Economists from Italy

"Il voler tutto riformare è lo stesso che voler tutto distruggere."

"Se l'arte dell'eloquenza è l'arte di persuadere, non vi è altra eloquenza che quella di dire sempre il vero, il solo vero, il nudo vero. Le parole, onde è necessità di nostra inferma natura di rivestire il pensiero, saranno tanto più potenti, quanto più atte al fine, cioè più nudo lasceranno il vero, che è nel pensiero."

"History is a graveyard of aristocracies."

"The assertion that men are objectively equal is so absurd that it does not even merit being refuted."

"Assume that the new elite were clearly and simply to proclaim its intentions which are to supplant the old elite; no one would come to its assistance, it would be defeated before having fought a battle. On the contrary, it appears to be asking nothing for itself, well knowing that without asking anything in advance it will obtain what it wants as a consequence of its victory."

"It is a known fact that almost all revolutions have been the work, not of the common people, but of the aristocracy, and especially of the decayed part of the aristocracy."

"The economic and social theories used by those who take part in the social struggle ought to be judged not by their objective value but primarily for their effectiveness in arousing emotions. The scientific refutation of them which can be made is useless, however correct it may be objectively."

"When it is useful to them, men can believe a theory of which they know nothing more than its name."

"Men follow their sentiments and their self-interest, but it pleases them to imagine that they follow reason. And so they look for, and always find, some theory which, a posteriori, makes their actions appear to be logical. If that theory could be demolished scientifically, the only result would be that another theory would be substituted for the first one, and for the same purpose."

"The diverse natures of men, combined with the necessity to satisfy in some manner the sentiment which desires them to be equal, has had the result that in the democracies they have endeavored to provide the appearance of power in the people and the reality of power in an elite."

"Society is not homogeneous, and those who do not deliberately close their eyes have to recognize that men differ greatly from one another from the physical, moral, and intellectual viewpoints."

"Empirical laws ... have only slight or even no value beyond the limits within which they have been observed to be true."

"Among civilized peoples, especially the very wealthy population of the United States of America, women have become objects of luxury who consume but do not produce."

"Increase in the wealth per capita fosters democracy; but the latter, at least according to what we have been able to observe up to now, entails great destruction of wealth and even eventually dries up the sources of it. Hence it is its own grave-digger, it destroys what gave it birth."

"Usually, so far as improvement in the people's economic conditions is concerned, humanitarians simply play the role of the busybody."

"For a very long time, and among a large number of peoples, political power has belonged to the owners of the land."

"Most lobbying is pro-business, in the sense that it promotes the interests of existing businesses, not pro-market in the sense of fostering truly free and open competition."

"Today we are practically living a trade war, a currency war because the exchange rate today is one of the important factors to determine the competitiveness or not of products. Generalized currency depreciation in my view is an explicit strategy used by countries and that threatens us."

"A fairly large part, if not, indeed, the very nucleus, of the Fascist movement has been built up of ex-Socialists who abandoned their party because of, or in consequence of, the war. This observation is particularly true of the younger element in the Socialistic party, including young men of a practical turn, often restless in temperament, who had rallied to the Socialist party not so much because of its positive economic program, as because of its negative program of protest against the aimless individualism of the Liberal regime, and who found in Fascism the means for effectuating their desire to take a part and to reconstruct."

"The most notable difference (of the American character) lies in the psychology of work. In the Orient one works to live; in Europe one works to consume; in America one works to work. These are the three stages of a progressive evolution."

"What is the "cost of capital" to a, firm in a world in which funds are used to acquire assets whose yields are uncertain; and in which capital can be obtained by many different media, ranging from pure debt instruments, representing money-fixed claims, to pure equity issues, giving holders only the right to a pro-rata share in the uncertain venture? This question has vexed at least three classes of economists: (1) the corporation finance specialist concerned with the techniques of financing firms so as to ensure their survival and growth; (2) the managerial economist concerned with capital budgeting; and (3) the economic theorist concerned with explaining investment behavior at both the micro and macro levels."

