Avvenire Editorials

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A reflection of Luigino Bruni on the earthquake, work and feast day: topics that deal with family in his opening address at the VII World Day of the Families that begins today in Milan

Comments - Those four deaths, our life 

By Luigino Bruni

Published in Avvenire on 26/05/2012

logo_avvenireFour of those who died in the Reggio Emilia Region earthquake were working. They were working at four in the morning on a Sunday. There is something different about dying while working. In these times of crisis and suffering for lack of jobs, the death of these workers tell us many things, they send us many messages. First of all, through tragedy, they tell us that in our age, all centered on consumerism and money, places of work still exist, as well as that shift work and  shift – workers, whom the present crisis has made harder and embittered; shifts of citizens and businesses which, through their work efforts, keep our country afloat, and who offer serious reasons to hope that we will make it. Those workers died at four o'clock on a Sunday morning. They died while working on a Sunday, at night, instead of compromising or demeaning the value and the meaning of Sunday, the day of the Lord, while paradoxically elevating and ennobling it.

[fulltext] =>

We would have had other words and felt other emotions , always tragic but different, if these workers, both Italian and foreigners, had died underneath the rubble while having fun dancing in a club or shopping in a 24/7 mall.  Someone might have added "if" and others "but" to those hypothetical deaths;  but to die while working on a Sunday night has caused greater pain and increased the value of those lives, of those deaths, of that night, even of that Sunday.

In our society it isn't human work or the effort put in it which are the enemies of the feast day and of Sundays; they never have been. Their real adversaries are lifestyles founded more on consumerism and on seeking income and profits, which  then enslave the workers from whom is stolen the Sunday as the day for restful enjoyment. He who lives and loves his job, lives and loves the day of rest and the times of feasting (enjoying). The very word ‘feast’ comes in fact from fesia which is the root of feria as well, that is, a work day. A society which offers too few jobs and makes work too precarious, ends by negating Sundays as the day of rest.  Let's not forget that the first thief of Sundays is unemployment, not work, because when you are not employed or under-employed, you are not only robbed of work, but also of the feast day: a feast day without work is never a real and full feast. And vice versa.

If you work but don't observe the day of rest, you no longer work, but you experience instead the state of slavery, even when you are well paid. It is becoming ever more a normality when the great capitalistic businesses hire youth, give them high salaries, luxury cars and future rapid career growth, but at a price (invisible yet very real) that's too high, having to renounce feast days, and eventually, life. If feast days are gone, and therefore those for family life, perhaps leaving only enough time for some entertainment and distractions, in these workers there is a progressive drying up of the wells from which you draw working energy, only to find oneself burnt-out and exhausted after only a few years, as a worker and as a person.

Both individual and collective life function only when the feast day and work are allies, when the time for the one establishes  and prepares the time for the other, even in the same places - and the farming and artisan culture knew this well.  There is not enough celebrating today in society and in the workplace, where without its' symbolic strength, are not able to create a sense of belonging to a common destiny, as well as create the ties which keep a human community together. It is of great importance to celebrate especially when one is suffering, when times are hard. This is why we must all  re-learn to enjoy ourselves in this late-modern economic society, even in our  workplaces. If one is not able to "waste" some time for some celebration, the whole working period is impoverished and one truly wastes everything. A working person knows, for example, that to not be able to join in a colleague's birthday or wedding celebration is a strong and clear signal that that particular working environment is slowly losing its appeal and is becoming a sad place to be.
 
If we wish to overcome cynicism and pessimism in this age of crisis, and these are the very diseases of every crisis, we must re-discover, politically as well, the great symbolic  and bonding strength of the real feast, even in the workplace, in schools, in the offices, at the iron furnaces, in different departments and with our dusty clothes: "Work isn't dirty." Never tell a worker who arrives from his job that  "he is dirty". You must say: 'He has the traces of his job on his clothes.' Remember that" (Edmund De Amicis, Cuore).
 

All of Luigino Bruni's comments on Avvenire can be found under Avvenire Editorial.

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A reflection of Luigino Bruni on the earthquake, work and feast day: topics that deal with family in his opening address at the VII World Day of the Families that begins today in Milan

Comments - Those four deaths, our life 

By Luigino Bruni

Published in Avvenire on 26/05/2012

logo_avvenireFour of those who died in the Reggio Emilia Region earthquake were working. They were working at four in the morning on a Sunday. There is something different about dying while working. In these times of crisis and suffering for lack of jobs, the death of these workers tell us many things, they send us many messages. First of all, through tragedy, they tell us that in our age, all centered on consumerism and money, places of work still exist, as well as that shift work and  shift – workers, whom the present crisis has made harder and embittered; shifts of citizens and businesses which, through their work efforts, keep our country afloat, and who offer serious reasons to hope that we will make it. Those workers died at four o'clock on a Sunday morning. They died while working on a Sunday, at night, instead of compromising or demeaning the value and the meaning of Sunday, the day of the Lord, while paradoxically elevating and ennobling it.

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Our Work Clothes

Our Work Clothes

A reflection of Luigino Bruni on the earthquake, work and feast day: topics that deal with family in his opening address at the VII World Day of the Families that begins today in Milan Comments - Those four deaths, our life  By Luigino Bruni Published in Avvenire on 26/05/2012 Four of...
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Comments - Beyond the GNP, with civil capitals

By Luigino Bruni

Published in Avvenire on 29/04/2012

logo_avvenireMario Draghi has also launched an appeal for a «pact for growthAngela Merkel is also becoming convinced that it’s a matter of necessity. It is becoming increasingly clear to many – and thank goodness, also to many influential people – that to base ourselves solely on the «fiscal pact» is not only too little, but runs the risk of further deteriorating the economic situation of the more fragile European nations. Growth, therefore: but growth of what? Without embracing the radical thesis, and at times naive (above all, in the  therapies that it proposes) of the so called de-growth, we need to be aware that the most important question on growth is really «of what?». When we think of growth, we normally think of growth in GNP.

[fulltext] =>

And we error, because, even if we never say it, this crisis was also generated by a mistaken growth in the GNP. In these last decades, in fact, the GNP has grown too much and badly, since it grew – and grows – at the cost of the natural, social, relational and spiritual environment, augmenting the hypertrophy of speculative financing. In Italy and in Europe in crisis, the GNP has since grown thanks to an abnormal growth in the public debt  - it is too comfortable and irresponsible to make the GNP grow by increasing the cost of public administration.

Today we have no guarantee that re-launching our GNP means also to increase the number of jobs and the wellbeing of people, since if the growth would continue to be guided and drugged by financial speculation, and therefore by income, the life of Italians would certainly continue to worsen even with a few extra points in our GNP. As we know it today, the GNP is not an indicator of human wellbeing in general (and this we know), but neither is it a good indicator of economic wellbeing in the era of finance (and this is less known).  If we want to measure the good growth well, we need to reform the GNP and, above all, to compare it to other indicators, which however – and this is the point – need to be indicators of stocks and not of flows (as is the GNP).

In what sense? The concept of «Gross National Product» was born in the 1700s in France (with Physiocratics), with the genial and revolutionary intuition that the economic strength of a nation does not measure its capitals or stocks but the annual income (therefore a flow), since a nation is not rich because it has mines, oil and forests, but only if it is capable of putting these capitals «into income», which depends on many factors (persons, technology, culture…). And from there we arrived to the 1900s and the birth of the GNP, continuing to think that for the wealth of nations, the flows and stocks are what count. However, today that beautiful ancient idea risks being misleading. 

Even though wanting to leave its value to an indicator of flow (a new GNP), it is more urgent that the stocks and capitals return to occupy the core of the economic, social, and political scenario.  The environmental theme, but also the relational and social ones – dramatically central – are formed by stocks and not by flows, capitals accumulated throughout millennia (or millions of years, in the case of the environment), that today the race to increase income flows is damaging and deteriorating. 

If we want and we must re-launch growth, then we have to concentrate on the growth and the maintenance of these forms of capitals: if they were not strengthened, maintained and in many cases recreated, the economic flows would not start up again; or, even if they were to start up because drugged by the finance market or European funds, they would continue to fuel the crisis of our time.

It would be enough to think of the impoverishment of those ancient civil capitals that are called neighbourhood relationships, or of proximity, and of that “productive correlation” of territories that until recent times have generated the many experiences of cooperation and of industrial districts of “Made in Italy.” The deterioration of these capitals is determining the progressive sterility of our civil fabric, which is not able to generate other flows, nor cultural, nor spiritual or economic. 

In order to be able to rebuild, and soon, these indispensable capitals, we first need to know how to see them, and then perhaps to measure them, giving life to new measuring tools of stocks or, better yet, of patrimony, a word that better denotes because, if meant as patrum-munus, that is, the gift of the fathers, it symbolically reminds us that we have received these patrimonies as a gift from passed generations, and therefore we have to protect and develop them, if we do not want to be remembered as the first ungrateful generation in history, the one that broke the big chain of inter-temporal solidarity.

