Monday, March 27, 2023

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RIP 110%

As you know (?), EUROSTAT yesterday updated its Handbook on public deficit and debt . Among the novelties of this edition, paragraph 37 on p. 86 clarifies that:

"if a tax credit can be transferred to third parties, it must be considered a payable credit and therefore must be entered in the national accounts as an asset for the taxpayer and a liability for the State".

Moral of the story: tax credits originating from the 110% are public debt.

The distinction between "payable" and "non-payable" credits dates back: it is also found in the previous version of the manual , and reads as follows (on page 82):

while in the latest version it reads like this (on page 85):

The text is substantially unchanged: they are "payable", or "refundable", or "non-disposable" tax credits (translating "wastable" is not very simple, but the curious, a subset of the literate in the 20th century, will be interested to know that the term derives from vastus , like "devastate", so to speak, or like "damage"…), those tax credits whose amount is paid to the beneficiary in any case, regardless of the amount of his tax debt, even in the event that the beneficiary of the credit does not owe any tax (does not have any tax "debt").

Consequently, from the government's side, these tax credits should be considered public spending, rather than lost revenue (since they are paid even if there is no revenue).

In the nice section of the Manual, called: "Borderline cases between payable and non-payable tax credits", added in this version of the manual, paragraph 37 appears from which we started, and which was not there before, whose rationale is clear: given that the possibility of transferring the tax credit implies that it will not be lost (par. 35), and given that if it is possible to transfer the tax credit this becomes an asset for the transferor, and therefore necessarily a liability for someone (par. 36), transferable tax credits are a liability for the State in their entirety (par. 37).

I am disregarding (for now) what the consequences of this clarification will be on Italian public finances, also because I have the vague suspicion that no one is able to calculate them exactly to date.

I limit myself to some considerations, already made in other forums, and which therefore do not represent an absolute novelty.

Meanwhile, rebus sic stantibus , it must be observed sine ira et studio to all the stakeholders of rigorous Europeanist orthodoxy thronged at our doors that in their world, in the world that they have strongly desired, the alternative is not between a world in which the 'Italy magically grows thanks to 110% and a world in which Italy falls into ruin thanks to the lack of 110%. In their metrics, in their system of values, in the manuals of their institutions (which have become ours because they were in the majority, a point to which I will return shortly afterwards), the alternative is between a world in which Italy finds itself with the spread at 500 due to an "excessive" deficit (according to their rules) and one in which Italy grows less because it does not promote the construction sector.

I repeat: this in their world.

After that, we know that the spread is a monetary and not a fiscal phenomenon (but they don't know it and have never helped us in our cultural battle to make it known), we know that Italy travels 400 billion euros under the historical trend due to the deflationary bias imposed by the use of potential GDP in European rules (but they don't know it and have never helped us in our cultural battle to make it known), etc.

Using the opponent's strength also means letting him live in the world he wanted to live in.

Obviously, if we want to throw it into politics, now adversaries and allies will wage war on the issue, offering miraculous solutions which, however, unfortunately, do not exist in this world. Obviously unspeakable catastrophes will complain, as had already happened, for example, at the time of the introduction of electronic invoices. It seemed that the earth would stop rotating on its axis, hurling us through space at speeds ranging from zero (at the poles) to 1500 km per hour (at the equator). We are still here. I don't want to minimize: I just want you to understand where a certain communication leads.

Objection: "Yes, oh well, but the police are suffering oooooooo!!1!1!"

Dear friends, if I hadn't known that the police were suffering and hadn't foreseen that they would suffer more, I would never have started this blog. The agent mostly wanted this world, voting for the Orthoptera even though it was clear how it would go:

( here , but the reasoning started here and was in a nutshell here ), and as the facts have shown:

( here ). After that, our orthopteric friends didn't dig the grave, thanks to the income of the glebe (aka exchange income), not randomly boosted by the latest PD traction government (the Draghi government).

