It was 1998

The South: a metaphor for incompleteness

The intolerance of the North-East and the South’s suffering represent the two sides of one of Italy’s most profound and oldest contradictions. On the one hand: widespread and consolidated wealth, full employment, the demand for greater autonomy from a state considered too pervasive and experienced as an obstacle to further economic growth. On the other hand, abandonment, an unemployment rate that has reached unimaginable levels, a criminality that is even more widespread and uncontrollable than in the past, and the absence of any prospect of development are just some of the figures that indicate a widespread discomfort that demands answers and a more significant presence of the State.

Having overcome the acute phase of anti-meridionalism, the awareness that Southern Italy’s problems are the problems of the country is gaining ground, albeit with difficulty, and that any delay in tackling and resolving them can only result in damage to the entire national community.

Through the Italy Report, we have repeatedly launched a Grand Project’s idea, calling for an investment programme in the South.

We know that many of the criticisms, even fierce ones, that have accompanied State intervention in the South in the past are well-founded. There has been squandering, and with squandering comes bad politics, clientelism and privileges. In many cases, public spending – rather than being an opportunity for promotion and growth – has ended up contributing to the establishment and power of criminal organisations: this is all true. But it is also true that the South has always been a land of business and conquest for many entrepreneurs, financiers and speculators from the North.

Good spending and bad spending

Therefore, having learned from experience, everything hinges on connecting public spending to a rational, convincing project that also attracts private investors, large national and international groups. A project that also coincides with the country’s general needs and that ends up being more than a “Project for the South”: it is an excellent plan for the modernisation of the system capable of bringing Italy into line with other European countries.

At this point, a resumption of public investments seems no longer postponable.

Galbraith teaches us that there are three main categories of public expenditure. Some have no clear purpose, neither present nor future. And we must fight against these. Then some protect and stimulate the economic and social conditions of the present. And finally, some will produce and enable growth in wealth, production and general well-being in the future.

The second category of public expenditure that cannot be financed by debt but is sustained by available tax revenues is that of ordinary government expenditure: justice, public order, foreign policy, support for industry and agriculture, defence. All those expenses related to the maintenance of the ordinary functions of the State should be financed with taxes or other current revenues. Finally, there is that part of public spending that serves to support future prosperity and economic growth. In this case, and we agree with Galbraith, borrowing is legitimate and socially and economically desirable. Moreover, this type of borrowing has the most significant approval in the private economy, even from the most vocal opponents of public debt. In short, borrowing is entirely acceptable when public spending supports – or is even essential to – the future growth of the economy and thus to the development of production and employment together with the increase in income on which future state revenue will depend. The production of future wealth will be thus primarily linked to this type of public spending. Spending on public works is the most obvious case, as is investment in improving infrastructure and transport, including air traffic. Just as clear are the benefits that may accrue to the community from investments in protecting the environment and the territory or improving the quality of public administration services, communication and transmission networks, education, training, and the preservation of the artistic heritage.

The North and the South’s needs and interests are brought together on these issues and in these perspectives. A system with a low quality of services and infrastructures is a constraint that holds back both the push towards a further projection of the North’s economy and the instances of promotion and development of the South.

A prudent infrastructure policy thus becomes a unifying factor of modernity and growth for the entire country.

 

*Gian Maria Fara, President of the Eurispes

**Let us pick up the thread of our reflections on the South of Italy over time and on the role of public spending by proposing some excerpts from the General Considerations that introduce each year the Eurispes Italy Report.

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