"In these days something very small has created an epochal world movement.
We are withdrawing to make room for the world.
And in doing so the world breathes.
And with it we too.
There could be no more important world experiment. The air is cleaner, we live on the essentials, we can no longer escape from ourselves, we have to deal with dilated time every day.
We went back to putting our hands in the dough to cook, we baked the bread we only bought in the bakeries, we started painting, creating with clay, writing.
We have become masters of our time.
And, as with children, boredom leads us to be creative.
That creativity lost for who knows how long. That creativity considered hitherto unimportant, unprofitable, just a thing for children.
Yet we are rediscovering that without creativity nothing makes sense.
The pollution inside and outside of us is decreasing. Nature invites us to flower, to show ourselves and others our most precious gems, the ones we have hidden so far.
We finally have time to become artists, writers, cooks, actors or poets. To do it without worrying about how we are dressed or combed, to do it without distractions, to follow the voice of our intuition that until now we have silenced because it is not in line with our daily commitments.
The empty squares show their beauty and their majesty, the isolated streets tell of the infinite stories they have witnessed and hosted, the trees are regenerated in a silence of the past, the birds give melodies never heard. And the night regains its mystery, without disturbing noises.
What a great redemption this for the whole world. The man had to step aside. Also for his own good.
We have so much time now to guard. We have our homes to look after and beautify. We have ourselves to discover.
Once able to sow something revolutionary in us.
Such a mighty revelation could not be born in a day or a week. It took more time.
And the Universe has given it to us.
Now it's up to us to eliminate the weeds that have taken away vital energies, make room for new sowing, intuitively feel which seeds to plant and let what wants to emerge flourish.
It is the moment of cleansing, purification and rebirth.
We are free. Finally free.
To really be ourselves.
Then the time will come to pour us into the squares, to walk in nature, to climb the peaks of the mountains. But they will be sacred moments, never taken for granted.
We will be ready to bow like never before to so much beauty.
But now we are not ready yet. We need time to spend with ourselves to give birth to this awareness, this delicacy of soul, this sacredness.
It's time to retire, to hide, to make room for the world."
Elena Bernabe
Last night, Sunday 15 March 2020, around 19.55:5 pm I turned on the television to listen to the evening news. TG368 journalist Costanza Calabrese makes her debut with a dramatic number: 24. The number of Coronavirus deaths in Italy in the last XNUMX hours. The highest since the emergency began (and I am not only talking about Italy, not even in China - wanting to take official data for good - there has never been such a high number of deaths in a day since this crisis began ). Higher than any terrorist attack recorded in Italy in our republican history. Higher than any plane or rail accident that has occurred in our country.
The newsletter continues by describing a quarantined country, and ends with a connection with Barbara D'Urso's studio, which anticipates the development of its prime time entertainment program on Canale 5. There will be three connections with as many Italian cities, to organize of the "flashmob" whose residents of the 3 cities will appear on their balconies to sing a song all together: our national anthem, in Rome at 22.30 pm; Azzurro by Adriano Celentano, in Milan at 23.00 pm; and Volare by Domenico Modugno, in Palermo at 23.30 pm.
Listening to this connection, at first I thought that the conductor's intent is certainly commendable, since she devises a nice way to brighten up a national quarantine evening by involving as many people as possible live, in an impeccable way from a health point of view. Then my mind focused on the choice of the songs: the national anthem agreed, while the other two were certainly chosen to instill confidence and hope in the citizenship, since they refer to the times of our Italian economic miracle. On this thought my stomach suddenly closed, I immediately turned off the TV, and spent the rest of the evening immersed in reading a fantasy book.
Because the reality is that our country has lost confidence in itself for too long. It seems that a spell makes us lose confidence in a piece of ourselves every 9 years. Throughout my life (I was born in 1985) all the current problems seem to have started in 1993, when we lost faith in politics. The last government of the first republic (registered by Giuliano Amato), the expression of a normal parliamentary democracy, falls overwhelmed by the Tangentopoli scandal; with it fall all the main parties, and the first "technical" government of our republican history arrives (registered by Carlo Azeglio Ciampi). The Italians just have to cling to one of the most prosperous and advanced economies on the planet.