And we cannot allow ourselves this, in order to today re-launch the good economic growth.

All of Luigino Bruni's comments on Avvenire can be found under Avvenire Editorial.

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Comments - Beyond the GNP, with civil capitals

By Luigino Bruni

Published in Avvenire on 29/04/2012

logo_avvenireMario Draghi has also launched an appeal for a «pact for growthAngela Merkel is also becoming convinced that it’s a matter of necessity. It is becoming increasingly clear to many – and thank goodness, also to many influential people – that to base ourselves solely on the «fiscal pact» is not only too little, but runs the risk of further deteriorating the economic situation of the more fragile European nations. Growth, therefore: but growth of what? Without embracing the radical thesis, and at times naive (above all, in the  therapies that it proposes) of the so called de-growth, we need to be aware that the most important question on growth is really «of what?». When we think of growth, we normally think of growth in GNP.

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Change in Order to Grow

Change in Order to Grow

Comments - Beyond the GNP, with civil capitals By Luigino Bruni Published in Avvenire on 29/04/2012 
Mario Draghi has also launched an appeal for a «pact for growth,» Angela Merkel is also becoming convinced that it’s a matter of necessity. It is becoming increasingly clear to many – and t...
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Comments – As in 1951 but because of the finance

By Luigino Bruni

Published in the Avvenire  on 15/04/2012

logo_avvenire

The instability and the fiscal and economic uncertainties that are characterizing, and will still long characterize, the current season of the financial market and of society, also depends on the big question on the present and the future of Europe, of economic, civil and political Europe. When in 1951 the CECA was formed, the Community of carbon and steel, behind this epochal event, took a fundamental step towards the “Treatise of Rome” and, therefore, towards the European Community, there was a genial and prophetic intuition of huge political, cultural and also spiritual valence: to create a community pact precisely on the strategic resources that were at the heart of two big world conflicts, that carbon and steel that had fuelled the wars.

[fulltext] =>

It has been a few yeas that Europe is living through the greatest civil crisis since after WW II. The globalization of markets, and unsustainable lifestyles on the level of individual and collective consumption (public debts), have destabilized, perhaps also undermined, the equilibrium on which the European Community was founded, generated by the initial agreements. Today, if Europe truly wants to get out of this serious crisis and imagine itself in a new season of wealth and civilization, it is called to do something similar to what was done back in 1951 by our fathers and grandfathers: it must really put in common the main strategic resources that in these recent years are fomenting a form of war among the peoples of the old continent and, always more, of the world: their finances. Whatever has been done up to now through the euro, the European Central Bank, the save-the-nations fund, have evidently not been enough. A community pact on the finance would mean many things, among which to give life to Eurobonds and a true Central European Bank, which however, in order to be created,  need a fundamental element, as essential as it is clearly absent or at least insufficient; that is, real trust among European nations and institutions.

The European financial situation and that of the world, in short, are in urgent need of a real structural reform. This capitalistic financing, which increasingly possesses (or puts a lean on) big industries, institutions and politics, is becoming a “common global evil” that renders our development unsustainable and is based on the dogma of maximizing profits in brief time periods. A dogma, that in the past was implicit and normally tacit and which today, instead, has no shame and is explicitly stated as the only possible way to be efficient and grow.

A true European pact "on and for the finance" could represent an initial and decisive step towards the necessary and urgent regulation of financial speculation, recalling the banks back to their fundamental functions for the common good (access to credit, prudent management of savings, support of investments made by productive businesses), functions that in the last decades have been betrayed by huge speculative financing which is deforming the whole financial sector, and therefore the economy and society.

Luigi Einaudi often recalled that economic science should study above all the “critical points”; that is, those thresholds crossed by which a positive reality becomes a negative one (or vice versa). Today, the financial market has certainly crossed this threshold and from the fundamental guardian of the economy and the family, it is becoming a tyrant in the world. These are the moments in which high politics needs to get back to its proper task by giving life to institutional processes that place at the centre of civic life the needs of the common good, a common good that today is so evident that it should not cause any dispute with theological and philosophical descriptions of its nature. In these years, we are playing a decisive game for our democracy.

The strong earthquake that the globalization of markets and that capitalistic-financial ideologies have set off has given a powerful shaking to our democratic edifice. The measures that we are taking in these years and months have been supports to stop the building from crumbling all together, without being able to discern real operations of restructuring of the main buildings.

A European pact “on and for the finance" would be its first and fundamental pillar, but one cannot see in our current political leaders neither the strength of ideas nor the civic courage to give life to such an operation, thus leaving to the younger generations a common home that is dangerously off kilter and in constant risk of succumbing to the next tremors. We thus need to continue to talk always more on these fundamental topics that are absent from public debate, because if there is to be a rebirth of Europe and a new economic world order, this time it will not be able to come up from the political sphere (too weak after the demise of the ideologies): the hope lies entirely in civil society and, therefore, in people’s will to live and to have a future.

All of Luigino Bruni's comments on Avvenire can be found under Avvenire Editorial.

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Comments – As in 1951 but because of the finance

By Luigino Bruni

Published in the Avvenire  on 15/04/2012

logo_avvenire

The instability and the fiscal and economic uncertainties that are characterizing, and will still long characterize, the current season of the financial market and of society, also depends on the big question on the present and the future of Europe, of economic, civil and political Europe. When in 1951 the CECA was formed, the Community of carbon and steel, behind this epochal event, took a fundamental step towards the “Treatise of Rome” and, therefore, towards the European Community, there was a genial and prophetic intuition of huge political, cultural and also spiritual valence: to create a community pact precisely on the strategic resources that were at the heart of two big world conflicts, that carbon and steel that had fuelled the wars.

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A New Pact for Europe

A New Pact for Europe

Comments – As in 1951 but because of the finance By Luigino Bruni Published in the Avvenire  on 15/04/2012 The instability and the fiscal and economic uncertainties that are characterizing, and will still long characterize, the current season of the financial market and of society, a...
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Comments - Banks, Europe, use of resources

by Luigino Bruni

published on Avvenire on 28/12/2011

logo_avvenireFinance and the economy are too important to be left with financiers and economists. I believe this could be summed up with the message that comes from the second and conclusive part of 2011. We noticed, and with more force than the first phase of the crisis (2008-2009), that the stock market indices and the “spread” are not distant affairs and are matters for experts, but are able to change the governments, our family budgets, and our life plans. So we all must address this situation, ‘living’ ever more in these places because if they remain inhabited by the citizens for a long period then they become inhuman. This crisis sends us three specific messages. The first relates directly to the banking world. Recent studies (University of Ancona: mofir.univpm.it), revealed that after September 15, 2008, banks have reduced lending to businesses, also to those virtuous.

[fulltext] =>

This apparent inefficiency depends on the distance of the place where decisions are made and where the business operates. Banks are more distant and do not have the knowledge of the area, therefore the decisions are handled by objective indicators that do not show essential things that become visible only to the eyes of those who live in the area and know the people by name.

The first message that comes to us then is the need to ‘reduce the distances’ between the places of decision making and the places of living. Then a financial policy critique that strongly wanted the concentration of banks of those big, remote, and anonymous that has been the watchword of the last two decades. It is interesting to note that local banks are holding up better to its vocation in the crisis. All this suggests a kind of golden rule: give citizenship rights in everyday small and fragile relationship (waste time with the customers, invest resources in relationships that are not always financially rewarding, etc.), which makes them less fragile when big crises arrive. Instead, do not accept these fragile daily ‘crises’ because they make the institutions more fragile in front of the big crises.

Then there is a second clear message regarding Europe, who is now living the deepest crises since its foundation. If no one will put a hand on a true political union, the Euro will not stand much longer. Today, however, they are lacking the great statesmen of the postwar period, and their place can and should be occupied by citizens. It is up to them, it is up to us all to ask, from the bottom and with greater force, to have a more regulated politics and finance.

Finally, the third message: there is something wrong with capitalism which we have given life, especially in the West. This ‘something’ has nothing to do with finance and perhaps not even with the economy, because it plays on a much deeper level of our culture. The crisis we are experiencing is like a fever, an indication that something is amiss in the body. Because fever lasts for a long time and temperature rises, it should be taken seriously. There are at least two pathologies that are cared for. In the last decades we have robbed the environment, hurt it and humiliated it. Within just a couple of generations we are consuming a wealth of oil and gas that the earth has generated in millions of years, and in depleting these assets we are also hurting the atmosphere. All this says that we have messed up one of the foundational relationship of our existence, that with the earth and nature. And when an important relationship like this does not work, it is impossible that the other relationships work, as shown by the growing intolerance in our cities, increasing solitude, and how the relationship still largely shows the marauding with the resources of the African people, where every day they perpetrate new ‘slaughter of the innocents.’ The second cause of the fever is the growing economic inequality in the world, also thanks to the finance revolution. Without economic inequality, that does not only play on the profitability axis but also on work, the principle of equality is too abstract because people cannot achieve the life they want to live. Equality is the second word of modern triptych, and denying it signifies denying also the other two, for equality, liberty and fraternity have to be together or not one is authentically achieved.