"The life cycle of family size, at least in the U.S., has a very humped shape rather similar to that of income, though with a somewhat earlier peak. As a result, one might expect, and generally finds a fairly constant rate of saving in the central age group, but lower saving or even dissaving in the very young or old."

"A situation where people can grow old without having a job that rewards them individually while adding to the collective well-being is morally unacceptable."

"Macro rational expectations, as I have labeled the hypothesis, seems to say that expectations in an economist's model must be perfectly consistent with his model that embodies these expectations. In other words, the agents of his model must all share his views of the relevant economic mechanisms, as well as his data. Why? Because if he holds them they must believe they are God's truth and, if so, rational people can have no other views (and of course we should never ask how they would come by these views and data, that not even other specialists may have heard of yet, let alone accepted). I submit that this view is pretty absurd--I would almost say offensive! I certainly believe that I know more about economics and the economy than (almost) everybody else, and i can even prove it: If everybody shared my vies, then the economy could not be in today's troubles (though it might conceivably be in some different ones!)."

"I believe people can solve complex problems eventually. By repeated trial and error they will get there; but they need a long time. At this point I agree with Herbert Simon. People do not learn immediately, as those rational expectations models seem to imply. I don't believe that. The statement that assumptions do not matter is nonsense. It is funny. Yes, I assume people are consistent in their behavior. I assume that not because I believe everybody actually is, but because I believe, on the average, you do not get too far from it."

"Modigliani's theory was a powerful searchlight on what was happening... It is the best explanation of what has actually been happening in the great swing of American life since the 1950's."

"In the early 1950s Franco Modigliani, with Richard Brumberg and , formulated the life-cycle theory of consumption and savings that enjoyed a huge and undisputed success for at least three decades. It replaced Keynes’s ‘fundamental psychological law’ of savings, according to which the marginal and average propensities to save grow as income rises. On the other hand, the life-cycle theory maintains that the level of savings depends on the age of consumers, and hence on the demographic structure of society rather than on the level of family income."

"Within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough. (26 July 2016, speech to Global Investment Conference in London)"

"In Greece, the position at the outset was particularly difficult, so now we have to be particularly patient with the country. That's no surprise."

"It is too early to assess the policies of the new German government. I can only say that the crisis has shown that the monetary union is incomplete and that the weaknesses need to be remedied. Germany helps the euro best by further strengthening its competitiveness and promoting growth."

"One needs a complex package of policies and, as we always stress, structural reforms come first, because many of the problems of the euro area are structural. And I'm sure that's also the biggest fear for the Governing Council as a whole. We discussed the possibility of negative deposit rates, but our objective is maintaining price stability."

"The crisis has not been overcome, but there are many encouraging signs. The economy is recovering in many countries, the imbalances in European trade are declining and the budget deficits in the monetary union are falling."

"The signals from the monetary analysis confirm the picture of subdued underlying price pressures in the euro area over the medium term."

"... "the Continent's traditional social contract" - perhaps its major contribution to contemporary civilization - "is obsolete" and must be dismantled."

"(Italian language) L'appello a non vaccinarsi è un appello a morire sostanzialmente - non ti vaccini, ti ammali, muori - oppure fai morire - non ti vaccini, ti ammali, contagi lui lei muore -, questo è."

"The gap between countries that embrace innovation and those that hesitate, Draghi explained, will widen significantly in the coming years, which is why Europe is now facing a moment of truth: over the last twenty years, we have gone from being a continent that welcomed new technologies, narrowing the gap with the United States, to one that has progressively placed barriers to innovation and its adoption. We have already seen this in the first phase of the digital revolution, when European productivity growth fell to about half the US rate, with almost all of the divergence coming from the technology sector. Now this pattern is repeating itself with the artificial intelligence revolution. Last year, the United States produced 40 major fundamental models, China 15, and the European Union only three. The same pattern can be observed in many other frontier technologies, from biotechnology to advanced materials to nuclear fusion. [...] Economic history indicates that mass unemployment is not the most likely outcome. Previous technological revolutions suggest this."