Nine years later, 2002 arrives and we also lose faith in the economy. To be precise, the exact half of Italians lose confidence in monetary policy, since they will never be able to accept our new currency (the Euro) as something fully corresponding to our national interests; while the other exact half of Italians lose confidence in fiscal policy, since they will never be able to accept that Silvio Berlusconi and Giulio Tremonti occupy the "button room" of power in Italy without combining havoc. The Italians (of both sides) just have to cling to one of the most envied lifestyles in the world.
Nine years later, 2011 arrives and we also lose faith in our lifestyle. The unforgivable fundamental errors of the architecture of the Eurozone (giving reason to the first half of the Italians described above) together with the unforgivable errors of evaluation of the government (giving reason to the other half), introduce the word "spread" in our common language. What was originally the differential expressed in basis points between the yield of Italian and German ten-year government bonds becomes, in our collective imagination, a thermometer that measures a very particular fever: it increases as the rulers on duty manifest the desire to spend more money than how many our country can afford, it decreases when those "virtuous sacrifices" are imposed which destroy our quality of life year after year without solving any of our country's financial problems. We Italians just have to cling to our culture and our memories of the good old days.
Nine years later, 2020 comes and we are facing this lethal pandemic. I think I can avoid having to summarize here what has happened to us in recent weeks.
Yesterday a friend asked me if it was possible to compare this pandemic to a war, and therefore expect that at the end of this crisis there will be a period of economic rebirth comparable to that of the "thirty glorious" of the second post-war period. I replied that this will absolutely not be the case, for the following reasons.
The great philosophers of economics (I am thinking, for example, of Karl Marx) explain to us that the trend of economics is the result of the interaction between 2 "ingredients": capital and labor. Capital is the set of all those assets (land, buildings, machinery, tools, in recent decades also software, etc.) that are used for the production of wealth; work, on the other hand, is the set of all activities (manual and intellectual) that human beings perform to produce wealth.
Wars typically destroy most of the available capital (razed cities, unusable means of production, ruined infrastructure, etc.). Consequently, in the post-war period we typically have a situation of extreme scarcity of capital (because everything has been destroyed) and a great abundance of work (many people need and want to work to eat). This particular mixture of scarce capital and abundant labor generates a period of strong economic expansion since all the available arms are used in the reconstruction of capital, up to a re-balancing of the two ingredients.
Our current Coronavirus, on the other hand, is decimating the population but at the same time leaving all capital intact. Therefore, this pandemic will leave us in the unprecedented situation of abundant capital and scarce labor.
To date (Monday 16 March 2020) it is not known what the final entity of this huge misfortune will be, but only for clarity of display I choose to take one of the worst possible scenarios, which would lead to extremely marked economic, political and social consequences. It goes without saying that in the hope that a less dramatic scenario will arise than the one under consideration, my arguments that follow would always be valid, but in a more attenuated form.
As "worst possible scenario" I refer first of all to the report prepared in recent days by Public Health England (PHE) for the British health system (NHS) in which it is estimated that about 80% of the British population could fall ill with Coronavirus in next 12 months. Given that the virus is now circulating in the vast majority of countries in the world, I assume that this percentage applies to the whole world.
Second, I assume that the current coronavirus mortality rate remains constant until the end of the epidemic. At 12.00 GMT today March 16, 2020, there are 173101 total sick people worldwide, of whom 6664 have died and 77785 have recovered. Of the remaining 88652 still ill, 5937 are in serious or critical conditions, while the remaining 82715 are not seriously ill (data: www.worldometers.info). Admitting that I have no expertise in medicine, I assume that all the non-serious sick people will eventually heal, while the seriously ill people will eventually heal and half die. On the basis of these hypotheses we would have a final number of deaths equal to 6664 + 5937/2 equal to 5.56% of the 173101 total patients.
According to the latest United Nations estimates, at the end of 2019 the world had a human population of 7.7 billion inhabitants. If 80% of the world's population fell ill, we would have a total of 6.16 billion sick. If 5.56% of these were to die, in this do-it-yourself "worst possible scenario" (I repeat: I have no epidemic skills) we would have 342 million Coronavirus deaths worldwide within the next 12 months.
If 342 million deaths were to occur in the world with minimal destruction of capital and infrastructure, we would end up with an overabundance of capital never seen in 3 centuries of capitalist history. Just think of how many empty houses, how many vacant shops and offices, how many closed factories, how many ruined shopping centers, how many abandoned mines and how many useless infrastructures we would find ourselves in the world to get an idea of the overabundance of capital that is about to overwhelm us.
