Giavazzanza’s income and the discovery of double entry
(… the title is partially to be attributed to one of the nicest of you …)
“The position of the mainstream is rapidly evolving,” is written in our Dictionary .
That's not entirely correct.
Despite what is said about the acceleration of historical processes, our personal Thirty Years' War is lasting the canonical thirty years: the position of the mainstream evolves, but so slowly that we risk being victims of change blindness , the phenomenon neuropsychiatric that a friend of ours described to us in a post nine years ago that is worth rereading , identifying it as the neurological foundation of the Juncker method ( described here ).
Change blindness , thus, afflicts us twice: when it hides the enemy's advances from us, and when it hides its retreats from us. In the second case it is perhaps even more insidious, because it prevents us from occupying and reclaiming the ground abandoned by the enemy. It happens every time they say, as if it were some kind of discovery, some kind of product of their fertile mind (certainly well fertilized), things that we have always said, simply because we have read them in the books we have all studied. But precisely, if on the one hand the slowness of change prevents us from perceiving it, on the other this does not mean that it is not underway. Underlining it, taking note of it, being aware of it, helps us give meaning and direction to our struggle. It also helps to escape the trap of pursuing a merely notarial discourse (the recording of the interminable QED), which risks being cloyingly self-congratulatory and deadly boring (for the writer before the reader), and therefore, ultimately, exclusionary, more than exclusive (you can be inclusive and exclusive, and it is much better than being exclusive and inclusive…).
I have reminded you several times, and it may have bored you, of Giavazzi's September 8th, which was actually a September 7th, that of 2015 :
the one in which Prof. Eng. Giavazzi came to tell us something that we knew here from the beginning and had put down in black and white five years earlier in the famous article rejected by the Bocconi blog :
that is, that the crisis in which we were mired did not depend on public debt, but on private debt contracted with foreign creditors, i.e. on balance of payments imbalances.
I went and reread the posts from September 2015 : I opened that month in a state of prostration, which I cured by visiting Scarpetta di Venere for the first time, I recreated myself by discovering Livòpoly , I tried to explain, unheard, why women they no longer have children , I rejoiced with you for our victory at the Macchia Nera Awards , we awarded the Big Beaver Award , I gave a nice concert , and I ended the month with the satisfaction of seeing my work cited by a recent friend of ours, but not It seems to me that I paid, or that we paid, enough attention to this significant setback by Prof. Ing., apart from a bit of a fuss on Twitter :
(a little ephemeral, if not conducted with due care), and for an imperceptible allusion in the post of September 7:
Perhaps it wasn't necessary to say much more, or perhaps yes, perhaps a minimum of in-depth investigation should have been done, because when the Bocconi boys , high priests of the counterintuitive, condescend to record the obvious, there is a reason behind it, and it doesn't necessarily mean that it's a trivial reason!
Today we go again.
Not on VoxEU, where they must maintain a minimum standard of decency, because it is also read by colleagues who are less conformist and subordinate than our own, but on Corriere della Sera (which is a different literary genre, as we well know here ), the ineffable engineer he delights us with the depth of his analyses, getting tangled up in a jumble of contradictions held together by the tenacious putty of a radical contempt for democracy, which is then contempt for the demos , that is, for you. Blinded by hatred towards the toothless, towards the rednecks , towards the fascioleghisti, towards those who do not think like him, that is towards the Italians (in Italy), our best ally, in this battle in which, being numerically inferior, we must rely on the forces of the adversary, makes a sensational mistake, this:
Without going either way or there, our ineffable tells us what we have all always said and known here, that is, that the rhetoric of public debt as a "burden on future generations" does not hold up. Debt today can make the lives of tomorrow's citizens better, simply because for this debt, these liabilities, there is necessarily a credit, there are tangible or intangible assets from which future generations benefit (better infrastructures, a better education, etc.). Unlike the previous time, however, in which General Giavazzi had simply surrendered to the evidence, admitting that the crisis could not have been caused by a debt, the public one, which was stable or decreasing almost everywhere, this time his utterances require careful reading. The reasons and intentions for the change in orientation are not difficult to read and will lead us, as you will see, to scenarios that we have been expecting to have to face here for some time.