"ECB [European Central Bank] President Mario Draghi’s famous promise to do ‘whatever it takes’ to preserve the eurozone was a masterly move to buy time. But monetary policy cannot solve the currency union’s problems."

"Our friendship goes back many decades, to when we shared a common plane. Over the years, over the decades, I have had enormous respect for Mr. Draghi. He has had an extraordinary capacity for intellectual analysis of issues that focused on the common good and not just the immediate. [He is the] symbol of a generational challenge. [He has carried out] extraordinarily complicated tasks because it was believed, and it turned out to be correct, that he would analyze the problems and not approach them from a biased position. [He is] a man with a unique ability to analyze situations and contribute to their solution."

"In economic theory the conclusions are sometimes less interesting than the route by which they are reached."

"Perhaps the most influential theorist in England today is Nicholas Kaldor (Hungary), and undoubtedly the most original is Piero Sraffa (Italy)."

"There are two things in Sraffa. One of them is very close to Keynes and that's the part that the Sraffians ignore and that is, Sraffa wrote a criticism of Hayek's capital theory book in 1932, and it's in that criticism that Sraffa developed this theory of spot and forward markets, and it's that theory which Keynes latched onto in his spot-forward market analysis. So there's a very good connection between Sraffa and the spot-forward markets. The other thing which they've latched onto, what was really anti-Keynesian, is The Production of Commodities by Means of Commodities. It has nothing to do with real world or with economics - it's an attack to show that the neoclassical system doesn't work. There are lots of ways of showing that it doesn't work, but basically the way Sraffa shows it doesn't work is by assuming that there's no substitutability between labour and capital. It's a fixed-coefficient system. So what? You know, the old neoclassicists would have said that wages were inflexible. It's the same thing. Real wages are inflexible in the Sraffian system. What does it prove? I don't think it proves anything."

"My thesis, paradoxically, and a little provocatively, but nonetheless genuinely, is simply this : PROBABILITY DOES NOT EXIST.The abandonment of superstitious beliefs about the existence of Phlogiston, the Cosmic Ether, Absolute Space and Time, ... , or Fairies and Witches, was an essential step along the road to scientific thinking. Probability, too, if regarded as something endowed with some kind of objective existence, is no less a misleading misconception, an illusory attempt to exteriorize or materialize our true probabilistic beliefs."

"Probabilistic reasoning—always to be understood as subjective—merely stems from our being uncertain about something."

"Indeed, a full understanding of Sraffa’s contributions can be difficult, since these must be viewed as a complex whole, as part of an extremely ambitious cultural project: ‘to shunt the car of economic science’ in a direction opposite to that –the subjective theory of value –chosen by Jevons, one of the leading early exponents of the marginalist approach. Thus, with his writings Sraffa contributes to exposing the weak points in the theories of the leading exponents of the marginalist approach, from Alfred Marshall and Arthur Cecil Pigou to Friedrich von Hayek, and of their present-day followers, and at the same time re-proposes the classical approach of Adam Smith and David Ricardo (and also, in certain respects, of Karl Marx). The work of reconstructing the classical approach is also coherent with elements of the Keynesian contribution. This connection is possibly the most important issue in the current debate concerning the road to be followed in going on with the work started by Sraffa."

"Sraffa’s criticisms of the concept of capital also amount – at least in principle –to a deadly blow to the foundations of the so-called ‘neo-classical synthesis’. Combining Keynes’ thesis on the possibility of fighting unemployment by adopting adequate fiscal and monetary policies with the marginalist tradition of simultaneous determination of equilibrium quantities and prices as a method to study any economic problem, this approach has in the last few decades come to constitute the dominant doctrine in textbooks the whole world over. It is only thanks to increasing specialisation in the various fields of economics, often invoked as the inevitable response to otherwise insoluble difficulties, that the theoreticians of general equilibrium are able to construct their models without considering the problem of relations with the real world that economists are supposed to be interpreting, and that the macroeconomists can pretend that their ‘one commodity models’ constitute an acceptable tool for analysis. For those who believe that the true task facing economists, hard as it may be, is to seek to interpret the world they live in, Sraffa’s ‘cultural revolution’ still marks out a path for research that may not (as yet) have yielded all it was hoped to, but is certainly worth pursuing."

