The United States-China face-off is surely going to dominate in the near future. Washington now considers the bid to involve China in a liberal order, which Beijing itself has deemed illegitimate, a lost cause. Thus, in order to prevent the confrontation from becoming a conflict – or even war – it is going to be necessary to establish some collaborative terrain on global issues in a context otherwise dominated by sharp contrasts. It is not the Congress but rather the American economic world that interacts and is heavily interdependent with the Chinese economy. Moreover, the recent phenomenon of corporate America shows the extent to which equilibria depend less and less on actors such as governments and increasingly on major corporations that dialogue amongst themselves rather than with government or institutional actors. The paradigm shift was clearly already underway, and the pandemic has done nothing but accelerate things.
An eventual US-China accord could risk pushing Europe off the playing field and triggering a period of major uncertainty. As a result, not only must the Recovery Plan be corrected but Europe’s internal and external agendas need to be consistent. In any case, Europe does have reason to hope, as witnessed by the German elections: high voter turnout – around 76% – containment of the extreme right and minimal space for left-wing extremism are a good indication that Western liberal democracy is working.
The macroeconomic situation at global level remains volatile however. Along with mistrust, there are contrasting perceptions of priorities and sensitivity to the imminent threat of China formally embracing the energy transition considered obligatory by the West and then, in reality, reverting to coal. The end of the pandemic poses a series of high priority questions: how to exit ultra-expansive monetary policies; how to channel liquidity; how to manage massive public and private debt and, finally, how to stabilize goods and services along global productive chains. Questions whose answers still lack the necessary cooperative political determination.
In Europe, and not only Europe, the pandemic has emphasized existing phenomena such as rising inequality, generational conflict and an increasingly polarized and divided public opinion. Efforts must therefore go toward recomposing the fragments and mending the tears caused by generational divisions, and toward reducing inequality to avoid fueling an already mounting social rage. Not to mention the weak factor of demographics: the birth rate in Italy has been falling since 2014. Indeed, the 1.5 million new Italians in Italy today are foreigners while 800,000 new Italians were born abroad; then thanks to the pandemic, the number of civilian deaths has reached that of the Second World War.
Covid-19 has triggered a reshaping of the work world in Italy and around the globe at a cost of 6-billion euro in lost work hours compensated by unemployment benefits. Inequality among workers has accentuated, resulting in the rise of phenomena such as the “working poor” and “social dumping”. Furthermore, CENSIS estimates a 21 billion-euro gap as the Italian economy fails to make demand meet supply. A contribution to resolving this problem could come from the world of training, where the most recent and important innovation is the creation of ITS institutes: fruit of a complex understanding between the business and work worlds whose success depends on being able to offer something that other forms of education cannot.
Taxation is another central theme. In reality, no European country has made any great reforms. Italy may now be ready for reforms capable of taking into account the changes underway; reflecting, for example, on whether a dual taxation system – progressive on work and proportional on income – still makes sense. Moreover, on the proposal for the reform of the property registry in Italy, it should be kept in mind – and this is a very serious problem – that mortgage debt amounts to a full 300 billion euro.
In response to high rates of inequality and productivity deficits, the inefficiency of the public administration, the services crisis and the government crunch it is not enough to create ad hoc committees or introduce subsidies and financial interventions – a new social contract is needed. The parameters have changed as compared with the past however, and committees especially must not end up merely producing a new income redistribution system but must draft a wealth distribution method that is sufficiently balanced so as not to jeopardize the soundness of the social fabric.
The new social contract must also be mindful that today’s conditions and players are not the same as yesterday’s. Those who did the collective bargaining in the past – political parties, unions, local institutions – are no longer the same, and this is due, above all, to a loss of power and legitimization. Today’s party membership is an eighth of what it was immediately following the War, and union enrollments are dominated by retirees. A new social contract must make reference to positive examples, such as Etna Valley: an alliance of city, university, unions and businesses that has made investments substantial enough to attract 1500 high technology researchers to the area. The model is one that could well work at a broader and more general scale.
“Pact for Italy”, some participants observed, is only a title for now; it could be useful to the extent it is capable of channeling positive energy into a rich and constant dialogue that could generate the determination to get out of this together. Future scenarios, looking ahead to 2040, are not going to be simple nor are they a sure thing, either for work or for social organization and cohesion. There were those who maintained that, in the end, work may no longer be central and, above all, will change in its composition – the active population in 2040 will be 60% creatives, with the remaining 40% doing executive jobs – resulting in no small impact on companies’ work organization and the concomitant elimination of currently underpaid levels. And there will be much more free time, so the question is going to be what to do with it. Utopia or dystopia? The question is sure to remain central in the coming years, and it will not be an easy one to answer.