Of course, I voted for the income of the serf too (I was president of the joint commissions in which it was done), of course, I voted for trust in the PD traction government too (they also forced me, for hazing , to intervene in general discussion!). We have already talked about how it works and if you want we can talk about it again: I know that the intelligent TMs will never want to admit it, but this painful path has served to lay the foundations for depiddinizing the country, given that, unfortunately, the only proven effective method for the depiddinisation of an individual or a collective entity is the Céline method:

Yes, as is well known, and as the story of the prick has demonstrated, "power", whoever or whatever it is, has managed to deconstruct us so much, abolishing charity (" noticing things before they happen to you ") , that now only the direct existential threat (choses bien cruelles) stirs consciences and promotes a reaction. A labile reaction because it lasts as long as the threat itself, and because it is not capable of creating solidarity and a collective, "class" consciousness, one would have said in the past (now it can no longer be said). It took the fear of dying (from COVID or from the vaccine, it doesn't matter), for the vast majority to realize that something was wrong, that the Constitution was a crumbly bulwark, etc. You will say: what does it have to do with it? I think it has a little to do with it. Whoever didn't wake up while Greece was being slaughtered, or when we were purged with austerity, woke up when it was his turn, because if a "we" doesn't exist, it can't be built, then "I" commands , "the filthiest of pronouns". Not only do you not have to ask yourself who the bell tolls for, but also how it will ring, because one thing is certain: if you don't get busy, if you move alone you will be rung…

Going back to the 110% epidice, what do you want me to tell you?

On the one hand, timeo Danaos et dona ferentes . Could something that came from Orthoptera work?

On the other, timeo Danaos et dona ferentes . Behind the justified and plausible technical rejection of EUROSTAT we can glimpse a contingent circumstance (if a similar measure had been proposed in Germany, I would have been curious to see how it would have ended), and an ideological position (we know, because we were told in Finance Commission, which before the issue of "public debt" the previous Treasury opposed this measure because it introduced a parallel fiscal currency: so we were told by the president). The "abstract" theme of the monopoly of commodity money becomes concrete here: the 110% offered a potential risk for public finances (but as is well known, one could counter-argument that the indirect revenue generated by the measure covers this deficit). The real risk, however, was of an ideological nature: to let citizens touch the fiduciary ("credit") nature of money, the one that central bankers, if cornered, confess. The paradigm of "commodity money" is that of the scarcity of money ("there is no money"). A somewhat bogus paradigm, considering that while it is said that the money does not exist (for public investments), it is printed in full force! But here too: in the world of many unstructured "I's", roller printing done with quantitative easing is not seen, while the possibility of paying for a job with a tax credit is seen. The usual problem of optical illusions: while the benefits of the euro are tangible, its risks are intangible. Conversely, while the pitfalls of QE are intangible, the benefits of 110% have been tangible. Continuing on this path would have opened a few eyes too many.

Because then, in the end, the theme is always the same: even if it were a deficit, why in a country that has been reduced like this:

should he be prevented from doing so, to return to where he was?

I am starting to conclude, for the dimofamos and the sicceroios.

I think you remember that student of mine who addressed me during the election campaign: "Professor, I continue to admire you as a teacher, but you have lost my esteem as a politician!"

I " looked at it " and said to him: "Dear friend, in the meantime I thank you for your admiration, and then I want to ask you: what do you think is the purpose of the game? Taking it in your pocket? Because if so, then I'll let you know you have a pocket too!" (not sure I said pocket, but the rest is textual). Translated: asking this government to get overwhelmed by the spread doesn't seem like a good idea to me, and not because "that way you would go homeaaahhh1!!1!" (also because we have seen many other government upheavals not followed by early elections), but because there is a supply chain in Europe that can resist stuff of this type, that knows how to negotiate sensible budgetary rules, etc.

We know the wrongs and the reasons or we think we know them, but the right counts. Success isn't guaranteed, but giving up definitely doesn't get us any closer to it.

The next appointment is the European Championships of 2024. We have to get there as an "us", not as a jumble of hysterical and omphaloscopic "I", we have to get there knowing how to place the different pieces of the puzzle in the correct context and clearly identifying our opponent .

Four years ago the votes to defeat him could be counted on two hands.

In one year?

It depends on us. We'll talk about it on April 15th at #midtermgoofy , where I'm pleased to announce the presence of…

(… whoever guesses gets in for free!… )

(… I take the liberty of adding: it depends on you, because I am only one and what I had to do, show you where and who it was, I did it sufficiently in time …)

This is a machine translation of a post (in Italian) written by Alberto Bagnai and published on Goofynomics at the URL on Thu, 02 Feb 2023 10:34:00 +0000. Some rights reserved under CC BY-NC-ND 3.0 license.