"Il green pass è una patente, è una patente di libertà, che è nelle mani di chi è guarito dal covid o ha fatto i tamponi o, ancor meglio, ha fatto il vaccino. (...) se non hai la patente non puoi, non potrai lavorare, non potrai accedere ai luoghi di socializzazione."

"(...) aumentare agli opportunisti il costo della non vaccinazione; come glielo aumenti agli opportunisti, qual è la logica, devo dire geniale del green pass? Tu dici "o ti vaccini", no non mi vaccino – benissimo, "o guarisci", e va be' se non lo ha preso... "e allora ti fai i tamponi". I tamponi sono un costo psichico – il fatto di infilare dentro al naso, fino al cervello, i cotton fioc lunghi – è un costo psichico, e un costo monetario - 50 euro, due volte 60 euro - più il costo organizzativo! Tu gli aumenti il costo; aumentandogli il costo, tu lo spingi a ridurre lo zoccolo (...)"

""Every day, 1) ‘simple systems’ become complex: for example, a village becomes part of a city; and 2) ‘complex systems’ become more complex: for instance, financial markets embrace machine learning. Often, an increase in complexity leads to unintended consequences"."

""By nature, ‘complex systems’ grow or decay at exponential rates. As suggested by the butterfly-effect in chaos theory, a negligible change in an ‘original state’ can lead to a radically different ‘resulting state’. In other words, a minor event might have large, unpredictable effects - depending on its: a) position in network (i.e.: initial conditions); b) degree of connectivity (i.e.: ease of interaction); and c) size of the impact"."

""The future is not a straight-line-projection of the past. Yet, most people - even scientists - think in linear, cause-effect patterns. The real world works differently: events follow discontinuous random walks, not predictable trends. At best, we can only assess the ‘likelihood of forthcoming events’. A rule-based approach is often misleading; to forecast future developments, we need probabilistic - rather than deterministic – thinking"."

""We need to learn how to manage ‘non-linear feedback loops’, ‘quantum jumps’, and the unpredictable consequences any event can bring about"."

""In an era of complexity, quantum thinking is needed – particularly in central banking"."

""Enlightened, quantum policymaking has an important role to play. Yet, ‘classical physics’ still shapes our way of learning. Cause-effect, linear thinking should be abandoned. To better understand our complex world, we must say “Bye” to Newton"."

""From Athens’ ‘Thirty Tyrants’ to the rise of Hitler, democracy always failed “from inside”. The shift towards authoritarianism was favored by: 1) rapidly changing contexts; 2) inept rulers; and 3) weak institutions"."

""Change is needed. In the absence of bold decisions, rising inequality will foster populism and nationalism, putting democracy at risk"."

""The question “state or markets?” is poorly posed. The dichotomy between “intervention - state - planning - equity” and “laissez faire - private sector - market - efficiency” stems from inappropriate consequential reasoning: the state can be inequitable and the market inefficient. Debates about primacy should end: state and market are complementary - not substitutes. Whenever governments and markets have worked well together, the results have been spectacular: ‘moon landing’ is the most quoted, quintessential example"."

""In public policy, dependencies and unintended consequences matter. For example, ‘climate change’ and ‘population aging’ are key drivers of migration and cannot be ignored when designing immigration policies. Also, ‘deforestation’ not only leads to ‘global warming’, but also drives wild animals closer to humans - increasing the likelihood of viral infections, via ‘cross-species leaps’. As a result, most decisions cannot be taken in isolation: solving problems in one place is likely to create new ones, elsewhere. Also, well-intentioned policy choices can often provide perverse incentives - and obtain the opposite of their stated objectives. The phenomenon is known as the “cobra effect”: in India, during British rule, the authorities’ bounty on dead cobras resulted in a larger cobra population. In other words, policy making: 1) relies on a complex, interrelated context; and 2) can lead to unpredictable, non-linear outcomes"."

""Future shocks could exceed the ‘ability to respond’ of governments, businesses and citizens"."