Europe will rediscover itself if it will be able to give life back to Humanism of three dimensions, from which will also bloom ‘public happiness’ at the center of the program of Modernity. As Antonio Genovesi, an eighteenth century economist from Naples, reminds us, “it is the law of the universe that we cannot make our own happiness without making that of the others.”

All of Luigino Bruni's comments on Avvenire can be found under Avvenire Editorial.

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Comments - Banks, Europe, use of resources

by Luigino Bruni

published on Avvenire on 28/12/2011

logo_avvenireFinance and the economy are too important to be left with financiers and economists. I believe this could be summed up with the message that comes from the second and conclusive part of 2011. We noticed, and with more force than the first phase of the crisis (2008-2009), that the stock market indices and the “spread” are not distant affairs and are matters for experts, but are able to change the governments, our family budgets, and our life plans. So we all must address this situation, ‘living’ ever more in these places because if they remain inhabited by the citizens for a long period then they become inhuman. This crisis sends us three specific messages. The first relates directly to the banking world. Recent studies (University of Ancona: mofir.univpm.it), revealed that after September 15, 2008, banks have reduced lending to businesses, also to those virtuous.

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Three messages from the crisis

Three messages from the crisis

Comments - Banks, Europe, use of resources by Luigino Bruni published on Avvenire on 28/12/2011 Finance and the economy are too important to be left with financiers and economists. I believe this could be summed up with the message that comes from the second and conclusive part of 201...
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Editorial - Entrepreneurs, Not Speculators

by Luigino Bruni

published on Avvenire on 02/10/2011

logo_avvenire

One does not get out of any crisis with reductions and tax cuts. There is an urgent need for the civil, political and economic factory to start up again. Then the question becomes real and serious: how? The operation is complex but Italy (and the West) above all needs new entrepreneurs. Today, entrepreneur is a word that is overused and misunderstood. In the media, entrepreneurs are often the focus of the headlines, but the noun ‘entrepreneur’ is used improperly and in an offensive way to those who are really entrepreneurs. Many individuals commonly referred to as entrepreneurs should instead be called with other words such as speculators or dealers.

[fulltext] =>

The difference between the entrepreneur and the speculator is in the role it plays in the pursuit of profit. The speculator is the person, individual or institution that aims at maximization of profit. It is not necessarily a criminal or an enemy of the common good, but someone for whom the business entity is only instrumental, a way like others to make money. Thus, the speculator opens a shoe factory today, a construction company tomorrow, a hospital the day after tomorrow, with the sole purpose of making money through those activities. The entrepreneur, as the real everyday life tells us and as some great economists like Schumpeter, Einaudi or Bacattini, is a different person because the first goal of its activity is to create a project. Profit is just one of many elements of its project, an important sign that the project is working, innovating and growing over time. Therefore, the entrepreneur is someone who never totally “exploits” the business because of its given intrinsic value, as an expression of undertaking an individual and collective project of life. This is true to an extent that many businessmen, especially in these times, would make much more money giving up the company and investing the proceeds in speculative funds. But they do not do it because in that business they see something more than just money-making machine. There we can see their identity and history.

The current crisis is also the result of a cultural process that has led, in recent decades, far too many entrepreneurs to become speculators, thus losing relationship with the territory, with the people of flesh and bones, with the workers-persons, therefore helping the financial system to exaggerate its governance not only in the business but the world. But without authentic entrepreneurs there can be no true common good. The entrepreneur-innovator, unlike the speculator, sees the world as a populated place of opportunities to be seized, not simply to increase its slice of the “pie,” but for its vocation, loves to make new pies. From civil humanism of the fifteenth century to the industrial districts made in Italy, to the craftsmen artists to cooperatives, Italy was capable of civil and economic development when cultural and institutional conditions were created which allowed cultivation of the virtues of creativity and innovation, but instead we stopped growing as a country when whining, research and maintaining advantageous positions dominated, as in this last quarter of the century. People are the most important asset when the economy and society work even before the capital, finance or technology because only people know how to be creative and give life to those great innovations that are essential in hard times. Even today, after decades of hung-over for the growth of technological and financial capital, we are realizing that companies can grow and be leaders in the global economy. They are always more the ones where there are one or more people capable of seeing differently the reality.

People’s intelligence is the key to any real innovation and to any authentic economic value, as the economist and politician Carlo Cattaneo well know: “There is no work; there is no capital that does not begin with an act of intelligence. Before each job, before any capital is intelligence that begins the work and marks for the first time the character of wealth.”

Today, Italy is not (yet) sinking because, despite everything, there are millions of people, men and women, workers and entrepreneurs, who get up every morning to do their duty, who try to solve their problems and the others, drawing on their creativity to be innovative. If we want to get out of this crisis, we must first make life possible for these people, and arouse, especially among young people, a new enthusiasm and new entrepreneurial vocations. But this will not happen until we put the spotlight on the civil society, including that part of civil life which we call business.

All of Luigino Bruni's comments on Avvenire can be found under Avvenire Editorial.

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Editorial - Entrepreneurs, Not Speculators

by Luigino Bruni

published on Avvenire on 02/10/2011

logo_avvenire

One does not get out of any crisis with reductions and tax cuts. There is an urgent need for the civil, political and economic factory to start up again. Then the question becomes real and serious: how? The operation is complex but Italy (and the West) above all needs new entrepreneurs. Today, entrepreneur is a word that is overused and misunderstood. In the media, entrepreneurs are often the focus of the headlines, but the noun ‘entrepreneur’ is used improperly and in an offensive way to those who are really entrepreneurs. Many individuals commonly referred to as entrepreneurs should instead be called with other words such as speculators or dealers.

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Making Cakes

Making Cakes

Editorial - Entrepreneurs, Not Speculators by Luigino Bruni published on Avvenire on 02/10/2011 One does not get out of any crisis with reductions and tax cuts. There is an urgent need for the civil, political and economic factory to start up again. Then the question becomes real and seri...
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Comments - Three fragility and too much indecisions

The right path is difficult

by Luigino Bruni

published on Avvenire on 06/09/2011

logo_avvenireAs Italians and Europeans we must have the courage to come to terms with the reality. Behind the stock market crisis and markets around the world there is a triple fragility of financial capitalism (too much debt), the European policy, and Italy. For two or three decades this season of globalized capitalism has generated growth through private and public debt and a highly risky creative finance (for the system, not the actors), is coming to an end. Too bad that markets are still not able to choose and take a new path. And that same operation does not succeed, despite the increasingly explicit appeals to the Quirinal, leaders and key sectors of our politics, our union and significant parts of the civil society.

[fulltext] =>

The call that made us turn is eloquent and strong, but unfortunately it is not systematically listened to, not understood and even misrepresented. Uncertainty and mistrust reigns as supreme, and after a few puffs of oxygen it goes back underwater again, waiting for the next storm.

It has now been two months that the crisis is acute and we have not yet seen a G20 summit, only semi-private phone calls, meetings in two, statements that would be reassuring (which often produce perverse effects). The politics is showing itself incapable of governing the first serious crisis of globalization. The economy and the world have changed, but the categories in which the political, national and global read and act on it (or not act) is outdated and therefore ineffective. There is, of course, a specific Europe crisis, which is experiencing the first great age of the euro fibrillation: market operators are no longer sure that the Eurozone is capable of the future. The empty and useless statements on the Tobin Tax, the proposal to postpone the sender of Eurobonds (which are not realistic because behind the Euro lacks a strong unified European policy), the repeated uncertainties of the European Central Bank, much is said and always more confused and inadequate ideas.

But it is enough to look, at these times, the titles of major newspapers and international websites just to be convinced, if there is still a need that in this European and worldwide crisis of stock exchanges there is a big and heavy question mark on Italy. The uncertainty and constant change of the contents of a maneuver are increasing the negative expectations of the financial operators, who after a couple of weeks of waiting they begin to manifest devastatingly their serious doubts that our country really has the resources, first moral then economic, to do for itself what is necessary. It is really sad to see the hesitancy of our ruling class to immediately start and share those few reforms, perhaps unpopular, but essential, that would give confidence to markets and honest citizens. It is unthinkable to clean up the huge debt without putting real effort on pensions (primarily the question of intra and inter-generational equity), without asking a fair and well-modulated extraordinary contribution to those who can give it because of the possibility and convenience (instead of imagining the alternative that of taxing the remittances of care takers and domestic workers: it is a stroke of genius to ask sacrifices for our debt to those who did not create it and, with their work, make life better for millions of our elderly and children), without a drastic cost reduction, not so much of "politics" (politics is something high and serious), but of political bureaucracies. Not to mention the tax issue, for the family and against evasion, of which so much has been said here already.