But this is not enough, because once the surviving active population had to try (with very little capital use) to put farms, mines and factories back into operation, the world would also find itself overwhelmed by an overabundance of food, raw materials and of consumer products without having at their disposal an audience of consumers able to absorb all this overabundance.
The reader will now wonder if I am crazy to talk about overabundance of food in the weeks when images of consumers are spreading all over the world who are assaulting supermarkets trying to grab pasta, tins and toilet paper. However, I reaffirm my profound conviction that what worries me most about this crisis is not so much the images of the empty shelves (moreover always regularly replenished again). What worries me in the long run, rather, are the images of the farmers of the Po Valley who for some days have had to throw rivers of milk that no longer have access to bars, cafes and closed restaurants.
The recent collapse in demand and the price of oil and almost all other agricultural, energy and industrial raw materials also goes in the same direction.
It is therefore very easy to predict the impact of all this on the global economy: a generalized collapse in securities and real estate, and a suffocating deflation. The joint result of these two phenomena will be a very serious financial crisis caused by debt levels (both public and private) that rise beyond any control and measure.
It is necessary to specify that this financial crisis will not be a liquidity crisis, but a much more serious solvency crisis. This is the reason why the recipes put in place these days by the main central banks of the planet, and inspired by the concept of "Quantitative Easing" that accompanies us since the 2008 financial crisis, are absolutely not adequate, since they are based on an injection of liquidity. essentially in the form of additional debt. The inadequacy of these measures (measured by the reaction of the financial markets) was not only seen in the timid and disastrous version of the recipe proposed by the European Central Bank last Thursday 19 March, but also in the much more decisive version announced by the Federal Reserve yesterday , Sunday 15 March.
What I think should be taken into consideration, however, would be a large-scale, readjusted replica of what Hong Kong authorities did during the darkest days of the Coronavirus crisis on their territory. On February 26, 2020, the Hong Kong government decided to credit 10000 Hong Kong dollars (just under 1000 euros) to the current account of each resident to encourage consumption. The measure was financed in budget deficits.
Such a rainfall and non-refundable credit should also be made in Europe, and not only for a month, but for the whole time of the emergency. Furthermore, it should not be done by governments in budget deficits, but directly by the European Central Bank simply by issuing money.
As any good macroeconomics textbook teaches us, the issue of money and direct and free credit to citizens would have a single result on the economy, to be pursued from now on by the ECB in a precise and determined manner: create inflation.
If there were some zealous custodian of the Bundesbank's orthodoxy within the European Central Bank by mistake among the readers of this text, he would probably jump in the chair now to smash his knees against the underside of the table.
It is unthinkable for anyone to talk about the deliberate creation of inflation without reviewing the history of what exactly happened a century ago in the Weimar Republic, when uncontrolled devaluation and hyperinflation had the immediate and concrete impact of depriving the poor people of consumer goods. essential. Nor can we forget the tragic political evolution that followed the aforementioned Republic. Nor can we forget the enormous efforts that entire generations of institutional servants have made in the last 100 years to combat the monsters of hyperinflation and devaluation in every corner of the world, from Mexico to Zimbabwe via Peru.
However, I would like the ECB authorities to consider my reasoning and perhaps argue if and why I'm wrong. They too should bear in mind the basic difference between war and pandemic. Here we are not talking about creating inflation in a reality with hungry people and capital, productions and infrastructures destroyed by war or mismanagement. Instead, we are talking about creating inflation in an economy where people and consumption, not production capacity or infrastructure, are decimated, and where the overabundance of food, raw materials and unsold consumer products would act as a natural way to inflation induced by the extreme measure that I propose.
The objective that would be achieved would be threefold: firstly, to guarantee access to essential goods for the population left without work and without income; secondly, to guarantee an audience of consumers to the production chains that have remained without consumers; third, to use the path of inflation to bring the entire global financial system out of a solvency crisis of such magnitude that it does not allow any other possible outlet to be frankly glimpsed (apart from the chain collapse of banks and sovereign states for bankruptcy) which not the reduction in the value of the debt in real terms.
Another discourse is instead the management of the economy on the fateful day after which this tragedy will have passed and the final damage count can be made.