""Tackling ‘population aging’ - especially in high-income countries, where the median age is above 40 - requires: 1) acknowledging that most pension systems are financially unsustainable; and 2) reducing the resources allocated to the most sizeable share of the electorate - the elderly"."

""‘Greening the economy’ is likely to be as challenging: every year governments across the world subsidize fossil-fuels (coal, oil, gas) for an amount equivalent to Japan’s GDP, produce electricity by burning them, and authorize the chopping to ‘non-forest use’ of an area the size of Belgium"."

""The state must set the framework for the markets to function (...) but in the long run, innovation needs a competitive private sector"."

""When designed and implemented correctly, ‘conditional financing’ can: 1) steer resources towards the strategic objectives; 2) avoid speculative capture, by ensuring the productive use of public resources; and 3) push the private sector towards inclusive, sustainable growth"."

""The state needs to enable the markets, but - contrary to the dreams of planners and technocrats - development cannot be ‘state-managed’. For the business environment to lead to innovation, the state needs to protect ‘public goods’ such as: 1) competition; and more broadly 2) the entrepreneurial spirit. Policymakers must achieve a practical, dynamic balance in the state-market mix"."

""Thinking about the future gives vertigo. It takes courage to look ahead. The ancient Greeks - when they sought to know - consulted the oracle at Delphi. Religion and magic help manage anxiety, but a dispassionate analysis of data and probabilities may actually provide useful guidance"."

""Largely unnoticed, megatrends transform the way we live and work. Preoccupied by our daily worries, we tend to overlook the irreversible forces that shape our life. In the past, the printing-press and the telephone forever changed human communication. Combustion and electricity revolutionized energy management. Going forward, the unfolding of similar ‘transformative, disruptive shifts’ will reshape society, business and the global economy"."

""[In Italy,] continuing to do 'what has always been done' is not convenient: living on rents and clinging to the past would equate to a slow suicide, because in the meanwhile risks would rise and the economy would get exposed to potential adverse shocks. If not challenged, the “I hope I get through” mentality will lead to shipwreck or irrelevance – which is the same". Original quote: "[In Italia,] continuare a fare ‘ciò che si è sempre fatto’ non conviene; vivere di rendita, aggrappati al passato, sarebbe un lento suicidio, perché nel frattempo i rischi aumentano e l’economia viene esposta a potenziali shock avversi. Se elevata a sistema, la mentalità dell’“io speriamo che me la cavo” porterà al naufragio o all’irrilevanza – che è lo stesso"."

""(...) throughout the Peninsula, informal and personal social ties are more important than formal and impersonal ones. When the community (Gemeinschaft, in German) counts more than society (Gesellschaft), family relationships - making up for the absence of the State - prevail over collective responsibilities, weakening civil society". Original quote: "(...) lungo tutta la Penisola, i legami sociali informali e personali sono più importanti di quelli formali e impersonali. Quando la comunità (Gemeinschaft, in tedesco) conta più della società (Gesellschaft), le relazioni familistiche – supplendo all’assenza dello Stato – prevalgono sulle responsabilità collettive, indebolendo la società civile"."

""Almost as if it were a new religion, we need to start rewarding those who create added value and take up the responsibilities required by their role in the community". Original quote: "Quasi fosse una nuova religione, bisogna iniziare a premiare chi crea valore aggiunto, assumendosi le responsabilità richieste dal proprio ruolo nella collettività"."

""We need to understand and resolve discontent, preventing valid social issues from falling into nationalism". Original quote: "Bisogna capire e risolvere lo scontento, evitando che valide istanze sociali cadano nel nazionalismo"."

""Women are the (forgotten) half of the world's population, and their social inclusion would benefit everyone". Original quote: "Le donne costituiscono la metà (dimenticata) della popolazione mondiale, e la loro inclusione sociale porterebbe benefici a tutti"."

""Complex problems are not solved (only) with money". Original quote: "I problemi complessi non si risolvono (solo) con i soldi"."