We are very late, perhaps too much, and the signals for necessary things to be done are few and weak. But it is in hard times that everyone must demonstrate the ability to act within the limits of power and responsibility one has. Among these uncertain actors there are also of the European institutions, our closest relatives: if Italy is really too big a country to declare default, then some slap on the back and some consoling words at the bedside is not enough. But, as in any good family, relatives are not involved in a concrete way if the one in need does not first demonstrate seriousness and commitment to solve their problems. "Only you can make it, but you cannot go it alone,” recites a nice variation of the subsidiarity principle, one of the pillars of ethical and political Europe.

We need Europe more, but - first - we need Italy more, more government, more political, more civil and economic society, beginning with those who have most at heart the common good. But there is also a need of greater power of ideas: we cannot live this time of crisis waiting for it to pass. Also because it will not pass, unless we indicate and even cry out the need for a “new economy,” to save the civilization  called “market” that it may be able to articulate itself in a just and supportive manner, beyond this capitalism.

All of Luigino Bruni's comments on Avvenire can be found under Avvenire Editorial.

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Comments - Three fragility and too much indecisions

The right path is difficult

by Luigino Bruni

published on Avvenire on 06/09/2011

logo_avvenireAs Italians and Europeans we must have the courage to come to terms with the reality. Behind the stock market crisis and markets around the world there is a triple fragility of financial capitalism (too much debt), the European policy, and Italy. For two or three decades this season of globalized capitalism has generated growth through private and public debt and a highly risky creative finance (for the system, not the actors), is coming to an end. Too bad that markets are still not able to choose and take a new path. And that same operation does not succeed, despite the increasingly explicit appeals to the Quirinal, leaders and key sectors of our politics, our union and significant parts of the civil society.

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The right path is difficult

The right path is difficult

Comments - Three fragility and too much indecisions The right path is difficult by Luigino Bruni published on Avvenire on 06/09/2011 As Italians and Europeans we must have the courage to come to terms with the reality. Behind the stock market crisis and markets around the world there is ...
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Comments - The weapon against more tax evasion

Rewarding the honest

by Luigino Bruni

published on Avvenire on 28/08/2011

logo_avvenireFor teachers exams are a sad ritual in search of hidden notes and of new tricks to pass the test without studying. When a course is particularly led to these malpractices the first and natural reaction of the faculty is to increase controls and harsh punishments. I too have fallen into this temptation, but I learned that the main, if not the only, effect one gets is a double failure: it creates a crime atmosphere in the classroom and all students work badly, and the "copying professionals" always find more sophisticated systems that circumvent the controls while the average student falls in tighter controls, because now even a harmless look at the neighbor’s desk is punished.

[fulltext] =>

Last year I happened to teach Economics at a prestigious foreign university and I discovered that the exams were "open book." Obviously I had to develop a more structured exam but I'm even more convinced that the best way to increase efficiency and fairness in any system involves the right design of institutional mechanisms. Tightening controls and sanctions in my exams, with the best intentions and without wanting it I sent a strong message to my students: "you are basically dishonest and unfair," a message that frustrated the intrinsic motivation of good students and unleashed the imagination of the few unfair students to the point of wanting to prove that they were more cunning than me.

I believe there is a link between this experience and the debate against tax evasion which is in progress in Italy today. The first step for a real tax reform is to rethink the design and overall logic of the tax system: returning to the school metaphor, to switch from "note hunting" to "open book exams," where appropriate incentives are given to citizens to demand their own and others’ transparent transactions, allowing, for example, families to have less expenses and a more appropriate rate than the present ones.

A second element of a serious tax reform should begin with the realization that even if we were to sanction all bakers, bartenders, craftsmen and professionals who do not issue receipts and invoices (which is obviously necessary), there exist a mega tax and ethical issue for large companies and individuals who have registered offices and homes in tax havens, and easily exchange enormous wealth in international financial markets evading taxes (just see the reactions to the Tobin tax proposal or the taxation of Credit Default Swaps (CDS)), perhaps of pending future amnesties. Without a serious fight against these macro fiscal scandals, we can also close down some activity that does not issue a receipt (an appropriate thing in itself, especially when it comes to freelancers or medical professionals with villas and SUVs), but we would do the grave error of who treats the tooth decay of a patient and neglect to care about a tumor: treat well the tooth decay (which is very painful when inflamed: the dental metaphor is purely coincidental), but let us also remember of the tumor.

But there's more. In 1766 Giacinto Dragonetti, lawyer from Aquila, Italy, published a book entitled "On Virtues and Rewards," not by chance two years after the publication of the famous "On Crimes and Punishments" by Cesare Beccaria. In Dragonetti’s Introduction, it reads: "Men have made millions of laws to punish crime, and they haven´t established even one to award virtue," and therefore proposed to his Kingdom of Naples to give life to a true and real "Code of Rewards" which would accompany the "Penal Code," based on the extraordinary intuition that a country cannot develop if, while punishing the dishonest, it does not reward the virtuous citizens. It is true that an indirect way to reward the honest is to punish adequately the opportunists and the cunning ones, and today Italy also needs this. But we must bear in mind one of the lessons of economic science: the laws are mostly symbolic signals and messages, and those that are based on anthropological hypothesis that humans by nature are dishonest and opportunists ultimately produce opportunists and dishonest citizens. A tax reform that aims to be efficient and equitable must rely primarily on virtuous and law-abiding citizens that, we must not forget in these hard times, are always the vast majority of the population, including the Italian one, because if the opposite were true the common life would implode in the space of one morning. It is therefore the foundation of a healthy people that must be mobilized for a tax reform, with credible signs of confidence, esteem and gratitude. The biggest failure of a tax reform would be to further ruin the relationships between citizens, bringing them to look at colleagues and neighbors as dishonest and potential tax evaders, and not as valuable allies in the common construction of the city.

All of Luigino Bruni's comments on Avvenire can be found under Avvenire Editorial.

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Comments - The weapon against more tax evasion

Rewarding the honest

by Luigino Bruni

published on Avvenire on 28/08/2011

logo_avvenireFor teachers exams are a sad ritual in search of hidden notes and of new tricks to pass the test without studying. When a course is particularly led to these malpractices the first and natural reaction of the faculty is to increase controls and harsh punishments. I too have fallen into this temptation, but I learned that the main, if not the only, effect one gets is a double failure: it creates a crime atmosphere in the classroom and all students work badly, and the "copying professionals" always find more sophisticated systems that circumvent the controls while the average student falls in tighter controls, because now even a harmless look at the neighbor’s desk is punished.

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Rewarding the honest

Rewarding the honest

Comments - The weapon against more tax evasion Rewarding the honest by Luigino Bruni published on Avvenire on 28/08/2011 For teachers exams are a sad ritual in search of hidden notes and of new tricks to pass the test without studying. When a course is particularly led to these malpractices the firs...
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    [title] => Both future and present, maybe it's time of the youth quota
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Comments – What this World Youth Day leaves

Both future and present, maybe it's time of the youth quota

by Luigino Bruni

published on the Avvenire on 23/08/2011

 logo_avvenireIt was impressive to see in these days, the stark contrast between what happened at the WYD in Madrid and the turbulence, uncertainty and fears of the markets and politics. The stage was always the same: Europe and the world, but how different the feelings, the excitement, the scenery, the colors, the joy. On one hand, the weakness and inadequacy of politics, the dominance of the strong powers of finance, the lack of growth and development, the great debt also due to the lack of hope and confidence were celebrated; on the other, life, hope-faith-trust (fides), enthusiasm, the joy of living were celebrated. In fact, those young people and this church do not live on another planet; they are no less concerned and involved from the economic-financial events of these difficult times: what is profoundly different is the "look," and the point of view from which we observe the reality.

[fulltext] =>

Young people, in fact, are not only, as is often repeated (a little paternalistic) the future of our society: they, also and above all, live and interpret the present, today, and the history in a different way. Young people have a perspective on the world, eyes that see things different from those who no longer is young or not yet. The young people were at the head of the largest movements of epochal change: the young fathers of the resurgence, young protagonists of '68, and millions of young citizens who for thirty years with the WYD are changing the world in their own way.

