Europe complacent in its immobility
It has been more than two years since the publication of the Letta report ("Much more than a market") and, in September, it will be two years since the publication of the Draghi report ("The future of European competitiveness"). These reports are the two essential pieces of the diagnosis that warned that Europe has been falling behind in the global economy.
The conclusions also coincide. More integration, more innovation, more productivity, and, for all this, more investment are needed. In fact, this has been needed for a long time.
Two years after the publication of the reports, progress has been meager, almost imperceptible. This is explained not only by a lack of political decisions – which is also worrying – but also by the unyielding attitude of European citizens, who do not demand that politicians and public managers change course. Consequently, as time runs out and European improvements are scarce, the situation has worsened.
One of the key points of the diagnosis shared by Letta and Draghi is the imperative need to generate investment from European private savings, which are abundant but inefficient for savers themselves and for the economy.
In a radio debate a few days ago, we tried to emphasize this priority urgency, in order to change savers' perception of risk, which in my opinion, is mistaken. Their conservative vision leads them to waste their efforts on accounts, deposits, and assets with minimal remuneration. Ultimately, it causes them to lose purchasing power.
Faced with this situation, we called for tax incentives to encourage savers to take the leap, but we failed in our educational attempt: the moderator summarized it as further proof of the old debate between the right – which only asks for lower taxes – and the left – which defends the welfare state by not ceding public income.
The moderator's perception is the one that dominates socially: the idea that we will pay for the welfare state by collecting as many taxes as possible, rather than by making the economy more competitive, grow, and guarantee us the resources for the sustainability of European benefits, now in danger due to a declining and impoverishing economy.
Just two months ago, the European Securities and Markets Authority (ESMA) organized its annual conference at its headquarters in Paris. ESMA's role is vital for changing attitudes towards saving and generating the necessary investment volumes in Europe. Most speakers validated the diagnosis of Letta and Draghi, but they did not want to admit the scarce progress achieved and the almost null perspective from now on. They therefore expressed complacent and indecisive attitudes towards changing the current statu quo. Their position is fatal for European competitiveness, but it defends the positions held in public and private entities, which could be threatened by the radical transformation in Europe that would result from applying the conclusions of the reports.
In the midst of this conformity, and of the ridiculous assertions about supposed advances in the therapy applied to the European patient, Enrico Letta appeared with dignity, a good speaker, usually affable, who on that day did not even smile. Letta reminded the self-satisfied audience in a serious tone that the delay is not two years, but twenty-five. In his opinion, it was then that Europe began to perceive a continuous loss of progress compared to the United States, which then had an economic weight equivalent to the European club, but which is now 30% higher. According to Letta, it was at that moment that Europe should have initiated a decisive reform.
The former Italian Prime Minister warned that, compared to when he published his report, there has been a clear degradation of political and economic conditions. Among the urgent obstacles currently facing the European club, he highlighted the political mismatch between voters – who demand immediate and simplistic reactions and policies, in line with the vision of the journalist we mentioned – and the impossibility of short-term decisions responding to the need for structural adjustments, in finance but also in energy.
Letta finished speaking, terrified by the cowardice and inability of European leaders to move, even slightly, the level of citizen understanding about the urgency of changing things.