"Many times I say to the Americans: "You're looking for someone and not something". In effect this "someone" benefits from the "something", from the traffic in drugs."

"Obviously, as the FMA, we have in our DNA attention to women, young women, and to work, because there is no discrimination and because there has been what was perhaps a word most used in the past: empowerment. So I felt I was on a mission in a certain sense, to bring my skills and "do my bit for Italy", which is perfectly in line with our FMA mission. And then it’s exciting to somehow bring Mary’s presence into a group that wants to work for rebirth."

"The monopoly of the United States and Europe in the selection process condemns the World Bank and the International Monetary Fund to being seen as mere extensions of the strategic interests of industrialised countries. The choice of who leads these institutions is too important to be entrusted to mechanisms that are opaque, undemocratic and increasingly unable to guarantee that the best candidate will prevail."

"The blog is perhaps not the most appropriate tool for performing the true function of politics, which is to mediate between different interests and find a synthesis. It is more likely that the Internet will continue to be a tool for information and reporting. This is, however, a very important function."

"The fact is that a reduction in contributions increases the current deficit, but will automatically reduce future deficits due to the lower implicit debt associated with pension payments as these mature. We are not aware that this feature of our social security system has been highlighted in EU-level negotiations on the Stability Law."

"(About ius soli and ius culturae) Does it make sense to make them feel stateless in our own country? Does it make sense to present them to our children as strangers? Does it make sense to teach them our laws, our social norms and our history in our schools, to impart our culture to them and then exclude them from all of this? Are we not running the risk of developing in them and in our children a feeling of learned helplessness, injustice and discrimination, which is a precursor to resentment, hatred and mistrust?"

"The international system of exhibitions, fairs, biennials and scientific events is now extremely dense and pervasive. And although every year new crowds of global tourists (Chinese, Russian and even Indian) arrive on the scene, it is very difficult to make headway in such a fiercely competitive environment. [...] Why should 29 million visitors come to Milan in the summer of 2015? To see an extraordinary exhibition on food (the materials for which could be consulted in real time on our iPhones while we travel to India or Brazil to study their food policies first-hand)? Or to visit the beauties of Milan (no doubt about that, but some doubt about our ability to compete with much more aggressive competitors in this regard)? This is no laughing matter: if we want the Milan Expo not to be a flop, it is crucial that Milan gradually becomes a global centre of attraction on the theme of food."

"Thanks to the large cultivated areas that still surround it, Milan could truly become the first metropolis where agriculture returns to being the lifeblood of the city and not just an extraneous presence. But we need pluralistic agriculture, promoted by pluralistic urban policies. We need a new belt of extensive agriculture that could redraw the city's perimeter and prevent any further expansion; but we also need “zero-kilometre agriculture” to give meaning to the thousands of small pockets of empty space that dot the large sprawling city of northern Milan. Finally, we need urban agriculture to multiply the amount of green and organic space on rooftops and along roadsides and to create opportunities for employment and environmental awareness everywhere."

"We need a project that makes Milan a “world city” in terms of food production and marketing; a project that helps migrant communities to promote widespread food entrepreneurship and creates a network of spaces (such as the many abandoned farms within the municipal boundaries) where these different cultures can find logistical support."

"The real problem we have in Italy today is one of fairness, not the financial sustainability of our pension system."

"There are people who currently receive pensions or annuities, as in the case of politicians, which are completely unjustified in light of the contributions they have paid in the past. We have granted this privileged treatment to these people for many years. For those who receive very high benefits, should we not ask them to make a contribution that could in some way lighten the burden on the social security accounts? This would allow us to carry out some redistribution, for example, to help those people in the pre-retirement age group who are living in poverty, or we could allow greater flexibility in terms of retirement from the pension system. These are all measures that can be taken in this area. Linking contributions and benefits is the real underlying problem."

"The National Social Security Institute (INPS) provides benefits on behalf of the state. So as long as the Italian state does not go bankrupt, let's say that the INPS goes bankrupt, and I assure you it will not, but the Italian state will always be there. If there is anything people should be concerned about, it is not the INPS accounts but the Italian state's accounts, the public debt."