There is now a big global "youth question," which is also one of the causes of the crisis, ethical as well as economic, we are experiencing. Not only that young people remain more and more outside the world of work (more often one finds work when no longer young), but they are outside the places that matter, from the economy, politics and institutions, to the point that we had to invent associations of young industrialists, young entrepreneurs, young political parties… as if to say that normal economics and politics are matters for the older. We are loading them of unsustainable public debt, plundering the environment, and above all with our cynicism, we are depriving them of hope, which is the fuel that powers life, more especially, the youth.

We (finally) agreed that there should be female quotas in the board of directors of large companies, because we realized, data in hand, that in firms where female genius is at work there is not only humanity but also more efficiency and wealth. When will we establish "young units" in businesses, economics, politics? Young people, in fact, bring enthusiasm, generosity, prophecy, courage that are essential foods for any good society, and that when they are missing everything becomes dark and sad. Of course, in a decent society there would be no need of either female quotas or youth quotas, but today in Italy and much of the old west, we are still far from this decency, and similar artificial mechanisms may serve democracy and development.

The economy is a piece of life, so it keeps all the vices, but also all the virtues and passions, this is why without the young protagonist neither the economy nor the society will function. Perhaps this is also one of the messages to what has happened in Madrid these days.

see more comments by Luigino Bruni on the Avvenire: Listen to young people, choose well. The Tobin Tax lost for 10 years (19/8/2011) A Nice Long Road (12/8/2011)  The Deadly Embrace (7/8/2011); The Cows of Finance and Us (2/8/2011); A Jubilee for Italy (24/7/2011)

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Comments – What this World Youth Day leaves

Both future and present, maybe it's time of the youth quota

by Luigino Bruni

published on the Avvenire on 23/08/2011

 logo_avvenireIt was impressive to see in these days, the stark contrast between what happened at the WYD in Madrid and the turbulence, uncertainty and fears of the markets and politics. The stage was always the same: Europe and the world, but how different the feelings, the excitement, the scenery, the colors, the joy. On one hand, the weakness and inadequacy of politics, the dominance of the strong powers of finance, the lack of growth and development, the great debt also due to the lack of hope and confidence were celebrated; on the other, life, hope-faith-trust (fides), enthusiasm, the joy of living were celebrated. In fact, those young people and this church do not live on another planet; they are no less concerned and involved from the economic-financial events of these difficult times: what is profoundly different is the "look," and the point of view from which we observe the reality.

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Both future and present, maybe it's time of the youth quota

Both future and present, maybe it's time of the youth quota

Comments – What this World Youth Day leaves Both future and present, maybe it's time of the youth quota by Luigino Bruni published on the Avvenire on 23/08/2011  It was impressive to see in these days, the stark contrast between what happened at the WYD in Madrid and the turbulence, uncertainty...
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    [title] => The Tobin Tax lost for 10 years
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Avvenire Editorial - Europe, now at the crossroads, must be able to show the way

Listen to young people, choose well

The Tobin Tax lost for 10 years

by Luigino Bruni

published on Avvenire on 19/08/2011

logo_avvenireThe Tobin Tax is not a new idea but it is a significant and important idea, which has only a defect of being late. In this case, it is worth an old African proverb: "The best time to plant a tree was twenty years ago, but if you have not done it the best time is now."

A dynamic phase of the debate on this tax was the one that broke out around the year 2000, within the youth movement that started from Johannesburg which culminated in Genoa in July 2001. Two months after the sad events in Genoa, there was the attack on the Twin Towers that completely shifted the attention of international public opinion and politics from the Tobin Tax and the governance of financial globalization to terrorism and wars. Thus began a period of "distraction" from issues of financial speculation from which we have awakened to the tragic crisis of 2008, when we realized that during our global distraction, in reality, the speculative finance without rules and controls grew and became hypertrophic, reaching the edge of an abyss.

[fulltext] =>

A first lesson to be learned from the history of recent years is therefore immediate but important: when young people are protesting together, in so many and on a global scale, often behind that protest, perhaps disordered and badly structured, hides an important question that must be heard beyond the partial or incorrect responses. If, in fact, we had listened, understood and made our own the questions that the young people posed to the world of economics and finance at the end of the last century, that is, a more attentive governance to the new dynamics of financial markets globalization, perhaps the crisis still in progress could have been avoided.

But to understand the meaning and purpose of a tax proposal at the time of Nobel James Tobin (one of the leading scholars of finance of all time, a figure that should already tell us something), it may be useful to recall the three main functions of taxes (and of taxations) in modern democracies.

The first is the most obvious and least controversial from the ideological point of view: financing and construction of public goods. The first function of taxes does not necessarily require special altruism or civic virtues, but only trust and hope that the vast majority the of other citizens are not tax evaders (a trust that we could also call today a virtue in Italy), but it is essentially a coordinated cost in order to produce goods that require contributions from all (security, infrastructure…).

The second function is the classic income redistribution: the taxation becomes an instrument of social solidarity and fraternity which says, with facts, that a people is also a community with a common good to ensure and protect, and may be based also on a form of self-interested rationality (as explained to us by philosopher John Rawls) when we think about the disadvantaged of the future could be us or our children.

The third function, the least known and remembered, which is to encourage the good called "meritorious" (or of merit) and discourage "demerit" good. Little or less goods, considered useful, are taxed for the common good (culture, education…) and more tax on those goods that in reality are "bad" (tobacco, hard liquor…). In this last case, taxes act as direct consumption of ethically sensitive people in areas where values are at stake in the general interest.

Normally, taxes play one or the other of these three functions and are very rare that they happen all together: the Tobin Tax is just one of them. In fact, to bring order and stability to financial markets today means to create a kind of public good that is of great value even economically. The redistributive effect is obvious, if they will use, as seems obvious, the revenue to build infrastructure, health and education in developing countries. Finally, financial speculation presents aspects of demerit goods, because the excessive risk that these tools create is downloaded from private entities, creating the typical "tragedy of the common good."

The critical challenge is to adopt such a tax at the maximum possible global level, as the field of finance is the world’s. As mentioned in other interventions, the legislation can only be global if it wants to be truly effective and not divert resources to other markets. In addition, the tax application must be associated with a serious fight against the scandal of tax havens, a reality in which we will have a hard time explaining its existence to our children without blushing of shame.

But even if only Europe could adopt the Tobin Tax I am convinced that it would be a great sign of civilization, which would benefit not only civil society but also the markets themselves, who need democracy and rules that will last. Europe has been home to modern economics and finance, has been able to invent these institutions and instruments which have been made big and made possible the development and democracy for billions of people, a beacon for humanity of the last centuries. Today Europe is faced with a choice: follow the short-term logic and the vested interests, and therefore leave the status quo of a financial market which today is not free because of the large ransom money, or give a sign of civilization with a courageous choice in line with its great history and its deep, and still alive, humanistic and Christian roots.

All of Luigino Bruni's comments on Avvenire can be found under Avvenire Editorial.

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Avvenire Editorial - Europe, now at the crossroads, must be able to show the way

Listen to young people, choose well

The Tobin Tax lost for 10 years

by Luigino Bruni

published on Avvenire on 19/08/2011

logo_avvenireThe Tobin Tax is not a new idea but it is a significant and important idea, which has only a defect of being late. In this case, it is worth an old African proverb: "The best time to plant a tree was twenty years ago, but if you have not done it the best time is now."

A dynamic phase of the debate on this tax was the one that broke out around the year 2000, within the youth movement that started from Johannesburg which culminated in Genoa in July 2001. Two months after the sad events in Genoa, there was the attack on the Twin Towers that completely shifted the attention of international public opinion and politics from the Tobin Tax and the governance of financial globalization to terrorism and wars. Thus began a period of "distraction" from issues of financial speculation from which we have awakened to the tragic crisis of 2008, when we realized that during our global distraction, in reality, the speculative finance without rules and controls grew and became hypertrophic, reaching the edge of an abyss.

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The Tobin Tax lost for 10 years

The Tobin Tax lost for 10 years

Avvenire Editorial - Europe, now at the crossroads, must be able to show the way Listen to young people, choose well The Tobin Tax lost for 10 years by Luigino Bruni published on Avvenire on 19/08/2011 The Tobin Tax is not a new idea but it is a significant and important idea, which has only a defec...
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Comments - To regain trust (and sense) for a new fair market

A Nice Long Road

by Luigino Bruni

published on Avvenire on 12/08/2011

logo_avvenireBehind the crisis we are experiencing there is, above all, a grave crisis of confidence. No one knows any longer where to find reliable investments; therefore they sell stocks preferring cash (or gold and safe havens). Today it is clearer than ever how true that the word credit comes from “believe,” from trust. In 1936 the great British economist J. M. Keynes well described, in its essence, what is happening now, a phenomenon that depends very little on sophisticated financial instruments and more on simple psychological mechanisms: we have fallen into a "trap of negative expectations," a situation in which a serious crisis of confidence (in this case in the public debts of "sovereign” States) that the workers have strong preference for liquid assets and lack of confidence in financial stocks. And when one falls into these traps, the only effective policy is to recreate that missing trust, recreate positive expectations. The current capitalist economic system does not have - and here is the point - anthropological and ethical resources before techniques, in order to raise these expectations, because they lack cultural perspectives to the challenges posed.