If this tragedy has taught humanity something, it will be that we can no longer afford to weigh unsustainably on our planet's ecosystem. It will no longer be possible to pursue economic growth as we have done up to now, since the already described overabundance of capital and production capacity and scarcity of consumption will prevent the profitability of many conventional investments. Instead, a colossal work of cleaning and re-sanitizing our planet will be needed, starting from the constant reduction of carbon dioxide emissions, the elimination of polluting emissions, the purification of river and lake waters, the reclamation and restitution to nature of built areas no longer used.
Political doctrines will also have to change, as the two new phenomena of overabundance of capital and scarcity of work and consumption will make socialism obsolete (yes because in 2020 there are still those who need to understand that this ideology has failed forever) as much as liberalism.
Socialism arises from the condition (already partially described above) of scarce capital and abundant labor. In particular, Marxian thought rests on the objective situation of the mid-800th century in which very small elites owned all the little existing capital, and the masses of workers were inadequately remunerated for their services. In the world of the time, the idea of redistributing existing wealth could have had a certain appeal, imposing a forced transfer of the means of production to workers, to lift millions of people out of poverty.
Unfortunately, however, if then removing a farm from a nobleman to assign it to a sharecropper meant giving hope of redemption to the latter, in the world of tomorrow, giving an industrial plant to an unemployed person will not have the same hopes, because the latter would find himself to produce without finding customers.
I therefore strongly hope that from now on all those who still find interest in the word socialism will cease to invoke a "redistribution of riches" dead and buried, and instead begin to study a "redistribution of paid work": a necessity that has already been sufficient ignored until now, but which will be made urgent in the morning by post-Coronavirus devastation, and the day after tomorrow by the imposition of artificial intelligence.
Liberalism also becomes obsolete and will have to renew itself. Those who have always believed that the right to private property and free economic initiative are essential pillars of our personal freedom, will have to clash once and for all with the definitive reality that there will no longer be any "invisible hand" to Adam Smith to regulate the private economic activities. There will only be room for a "regulated hand", and those who cherish freedom more than anything else, would do well to accept this reality and try to make this hand direct the company towards the above mentioned goals of redistribution of the work. and cleaning up the planet in the least invasive way possible regarding private freedoms.
Instead, I would like to spend a note of optimism regarding all the political diatribes that prevailed in the world until just before the explosion of this emergency. As for military and international political diatribes, the fact that the pandemic brings all the countries of the world to its knees, without any exclusion, should give the discipline of geopolitics a small holiday, at least during the most acute phase of this emergency. The show will resume as soon as we reach the coveted "peak" of the pandemic (don't worry, the story does not end).
With regard to internal political affairs, the pause should be even a little longer: for example, in European and Western democracies, those who called themselves "right-wing" will have to accept the priority of environmental re-sanitation over anything else (except for the obligation to guarantee health and essential goods to the population), while those who defined themselves as "leftists" will have to accept that international migratory flows in any direction will have to be eliminated for a long time (except for immediate family reunification husband-wife and underage parent-child) for the everyone's safety.
At this point it is finally time to make clear to the reader the meaning of the long quotation reported at the beginning of this article.
Dear Elena Bernabè, I don't know you and I mentioned your beautiful words and your name without asking for your consent, only after having noticed that everything was freely accessible on Instagram. I therefore assumed that you were happy with a free distribution of what you wrote and if I made a mistake I apologize. You may be surprised that your words were mentioned in an article that explains the opinions of those who write about the effects of Coronavirus on the global economy, but what you wrote represents for me one of the biggest inspirations, well, since I graduated in economics.
When you write "There could be no more important world experiment. The air is cleaner", Or"Nature invites us to flower, to show ourselves and others our most precious gems, the ones we have hidden so far." or again "Now it's up to us to eliminate the weeds that have taken away vital energies, make room for new sowing, intuitively feel which seeds to plant and let what wants to emerge flourish."I believe you have fully achieved the basic objectives that any politician, banker or entrepreneur must keep in mind to recover a career in the world of tomorrow, because as I have tried to argue, it will be the same economic and financial needs that will bring the world in that direction.
In the last part of my essay, I can't help spending a few more specific words on our country, Italy.
Criticizing those who govern us has always been our national sport. It is normal to continue to do so now, that the current government makes serious mistakes in managing this crisis. However, it should be stressed that a pandemic situation such as that which rained on us is absolutely unprecedented in our recent history. We have never even seen it in any Hollywood film (with the partial exception of "World War Z", which however is ill-suited to describe the Coronavirus because in the film the incubation period of the disease was 10 seconds, in our reality 14 days or more). therefore any governmentof any party would have made serious management mistakes.
