FINANCE/ Between Shakespeare and Keynes

The debate on the expectations raised by the Mario Monti’s government in Italy, and on the concrete programs that he will implement, which have so far been limited to macroeconomic issues and to the points raised in the exchange of letters between the previous Berlusconi government and the European authorities. The Minister of Labor and Social Affairs has pointed out that a reorganization of the social security system is not in the plan. Instead, they are planning a reinforcement of the series of reforms started in 1995 with the passage of the pay system changing from a fixed percentage of the latest salary to the capitalization of the contributions that were actually paid.

This brings a question to mind: Is it possible to make readjustments to the long-term public finance and the macro-economy without rethinking the welfare system? Or is there the risk that we will implement short-term measures designed to bring relief to the public accounts for two to three years (or even five) before returning to the present problem and once again grappling with what James O'Connor called "the fiscal crisis of the state"? James O 'Connor wrote in the seventies and, at the time, I criticized (with good foundation, I think) the cure he proposed. However, his diagnosis is even more relevant today than it was.

How can we rethink the welfare state? We can start from a line from Shakespeare and from economic theory. This may seem paradoxical, and therefore, deserves an explanation. The line from Shakespeare is central to Portia’s monologue in The Merchant of Venice, a monologue which is anchored on "the quality of mercy". In Italian, "mercy" is often translated as "clemency", while in English it has a nuance halfway between "clemency" and "misericordia" (the name - attention – that many of the charitable, religious organizations in Italy had in the Middle Ages and the Renaissance). The economic theory has two aspects: a definitional one and one about an economic policy initially proposed by John Maynard Keynes in a lecture delivered in 1930 in Madrid, but often forgotten about since.

The definitional one concerns the goods and services of welfare: they are "meritorious" in a technical sense, as they refer to "merits" recognized by the community in the various stages of social evolution in history (for example, until the beginning of the last century, education and health care were largely considered "private" goods and "on the market", not "worthy" of public intervention, but now are so "worthy" that the former is compulsory for everyone up to 18 years of age and the second has become a national service for all residents).