[fulltext] =>

In times of crisis, the memory is always an important resource to imagine and draw scenarios of hope. Trust comes from the Latin fides, a word that means confidence, reliability, tie (rope) and religious faith. I trust you, I will give you credit (you are credible), because we share the same fides, that faith which was the main guarantee of reliability and loan repayments, especially when trading with strangers. On this fides-trust-credibility-reliability-bond-faith, the first European single market between the fourteenth century and modernity was born. With the Protestant Reformation fides enters in crisis, the rope breaks (Christian fides was no longer enough for businesses and for peace), then Europe found new forms of trust in order to support the emerging markets: it is in fact in the seventeenth century that central banks, stock exchanges, which became the new “secular” guarantee of the new fides-free market. Parallel to these new economic institutions the national states were also born, which became the new "places of trust," the great safeguards for markets and currencies, as were the cities in the Middle Ages. This brief historical overview is just to say that the secular modern economy comes from a very close relationship between economics and national policy, between finance and national states. Behind exchanges and finance there were the states, peoples, ethnic communities, territories, affiliations. The political and economic democracy as we know it was based largely on national markets and economic institutions. This national capitalism, in its two great Anglo-Saxon and European versions, has held up until a few decades ago, when we entered in a more accelerated way in the era of globalization and financial capitalism.

This crisis is telling us that we still do not know nor understand nor govern the globalized capitalism, because while the economy and finance have changed radically, the policy and its instruments are still those of early capitalism, including creation of huge public debt without control and guarantees, an expression of ancient idea of sovereignty of nation states and seigniorage. Not to mention the tax issue: to fight tax evasion seriously we should at least acknowledge that there is a mega "tax issue" and of justice that plays in the global financial markets, where they create huge profits and returns that escape tax systems and are still too anchored to the national dimension, which may be used as ex post to the dangerous and immoral trick of amnesties.

In Europe, the euro is in deep crisis because we have not found a relationship between euro and Europe. Credibility always remains an effect of a single country (it will not be a coincidence that the Milan Stock Exchange is almost always the worst!), but it is not crucial to understand and deal with the crisis. It is enough to observe that the guarantees offered by Obama in the U.S. have become inadequate. In reality, it would need a political dimension of globalization, a policy that does not yet exist nor does one have a glimpse of. A new Bretton Woods world would be necessary to give life to a post-capitalist economy market where finance is regulated and taxed as (and perhaps more than) all income-generating activities, where one creates independent authorities of controlled public debt, where one regulates also the governance of multinational large firms (some of today's richest and most influential of small nation-states), and much more. That's why in this crisis the new market economy in the era of globalization is in play, which should be different from what we have created thus far. The global financial economy needs trust but, as in the case of energy, it consumes without being able to recreate, because its tools create reputation (which is a normal market good) which tends to displace the trust (which is instead a relational good).

What is certain today is that the old politics based on national governments, partisan balance and sovereignty no longer works. What will emerge from this failure we do not know: we can only predict a few years of fragility, systemic risk, uncertainty, and sacrifices for all, hopefully with bit of fairness. And we must above all raise the hope which is the great virtue in all times of crisis, it is the fertile ground from which even confidence can flourish.

All of Luigino Bruni's comments on Avvenire can be found under Avvenire Editorial.

 

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Comments - To regain trust (and sense) for a new fair market

A Nice Long Road

by Luigino Bruni

published on Avvenire on 12/08/2011

logo_avvenireBehind the crisis we are experiencing there is, above all, a grave crisis of confidence. No one knows any longer where to find reliable investments; therefore they sell stocks preferring cash (or gold and safe havens). Today it is clearer than ever how true that the word credit comes from “believe,” from trust. In 1936 the great British economist J. M. Keynes well described, in its essence, what is happening now, a phenomenon that depends very little on sophisticated financial instruments and more on simple psychological mechanisms: we have fallen into a "trap of negative expectations," a situation in which a serious crisis of confidence (in this case in the public debts of "sovereign” States) that the workers have strong preference for liquid assets and lack of confidence in financial stocks. And when one falls into these traps, the only effective policy is to recreate that missing trust, recreate positive expectations. The current capitalist economic system does not have - and here is the point - anthropological and ethical resources before techniques, in order to raise these expectations, because they lack cultural perspectives to the challenges posed.

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A Nice Long Road

A Nice Long Road

Comments - To regain trust (and sense) for a new fair market A Nice Long Road by Luigino Bruni published on Avvenire on 12/08/2011 Behind the crisis we are experiencing there is, above all, a grave crisis of confidence. No one knows any longer where to find reliable investments; therefore they sell ...
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Editorial - Debt and Financial hypertrophic

The Deadly Embrace

by Luigino Bruni

published on Avvenire on 7/08/2011

logo_avvenireThe downgrade, expected by the markets, of the U.S. rating by Standard & Poor's from AAA to AA + (first time in history), adds a tile to the mosaic that is  being compose these days. We do not yet have a clear picture of what is happening to our economic system, but what we can now have a glimpse of is that we are facing the biggest crisis of the capitalist system, a crisis that began in the fall of 2008, still in full swing, not knowing whether how and when it will end.

The collapse in the autumn of 2008 revealed a new fact: it is no longer possible to separate the real economy from finance, since in the era of globalization the real economy is also financial, a crisis in financial markets is also a real crisis (employment, GDP), and vice versa. That is why this crisis is also a failure of economics and of us economists (including Obama's advisers) for using outdated tools to describe the world and suggest recipes.

[fulltext] =>

But the storm we are experiencing these days is telling us something new: it is no longer possible to separate the economy from the geo-politics and from the policies of individual states. Among the collapse of financial markets, Obama's political problems and the affairs of the Italian government, the weakness of the European political system is their close relationship that one cannot find where the Market ends and where Politics begins. We will be able, then, to come out of this momentous crisis only if we learn together to look at finance, economics and politics in a systemic manner and in a global perspective but very attentive regionally (see Greece). Finance grew up as a good plant that, in the absence of pruning and care, is invading the whole garden.

Today, the annual volume of securities traded in financial markets far exceeds (between 8 and 10 times) the world's GDP, a volume that in the last 15 years has increased by more than 40 times. The question we must ask ourselves, including the experts,  is why we have witnessed this inert and bloated hypertrophic growth of speculative finance, without stopping from time to time to assess, at various levels (economic, political, social, ethical) if the path embarked in the nineties were taking us on impassable and dangerous trails.

This hypertrophy of finance narrows in a deadly embrace with the exorbitant private and public debt of the economically advanced world of economy. We must never tire ourselves of repeating that the problem of this crisis is excessive debt, private (in 2008) and public (now), due to large bailouts of banks and funding of expensive wars.

If we do not reduce the average debt of the West (and of Japan, another patient) we will not emerge from this crisis. Also because in these days where everyone talks about growth we must keep in mind that the capitalist economy has already grown bad in the past twenty years (thanks to financial innovation), with serious environmental and social consequences. The growth rates of years prior to 2008 cannot be proposed again, both for economic reasons (no question), but also and above all for ethical and environmental reasons. Otherwise we would discover the error of those who have diabetes that try to increase the physical activity, while continuing to eat sweets as before the diagnosis: we seriously care about globally changing the way of life and making sacrifices, an ancient and unpopular word, but always crucial when history becomes serious.

The individual and collective crises are always ambivalent: we can come out better or worse, and the outcome depends mostly on us, from our view of the world. A deadly mistake to avoid during crises is to not take seriously the signals that come from outside. Financial markets should not be demonized, they are telling us something important. First of all we have underestimated the crisis in countries such as Greece, Portugal and Ireland: structural and global financial crises are very serious things, even if they are of small states, because it can be a child who shows that the king (the euro) is nude.

A second signal-message that is coming from this crisis is the urgent need for serious and deep reforms, especially on pensions and reduced waste in public administration. Reforms that require a national policy still does not see beyond the partisan differences: this lack of responsibility is grave, because the moment we are experiencing is perhaps the most serious after the season of terrorism. Finally, this crisis will be a happy fault if it will make us give birth to a market economy other than the hyper-financial capitalism we have created, because we are paying the increases in economic well-being with the coin of vulnerability and insecurity of all but especially the most vulnerable (people and countries).

That's why we must all follow with great attention and responsibility what happens in these days: the fate of financial markets and the holders of securities are not the only ones involved, but the quality of the market economy that will emerge from this crisis, and therefore freedom, rights and democracy.

