Indeed, “The roaring 20s?” is the title on the cover of the latest issue of The Economist, which contains an editorial piece and an investigation into everything in the world that is heading “towards a new era of innovation”. The question mark that appears after the “roaring Twenties” title speaks volumes about the problems, limitations and uncertainties that we are all faced with, in the midst of a Covid-19 pandemic which continues to claim lives and a recession that is still having a marked impact on the economies of the world, with very few exceptions. It is common knowledge that crises also present opportunities. And indeed The Economist reminds us that “pessimism about technological change is giving way to hope – much of it justified”.
But it is equally true that the technological shifts that are currently underway – as we head towards a digital economy and embrace the decisive role that AI has to play in production processes, the service sector and so many other areas of our lives (from health to schools, and from culture to research) – have many far-reaching social consequences, on work and on incomes, and as such, these changes call for a high-quality political and governmental strategy in order to prevent (or at least diminish) inequalities both old and new, whilst taking full advantage of the opportunities these advancements offer. The outline of this strategy is still not well-defined, particularly here in Italy, during these tumultuous days beset by government crises and unconvincing answers on the issue of recovery, promises aside.
The cover of The Economist refers to another time of dynamic and dramatic social conditions: the 1920s, just a century ago (Paolo Di Paolo has dedicated a fascinating and unsettling book to this comparison, which is both well documented and very well written, entitled “Svegliarsi negli anni Venti” (Waking up in the 1920s), Mondadori, where he recounts the “changes, dreams and fears from one century to another”). Back then, we were just emerging from the Great War, reeling from the devastating effects of the new technologies that had been engaged in military conflict (cars, planes, sophisticated mechanics for weapons, advanced chemistry and physics for poisonous gases and bombs), yet full of hope for radical economic and social change, amidst the euphoria of the Belle Époque era, and the revolutions that were announced and started. However in the absence of forward-thinking policies designed to bring about reform and create a better economic and social balance, the world rapidly plunged into the Great Depression, which began in 1929 after the Wall Street crash and spread across the world, as large parts of Europe fell prey to Fascism, while Soviet Stalinism grew and people floundered in the anguish caused by new imbalances, until the disastrous outbreak of the Second World War (Keynes is worth rereading to gain a really good understanding).
Today, the imbalances and dramatic tensions we face are different, and in order to address the crossover between the pandemic and the recession, we must again look to politics, insisting on clear and effective answers. By choosing Joe Biden as the next President and ending the inauspicious reign of Donald Trump and his extremist nationalism, the USA has done just this (although the economic and social wounds are still gaping, of course, waiting to be patched up). And the EU too, with its Next Generation Recovery Plan for the green and digital economy – or in other words, for the environment and innovation, and with the expansive decisions made by the ECB, has provided key strategic indications. Elsewhere, the positive evolution undergone by public opinion as a whole, as it shows its sensitive, responsible side, is visible in many arenas, from Pope Francis with his appeals regarding the importance of creating a “just economy”, to the young people dedicated to fighting climate change and the increasing focus of the world of economics and finance on stakeholder values (or rather the prioritisation of the interests of people and communities, as opposed to the historic obsession with putting profit first at all costs). How do we move forward, then, so that the “new era of innovation” does not end up being a wasted opportunity for change?
We have entered a new era of greater public spending; the 1.9 trillion USD announced by President Biden as an emergency investment in the US economy serves to confirm this. The same goes for the 750 billion Euros earmarked under the EU Recovery Plan, while China continues to inject public money into the economy, making a decisive contribution to the country’s GDP growth of 2.3% in 2020, with a long, strong bounce-back expected for 2021. We’re getting into debt, for the future. And it’s the right choice to make. Provided we know how to distinguish between “good debt” and “bad debt”, as Mario Draghi urges us to do – “good” debt being that incurred for investments that can stimulate economic growth and bring about structural improvement to our quality of life and work, and “bad” debt being that related to welfarism, subsidies and the unproductive current expenditure.
And this is where the core of the issue lies – an issue that the Italian government has so far proved unable to solve; developing the Recovery Plan properly will enable us to use the 200 billion-plus Euros made available by the EU in a productive manner, along with the financial resources that have been “freed up” by the possibility of increasing our debt whilst enjoying the coverage of the ECB. We have seen financial relief, bonuses and subsidies, all of them more or less effective in coping with the emergency posed by the drop in GDP and incomes. But, at least so far, there is no policy focusing on reform and investment, containing clear measures, effective and detailed plans, deadlines that must be met, and reforms that need to be implemented. And now the feeling of concern is more tangible than ever, even within a public opinion that is frightened, lost, exhausted and undergoing a crisis of confidence.
The government has now promised that it will finally get down to writing a good Recovery Plan, following the indications provided by Europe on investments, the environment, innovation, research, training and radical reforms of the bureaucracy and justice systems, as well as claiming that it will make up for lost time. We shall see. Now it is down to the most responsible political and social forces and to public opinion to ensure that this opportunity is not thrown away, and that we stop wasting time.