peeling their fingertips to comment on the alleged censorship of a writer.
There are many things to do: arm the Ukrainians to make them fight to the last man, build an autonomous defense, do research for the energy transition. And then (hear, hear…) " we need to abandon the idea that debt is just a burden passed on to future generations. If going into debt today to invest will allow our grandchildren to live in a free and growing continent because it is located on the frontier of technology, repaying the debt will be a lesser burden. Also because public debt does not necessarily have to be repaid: the important thing is to reduce the debt-to-GDP ratio and this depends on growth. Upon maturity, public debt can always be repaid by reissuing other securities ."
Banalities that free economists have been writing for decades are now proposed without batting an eyelid. They made us live for decades with the ugly, dirty and bad public debt meters and with the myth of expansive austerity and today, Giavazzi, with an opportunism worthy of a better cause, overturns all the clichés and picks the flower from the flower, with the difference that these are wilted flowers, passed off as freshly picked wildflowers.
Giavazzi does not explain why – given that public debt is no longer a problem – those same things, assuming they are desirable, cannot be done at a national level. There are many dozens of nations on the planet, smaller than Italy, that compete effectively on international markets. Why can South Korea and Switzerland (two random examples, not to mention Japan) do it and we can't? And then, given that the EU has existed since 1992 and, since then, instead of being a factor of greater competitiveness, we have only retreated in international comparisons, sure that common debt will solve everything? Giavazzi admits that the Large Brush didn't work but he is convinced that a very large one is needed, when just a Large Brush would be enough.
But Giavazzi distracts us with the finger of banalities about debt to sell us the moon of the European debt agency. An old obsession in certain circles, because the problem of the trillions of public securities held by the ECB needs to be resolved, in substantial violation of the Treaties. But the common debt already exists and is borne by the ECB, the ESM, the EIB, the EU.
Unfortunately, ours forgets to tell us that those are debts contracted on the basis of a common but not joint guarantee. Each state responds for a fraction of the whole, without solidarity. Since the true common debt provides for a solidarity bond, not foreseen by the Treaties (not to mention the German Constitution). So what's the point of moving it, without a joint guarantee?
Thank you Professor. We don't buy anything and, if necessary, we call.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/giavazzi-scopre-che-il-debito-pubblico-e-buono-ma-solo-quello-europeo/ on Sun, 21 Apr 2024 09:51:22 +0000.