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Editorial - Debt and Financial hypertrophic

The Deadly Embrace

by Luigino Bruni

published on Avvenire on 7/08/2011

logo_avvenireThe downgrade, expected by the markets, of the U.S. rating by Standard & Poor's from AAA to AA + (first time in history), adds a tile to the mosaic that is  being compose these days. We do not yet have a clear picture of what is happening to our economic system, but what we can now have a glimpse of is that we are facing the biggest crisis of the capitalist system, a crisis that began in the fall of 2008, still in full swing, not knowing whether how and when it will end.

The collapse in the autumn of 2008 revealed a new fact: it is no longer possible to separate the real economy from finance, since in the era of globalization the real economy is also financial, a crisis in financial markets is also a real crisis (employment, GDP), and vice versa. That is why this crisis is also a failure of economics and of us economists (including Obama's advisers) for using outdated tools to describe the world and suggest recipes.

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The Deadly Embrace

The Deadly Embrace

Editorial - Debt and Financial hypertrophic The Deadly Embrace by Luigino Bruni published on Avvenire on 7/08/2011 The downgrade, expected by the markets, of the U.S. rating by Standard & Poor's from AAA to AA + (first time in history), adds a tile to the mosaic that is  being compose these day...
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    [title] => The Cows of Finance and Us
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Editorial – Middle Class and the Capitalism Crisis

The Cows of Finance and Us

by Luigino Bruni

published on Avvenire on 2/08/2011

Based on a perceived economic equity, impoverishing the middle class will unravel the social bond.

logo_avvenire

The agreement reached on U.S. public debt must not excuse us from deeply reflecting on excessive indebtedness of North American economy and of the capitalist system. The 2009 big bank bailouts primarily moved the private sector debt to the public sector, without removing the real causes of the problem, which find themselves in the U.S. and world middle class that is progressively impoverished and in debt. Behind the large public debt there is an inequality problem in income distribution that is becoming ‘the’ crucial question in our capitalist economic system.

[fulltext] =>

In the fall of 2008, when the crisis was about the explode, the 1% GDP share owned by the richest U.S population reached its peak, just as in 1928, at the dawn of the great Wall Street crash, as Robert Reich reminded us in his latest, valued book (Aftershock, Fazi, 2011). When the middle class is impoverished relative to the affluent class, it tends to borrow too much, also because now, unlike in 1929, the financial system proposes and promises magical recipes to maintain or increase, with debt, the levels of consumption.

In the past decades the attitude towards inequality had been ambivalent: part of the public and scholars’ opinion saw it basically as a transitional phenomenon, a price to be paid only in the early stages of the economic development. Albert Hirschman metaphorically expresses it with the image of the tunnel: when we are in a tunnel blocked in a traffic jam and if the lane next to me starts to move I can suppose that my lane will also start to move. The inequality, therefore, should have had an inverted U-shape: growth at the beginning then diminishes at the mature stage of capitalism.

The historical event of the West (certainly U.S. and Italy) tells us that in the last 25 years inequality has increasingly returned. How come? Were the forecasts of the economists wrong? In reality, a brand new factor was inserted, which is the financial nature of the last capitalism that send into crisis the same theory and ideology of the free market. In fact, when the helm of the economic system (and political) passes into the hands of speculative finance (here the adjective is important, finance is not all the same), some of the pillars of liberalism enter into crisis, including the market’s ability to ensure economic growth, for at least three reasons.

The first has to do with the kind of wealth that is created by financial speculations. The golden rule of the “normal” market economy (when funding is subsidiary to the real economy) is the mutual benefit of the parties that exchange; when, instead, we are often dealing with speculative finance the rule is of the ‘zero-sum game,’ just as poker: the winner correspond to the losses of the others.

This means that many of the latest generation of finance instead of creating new wealth moves it (especially by playing with time) from some individuals to others. Second, in many (not all) speculative finance happens systematically, without scandals and convictions. What we have recently seen with soccer bets: some players (large funds) bet on the outcome of the games (future value of securities) and then play in a way that their expectations (bets) will come true. The third reason directly deals with inequality. The financial turbo capitalism naturally produces high inequality because, thanks to labor and technology globalization, workers of average skills (laborers, employees, and care and service agents) always pay less. That is, the big part of the middle class, while strategically-pays the few hyper-specialists (technicians and managers) are able to exponentially increase the profits of finance.

But – and here lies the crucial point – an economic system that enriches too few and impoverish the middle class, the great majority of the population (to say nothing of true poverty, another crucial topic) does not grow. The social bond that is based on a perceived economic equity unravels and begins inexorably to the decline mainly due to a lack of “demand” (not just equity). In fact, an increase of middle and lower class income is immediately translated into a higher consumption and GDP, while increasing income of those who already have much produces very minor effects on consumption and growth. We are then realizing that when workers are poorer relative to other social groups, the inequality becomes a direct factor of growth (or recession). The rhetoric increase is no longer enough for the “size of the cake” before thinking about the ‘slices,’ because on one hand the increase of the cake may only be apparent, and on the other the squandering and the waste of the big cake eaters makes it indigestible even the smaller pieces of the others.

When one watches our capitalist system from afar, the first strong impression one can draw is that we have grown too much and evil: the environmental crisis says it with more eloquence, but it also says that this growing inequality is a result of over-milking the cows of finance, which today risks to kill the animals to exhaustion. The tool to rebalance the economic relationship is not called charity or philanthropy but tax system. That is why family-friendly tax proposals (like the “family factor”) is a purely economic matter before becoming an ethical proposal, because without rebalancing the social deal we will not have the energy to re-launch growth, reduce public debt and construct a better economic system. For this I must make my own the words of hope with which Reich concludes his speech: “In the United States, as in Italy, we will reverse the course that threatens our economies and democracies. We will do it so that this inversion is in everyone’s interest, even those in our societies who have enormous levels of power and wealth. … It is our challenge and our children’s. It is the biggest economic challenge we are facing.”

All of Luigino Bruni's comments on Avvenire can be found under Avvenire Editorial.

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Editorial – Middle Class and the Capitalism Crisis

The Cows of Finance and Us

by Luigino Bruni

published on Avvenire on 2/08/2011

Based on a perceived economic equity, impoverishing the middle class will unravel the social bond.

logo_avvenire

The agreement reached on U.S. public debt must not excuse us from deeply reflecting on excessive indebtedness of North American economy and of the capitalist system. The 2009 big bank bailouts primarily moved the private sector debt to the public sector, without removing the real causes of the problem, which find themselves in the U.S. and world middle class that is progressively impoverished and in debt. Behind the large public debt there is an inequality problem in income distribution that is becoming ‘the’ crucial question in our capitalist economic system.

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The Cows of Finance and Us

The Cows of Finance and Us

Editorial – Middle Class and the Capitalism Crisis The Cows of Finance and Us by Luigino Bruni published on Avvenire on 2/08/2011 Based on a perceived economic equity, impoverishing the middle class will unravel the social bond. The agreement reached on U.S. public debt must not excuse us...
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    [title] => A Jubilee for Italy
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Comments – To understand and deal with the crisis

A Jubilee for Italy

by Luigino Bruni

published on Avvenire on 24/07/2011

logo_avvenireIn these days, there have been warning signs after another of speculative attacks, alternating with that of relaxation and optimism. In reality, we must be aware that the situation is serious, and we must equip ourselves as country and as Europe to address a phase that could prove no less difficult and lengthy than that of the autumn of 2009. In fact,  the crisis that we are experiencing in these days is much more of a contagion phenomenon (of the Greek and/or Portuguese crisis): it is a structural fragility crisis of Italy and Europe. The illness is serious and yet it is neither a deadly disease nor a simple flu. It is a second mini-stroke that if it does not produce a change in lifestyle it can lead to fatal consequences.

[fulltext] =>

In the interval between the two crises Italy the “patient” has continued to behave as before, except for a few afternoon stroll or a few pills, but without any strong sign of a turnaround.

There are at least three elements to propose as diagnosis and a possible treatment. The first element for a correct diagnosis has to do with demography. We will never understand well what is happening if we do not start from a given structure and long-term period: Italy, more than other European countries, has in the recent years radically decreased the relationship between the active and the retired population, parallel to the sharp increase of life expectancy.

The entire state welfare system was based on a much lower life expectancy (and even more on youths who worked), which allowed the young generation to sustain the burden of pensions. In addition, the family, which was the true center of our state welfare (much more of the state or the market), can no longer perform its duties of care and nurturing. If we do not quickly act not only for a pension reform but a new intergenerational deal, the public debt cannot be reduced.

