Whoever exports goods exports (human) capital
We have now lost all hope of making the proud and foolish century (LVI included) understand that for mere accounting the sum of the balances of goods and capital ( rectius : the algebraic sum of the balance of current accounts and the financial account of the balance of payments) must be zero. This is not alchemy or convention! This is the clear and easily understandable representation of a fact. When the Italian exporter collects dollars (and therefore a plus sign is recorded in the balance of payments, as always when the currency enters), the story does not end, an important piece is missing.
With his dollars the exporter can do three things:
1) keep them in your pocket (but unless you are Eta Beta this strategy could quickly prove unsustainable, as well as being financially unviable);
2) buy financial assets denominated in dollars, so as not to keep idle and unproductive cash, in which case the balance of payments would show a minus sign (a currency outflow recorded in the financial account);
3) convert them into euros to buy an ice cream (or to make productive investments), in which case there would still be a minus sign on the financial account of the balance of payments, because the Central Bank is not like Scrooge McDuck's vault, a gigantic armored hangar full of dancing and ringing metal dollars, but an office populated by a bureaucracy that is more or less friendly to the country but certainly rational, which therefore with the dollars that are given to it in exchange for euros purchases assets denominated in dollars (with a relative outgoing annotation in the balance of payments).
Point.
Is it that difficult? Apparently yes, if even LVI does not understand that you cannot ask for more competitiveness and less capital flight at the same time! Competitiveness, to the extent that it is achieved, manifests itself as export of goods and therefore export (or flight) of capital.
I'll point again.
But there is another aspect that is not reflected upon enough, that no one sees (strange…), even though it is there for all to see, even though even has somehow confessed it through gritted teeth.
Follow me: to export you have to be competitive, right? To be competitive you have to cut wages (Draghi said so), right? But if entry-level wages are too low, what do the best young people do? It's simple: they emigrate in search of better opportunities! So in a monetary union, those who want to export goods want to export human capital, they want to separate from their children.
You say he doesn't want to?
Oh, no: Keynes says he wants, because do you remember what he says in “The Economic Consequences of Mr. Churchill”? I remind you: “who wants the end also wants the means to achieve it”! So when you hear someone, like or whoever is intellectually subordinate to him, talk about the competitiveness of our economy, know that he wants to separate you from your children, that’s what he’s talking about, because that’s how it works now, because someone (not us) wanted it to work that way. The prerequisite for not exporting human capital is a thriving and dynamic internal market, it’s a growth model based on internal demand, and therefore wage led , not export led .
I look forward to reasoned refutations of these platitudes.
But now… take off for Genoa!
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/2025/06/chi-esporta-merci-esporta-capitale-umano.html on Fri, 06 Jun 2025 15:34:00 +0000. Some rights reserved under CC BY-NC-ND 3.0 license.