The top priority is therefore that the government continues to do its best to manage the health emergency, slow down the spread of contagion, and save as many lives as possible. Citizens must comply with the ordinances imposed, the social partners guarantee the supply of essential goods during an emergency.
In the meantime, the Italian government will have to start an intense diplomatic action both towards the European partners and towards the European institutions themselves to get the main argument of this text: the public expenditure necessary to manage this emergency cannot be financed in deficit of public budget, as done in the last few weeks to date. Instead, it must be financed with a free issue of money by the European Central Bank.
I believe it is right to open your eyes to a fact of fundamental importance: even in a hypothetical "best possible scenario" in which the restrictions on the freedom of movement of the population decided by the Italian government in recent days had the full desired effect, however it will serve the whole spring to eliminate the infections. So, we can immediately say that the 2020 tourist season (i.e. at least 10% of our gross domestic product) is lost. Right from the start we can say that our retail stores have received goods for the spring-summer season that they are unable to sell or pay, which means they cannot order or hope to receive the goods for the coming autumn- winter, and therefore have lost at least one full year of work. All the production chains of non-essential goods during the emergency period will suffer devastating consequences.
It would therefore be desirable that we stop immediately to tell us that "Coronavirus will have a negative impact of zero point on this quarter's GDP" and immediately accept that our GDP in 2020 will suffer a double-digit collapse never seen since the second post-war period. This means our debt (both public and private) is already unsustainable from any point of view. Hence the urgency on the part of our government to demand a free issue of money by the ECB with the short-term goal of keeping our country up in the emergency phase, and with the long-term goal of allowing to our economy a way out of reducing real debt by means of inflation. Otherwise it will be sovereign bankruptcy, and we won't even be able to save the salvable. At that point, regaining full control of our monetary policy would no longer be the ambition of some nostalgic extremist, but a prerogative of national survival.
Once the emergency is over, the Italian government that will have to translate the indications I have provided above into our country. It will be essential to start from a real demographic policy focused on the concept of 2 children per woman, given that our country has an average age of the population among the highest on the planet, and therefore it is no wonder that the mortality of Coronavirus in Italy it is double compared to the rest of the world (the mortality of this virus increases with the patient's age). It will also be essential to proceed with the cleaning of our skies, our waters and our soils, all three of the most polluted in Europe. Finally, it will be essential to restart the restoration and re-enhancement of our artistic and cultural heritage, which as always will be our lifeline.
Only then "Then the time will come to pour us into the squares, to walk in nature, to climb the peaks of the mountains."and "We will be ready to bow like never before to so much beauty."As Elena Bernabè says.
Finally, I would like to give some suggestions to Barbara D'Urso for the next episodes of her evening entertainment program on Canale 5. Just "Azzurro" and "Volare", dating back to 1968 and the Sanremo Festival of 1958 respectively! I do not say to choose songs strictly from 2020, but if we browse the repertoire of the Sanremo Festival at least for the last 10 years, some nice ideas for a flashmob from the balcony in Coronavirus times we find it.
Malika Ayane sang (Sanremo 2010):
"I start from here, From an ephemeral illusion, I wake up and you are there, You still, Here"
Roberto Vecchioni sang (Sanremo 2011):
"Call me still love, always call me love, In this desperate dream, Between silence and thunder, Defend this humanity, Even if there was only one man left"
Emma Marrone sang (Sanremo 2012):
"No, this no, it's not hell, But I don't understand, How is it possible to think, That it is easier to die"
Marco Mengoni sang (Sanremo 2013):
"And while the world falls apart, I compose new spaces and desires that belong to you too, that you have always been the essential for me"
Etcetera et cetera, up to the present day.
It is not my intention to exalt the singers of our day, nor to diminish those who made Italian post-war music famous and loved all over the world. I would just like to raise the alarm cry of a thirty-four year old who too often in his life has seen his own country, Italy, who instead of facing problems instead of facing them took refuge in his memories of the good old days, therefore turning his head dramatically backwards.
Who knows if thanks to Coronavirus we Italians will find the courage to turn away.
* Paolo Silvagni, March 16, 2020
Graduated in economics, former financial consultant, entrepreneur
Photo: Facebook