The public debt is, in fact, the second element of the diagnosis: speculation hits Italy because the huge public debt makes the periodic signing of government bonds indispensable, nothing less. Hence the request, in times of frailty even politically, of increasing returns of our bonds. The public debt is the real sword of Damocles of the current crisis.

The third element deals with Europe, namely the absence of a political reality behind the euro. The project of the founding fathers of Europe was primarily a political one. History tells us that a currency is strong when it is supported by (and expresses) a political power. The management uncertainties of the Greek crisis are very important signs, since they say that in addition to business interests of euros in Europe there is too little: the forces of financial markets know it and target those that are more fragile. Without a new political deal, a European constitution and strong institutions (and agile: one must reduce also the costs of European bureaucracy), the euro will not hold for long.

Today, the therapy that everyone suggests is the revival of the economic growth. It should be remembered that the insufficient economic growth is also a consequence of the first two elements, namely a country’s aged debt who cannot find the resources to grow. Economic growth requires many ingredients, all very essential: public investments (especially in education and research), creativity, innovation and, above all, enthusiasm and passion for the people. Today Italy certainly lacks resources for public investments but lacks even more the enthusiasm and the desire for life. To understand what this enthusiasm is, it is enough to a tour Asia, the Middle East or Africa. On my last trip to Kenya, more than the material poverty, it struck me to see young people studying in the evening under the street lights: it is this hunger for life and future that tomorrow can defeat the hunger for food and give life to development and prosperity. If today Italy and Europe do not find this enthusiasm, no finance can revive the growth because our politicians and public opinion systematically forget the greatest lesson of social sciences of the twentieth century: the growth and development of a country does not depend mainly on the action of the government but by the daily behaviors of millions of citizens, each of which has, and he alone, that piece of information and knowledge relevant to social and economic action.

Of course, among these economic agents there are also the government and institutions (which can and must do their co-essential part), but have much less power than they tell us every day (even to justify their presence and related costs). The solution to the economic crisis can be found outside the economic sphere: one can find it in the civilian life, the desires and the passion of the people, which are springs that feed also the economic life. One does not go to work every morning to reduce public debt, but to pursue projects and dreams. We are also able to make great sacrifices only if we catch a glimpse of a bigger collective project, capable of moving the heart and actions to rekindle enthusiasm. We have been able to do them many times in the past, even recently, why not now? However, each one of us should use well that piece of knowledge and power on the reality of which it is related to, use the talents well, undertake more and better. But for this game to function there is a need of rite and public liturgies, symbols of force, art, beauty, solemn and collective acts. In particular, I am convinced that today there is an dire need of a sort of jubilee, in the biblical meaning of the term: a season of mutual forgiveness, of reconciliation and of peace, to forget all the malice and poisoning of each other of which we are capable of in these twenty years both in the political class in the country and to look forward together. Today Italy is in a state of welfare very similar to “war of everyone against everyone” of which Hobbes talks about. We do not have to get out of it and continue the civic and economic decline; we can get out of it creating a Leviathan, the monstrous crocodile that is also part of the history and the DNA of the Italians. But we can get out of this poverty and economic trap by re-launching a new era of civic virtue and a new deal, the only ground that has generated and generates creativity, enthusiasm and love of life, from which the economic growth will flourish.

© All rights reserved

see a comment of Pierluigi Porta

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Comments – To understand and deal with the crisis

A Jubilee for Italy

by Luigino Bruni

published on Avvenire on 24/07/2011

logo_avvenireIn these days, there have been warning signs after another of speculative attacks, alternating with that of relaxation and optimism. In reality, we must be aware that the situation is serious, and we must equip ourselves as country and as Europe to address a phase that could prove no less difficult and lengthy than that of the autumn of 2009. In fact,  the crisis that we are experiencing in these days is much more of a contagion phenomenon (of the Greek and/or Portuguese crisis): it is a structural fragility crisis of Italy and Europe. The illness is serious and yet it is neither a deadly disease nor a simple flu. It is a second mini-stroke that if it does not produce a change in lifestyle it can lead to fatal consequences.

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A Jubilee for Italy

A Jubilee for Italy

Comments – To understand and deal with the crisis A Jubilee for Italy by Luigino Bruni published on Avvenire on 24/07/2011 In these days, there have been warning signs after another of speculative attacks, alternating with that of relaxation and optimism. In reality, we must be aware that the situa...
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Editorial

By Luigino Bruni

Published on Avvenire on 23/09/2010 

The topic of gratuitousness is (finally!) being talked about again, even in public debate, in politics – and even in economy and economic science.

This renewed interest by the economy should not surprise people if we remember that the Latin word charitas (note the letter “h”, as it was written in the first Christian codes) – which was chosen by Christians to translate the Greek word agape, gratuitous love – had economic origins and uses. It means that which was expensive, that which costs on the market. This renewed interest, however, is accompanied by usage which is not always attentive and faithful to the great philosophical, spiritual and especially human reflection (only humans know about it) on gratuitousness. In my opinion, there are two errors that frequently appear when people talk about gratuitousness. First of all, they identify it with free, as in free of charge, a price of zero. “Frank works gratuitously”, meaning he works for free, therefore, his stipend is zero.  Instead, from the great Franciscan tradition, we know that gratuitousness in a certain way means to have infinite value.

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When Francis sent friars to give the Gospel, he told them to not accept money in exchange for their preaching. But why? The tradition goes that, “If they had to pay you, it would take all the gold in the world.” And therefore, accepting sums of money less than “all the gold in the world” would mean underselling gratuitousness – relational and spiritual dumping. That is where the Franciscan tradition to accept gifts as an answer to reciprocity originates. Today, when we identify gratuitousness with “free”, we risk cancelling out this fundamental truth, and we twist the meaning of gratuitousness (underselling and undervaluing it) and market. Why does it also twist the meaning of market?

This is where we come to the second error.

Identifying gratuitousness with free (price of zero) has and is leading people more and more to associate the market, contracts and mercantile exchange to non-gratuitousness. If gratuitousness is free, then everything that deals with prices and money  has nothing to do with gratuitousness – that is, if we use gratuitous to mean discount, freebee, which would be gratuitousness present in the market (in reality, these meanings are a “vaccine” against real gratuitousness). Or, it can come “after” the market, when entrepreneurs as private citizens make donations or institute foundations to finally be able to live that gratuitousness so foreign to economic action and business. There would be much to say about the birth of the American philanthropic model, which, even as a reaction to the excessive interweaving of gratuitousness (charis) and market (indulgence), has built a dichotomic economic system, where business is business and gift is something totally private and separate from it. (We have to say that in the USA, there is not even an equivalent word for the Italian gratuitá, or as we are using, gratuitousness. Gratuity is only the tip that one gives to the bellhop). In reality, the true cultural challenge of gratuitousness is to think about it as a founding dimension of every human experience, from family to business, from politics to contract, as is in line with Caritas in veritate. Many examples of microcredit, from the Franciscans during the Middle Ages to Yunus, have lived extraordinary experiences of gratuitousness which frees millions of people from misery and exclusion, without a gift or “free” services, but with contracts, with conditioning rules – with gratuitousness accompanied by what is right and proper. The kind of gratuitousness that is required today of the banking system is not primarily that of sponsors and banking foundations, but the kind that informs (or not) the normalness of banking, from responsibility to transparency. The kind of gratuitousness that truly counts is not the 2% of one’s profits, but the other 98%. Otherwise, we reduce gratuitousness to a kind of limoncello during a lunch (limoncello is a sweet Italian lemon-based liquor) – something that fills holes, and even more, something that should not be offered at that time, immediately becoming unnecessary and superfluous.

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Editorial

By Luigino Bruni

Published on Avvenire on 23/09/2010 

The topic of gratuitousness is (finally!) being talked about again, even in public debate, in politics – and even in economy and economic science.

This renewed interest by the economy should not surprise people if we remember that the Latin word charitas (note the letter “h”, as it was written in the first Christian codes) – which was chosen by Christians to translate the Greek word agape, gratuitous love – had economic origins and uses. It means that which was expensive, that which costs on the market. This renewed interest, however, is accompanied by usage which is not always attentive and faithful to the great philosophical, spiritual and especially human reflection (only humans know about it) on gratuitousness. In my opinion, there are two errors that frequently appear when people talk about gratuitousness. First of all, they identify it with free, as in free of charge, a price of zero. “Frank works gratuitously”, meaning he works for free, therefore, his stipend is zero.  Instead, from the great Franciscan tradition, we know that gratuitousness in a certain way means to have infinite value.

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But gratuitousness can live together with the market

But gratuitousness can live together with the market

Editorial By Luigino Bruni Published on Avvenire on 23/09/2010  The topic of gratuitousness is (finally!) being talked about again, even in public debate, in politics – and even in economy and economic science. This renewed interest by the economy should not surprise people if we remember that ...