A public-private agreement to become competitive again

The recent downgrade (the cut of our government bond rating) by Moody's that occurred despite the efforts made so far by our country is a symptom of a disease that unfortunately still plagues us. Even though these signals may sometimes seem incomprehensible, we believe that they should be taken very seriously. Fiscal consolidation, if it is not matched with a development policy that is suitable to overcome the challenges of international competitiveness, can also backfire. Monti's government has been able to work on the spending and that deserves distinct recognition. In fact, the recent decree on the spending review, although lacking a systematic approach, is a good painkiller. However, it risks having narrow and counterproductive effects, unless it is combined with at least two further steps.

1. The introduction - in connection with a gradual reduction of direct supply - of a new financing system of public services, able to shift the spending decisions from the public authority to families and individuals.

2. A competitiveness policy able to set the conditions for the renovation of our business system towards highly productive sectors, also contributing to a restructuring of supply.

Overall, these steps communicate a new agreement between the public and private sectors, both in terms of the reorganization of the public sector and in terms of the relationship between tax authorities and taxpayers, in the pursuit of reducing the tax burden and fighting tax evasion.

Concerning the first aspect, we believe that such a policy would allow for the reassessment and reduction of public spending and therefore for the creation of new opportunities and new markets, thus promoting, by implementing the principle of horizontal subsidiarity, a transition from welfare state to welfare society. The second aspect is instead about leaving behind any form of industrial policy that is likely to support uncompetitive enterprises and starting a strict competitiveness policy. In this context, the role of the public can only be that of redefining a legal and institutional framework in order to guarantee the correct functioning of the market; to provide regulation and control its proper application; to encourage enterprises to strive for innovation and seize opportunities in foreign markets; and to directly intervene, in terms of subsidiary, only where the private and third sectors are unable to operate independently. Businesses, however, will have to look again at themselves, relying on technology, on the quality of manufacturing processes and products, on professional qualification, on organizational and managerial efficiency, and on dimensional growth and the capacity of pool resources.

We believe that, if put into practice, this could be Italy's way to a "highly competitive social market economy."

To this end, the Catholic world is called to play a leading role, becoming again, as it did in the aftermath of World War II, a unifying element of a country that for too many years has appeared unable to overcome the corporate heritage that inhibits its growth and undermines the foundations of its future.

Flavio Felice is an adjunct fellow at the American Enterprise Institute

 

Also Visit
AEIdeas Blog The American Magazine

What's new on AEI

Defeating ISIS: AEI experts weigh-in before the president’s address on Wednesday
image Degrading, defeating, and destroying the Islamic State
image Wealth Building Home Loan: Building wealth through homeownership and retirement savings
image The $3 iPhone
AEI on Facebook
Events Calendar
  • 15
    MON
  • 16
    TUE
  • 17
    WED
  • 18
    THU
  • 19
    FRI
Tuesday, September 16, 2014 | 5:00 p.m. – 6:00 p.m.
The Constitution as political theory

Please join us for the third-annual Walter Berns Constitution Day Lecture as James Ceasar, Harry F. Byrd Professor of Politics at the University of Virginia, explores some of the Constitution’s most significant contributions to political theory, focusing on themes that have been largely unexamined in current scholarship.

Event Registration is Closed
Wednesday, September 17, 2014 | 8:10 a.m. – Thursday, September 18, 2014 | 1:30 p.m.
Third international conference on housing risk: New risk measures and their applications

We invite you to join us for this year’s international conference on housing risk — cosponsored by the Collateral Risk Network and AEI International Center on Housing Risk — which will focus on new mortgage and collateral risk measures and their applications.

Event Registration is Closed
Thursday, September 18, 2014 | 2:15 p.m. – 3:00 p.m.
Speaker of the House John Boehner on resetting America’s economic foundation

Please join us as Speaker John Boehner (R-OH) delivers his five-point policy vision to reset America’s economy.

Event Registration is Closed
Friday, September 19, 2014 | 9:15 a.m. – 11:00 a.m.
Reforming Medicare: What does the public think?

Please join us as a panel of distinguished experts explore the implications of the report and the consumer role in shaping the future of Medicare.

No events scheduled this day.
No events scheduled this day.
No events scheduled this day.
No events scheduled this day.