The assumption is that today as yesterday Giavazzi is firmly on the side of redistributive policies in favor of capital, on the side of the reduction of real wages in favor of profits and rents. For a while the instrument of this objective was the euro, with the wage deflation to which it necessarily led. Now that the euro has exhausted its destructive potential, because wage deflation has brought us back into balance with foreign countries, to continue on the path of Hood Robin policies something else is needed, and this other, as we said to ourselves, is green , the continuation of the class struggle, on the contrary , achieved by subsidizing companies to inflate their profits, and by reducing real wages by raising product prices.
Similar policies generally lead to a crisis in demand, but Giavazzi, who is an offerist, is not worried about this, probably because he doesn't even realize it. Giavazzi's concern is another: that European voters will vote against policies that impoverish them. Draghi's indignation, sorry: Giavazzi's, in the face of such a lack of consideration is palpable, but since both wish (for the moment) to maintain an appearance of democracy, a remedy must be found. The answer is simple: subsidies to businesses must be added to subsidies for workers, a Giavazzanza income financed with debt (strictly European) that keeps workers calm close to the subsistence level, and that "future generations" will repay because in exchange they will have had a cleaner world.
Through the mouth of his puppet, the ventriloquist Draghi finally lets us know what the good debt is: the one contracted to provide subsidies and to finance rearmament! The underlying logic is quite clear, and it matters little that subsidies are not in themselves a paradigm of productive spending, and armaments are instead by definition destructive spending. We are now enlisted: an outcome that shouldn't surprise anyone who has been following me for a while, because I haven't done much to hide it :
There is obviously something to worry about, for many reasons. The absurdity of the single European army in a context in which it is not possible to manage them with sufficient timeliness and with shared objectives, not even the minimum of economic instruments that have been put in common should catch everyone's eyes, and in any case we have widely examined elsewhere, analyzing theSecurity and Defense Union . A particularly disturbing declination of "more Europe". However, we must remain cool and slip into this dialectical crack of the mainstream , widening it to our advantage. We must keep only one part of Giavazzi's tendentious and crude reasoning: making public debt does not necessarily harm those who come after. And to this truism we must add a resolute: indeed!
On the contrary!
It is not by harming parents, by lowering their level of income, education, health, that you will be able to save their children! It is not by reducing investments that productivity increases, and we, as I recalled in the classroom to the ventriloquism of such a thinker, were the only one of the large European countries to have negative net investment, i.e. destruction of physical capital:
obviously coinciding with the massive cut in public investments that no one remembers:
It is not correct to say that public debt "is not necessarily" a "burden passed onto the young people of tomorrow" who "will have to repay the debt that is issued today". It's not true because young people won't have to repay any debt tomorrow: the market will renew it, if tomorrow there is enough growth, and therefore enough tax revenue, to pay the interest, but there will be growth if there are enough workers and enough capital physicist. It follows that austerity policies do not open, but close fiscal spaces to the extent that by destroying human and physical capital they take the least productive country, they undermine its ability to create value, and to the extent that by destroying income they cause growth, rather than decline, the debt/GDP ratio.
We predicted it, it happened, now everyone can see it with their own eyes.
And therefore the debt should not be contracted to keep the victims of regressive policies, the victims of austerity, happy by subsidizing them: it must be contracted to make progressive, investment and not subsidy policies.
They are afraid that you will understand this and act accordingly in June. They even tell you! What more than this do you want?
Let us remain steadfast and not give in to provocations.
Good evening and have a good week!
This is a machine translation of a post (in Italian) written by Alberto Bagnai and published on Goofynomics at the URL https://goofynomics.blogspot.com/2024/02/il-reddito-di-giavazzanza-e-la-scoperta.html on Sun, 18 Feb 2024 20:28:00 +0000. Some rights reserved under CC BY-NC-ND 3.0 license.