The populist rhetoric of extra profit: what if we looked at beach resorts and taxi drivers?
Snapshot from a period of crisis: it is 2012 and Sanremo is hosted by Gianni Morandi with co-host Rocco Papaleo who, on the first evening, enters the stage in loden. And Mario Monti, the then prime minister at the head of a government whose mission was to save the country from the economic-financial abyss, immediately had an effect. It is the era of the Minister of Labor and Social Policies Elsa Fornero who announced the pension reform and whose voice rippled and then broke into a sob at the word “sacrifices”, with the evident annoyance on the part of Monti himself .
The fall of Berlusconi
At the time, the gravity of the moment was clearly expressed to the Italians. So much so that the matter of the sacrifices to be made has become a national-popular theme, with all the mainstream media busy creating portions of the story. From Sanremo to the various political and lifestyle talk shows. The country was hostage of the fateful “Trichet-Draghi letter”, also known as the “letter from the ECB to Italy” of 5 August 201, which had as its immediate consequence the fall of the Berlusconi government, with a curious and, somewhat disturbing, curtain of plainclothes flag-wavers outside Parliament to celebrate. Just as they appeared in the late afternoon, they disappeared at dawn.
Tears and blood
Today we are not in the same dramatic situation as then, but years of tears and blood await us. And the image that the media is pumping out as much as they can is the criminalization of those businesses that produce wealth. Indeed, they have the audacity to produce “extra profits”. The narrative shifts from the need to make sacrifices to the unbridled ardor of hunting down extra tax revenue to squeeze out of banks and multinationals.
Where does all this come from? Let’s take a step back. The new European Stability Pact requires states to present a medium-term budget structural plan in order to illustrate to the European Commission what they intend to do to recover from excessive indebtedness. Italy could choose whether to present a four-year plan, with a consequent reduction in spending of over 20 billion per year until 2028, or a seven-year plan, with a consequent reduction in spending of 13 billion per year until 2030. It has taken the second path, as Prime Minister Giorgia Meloni herself and Finance Minister Giancarlo Giorgetti wrote in the document approved last September 27 and sent to the Chambers. In a nutshell, national deficits must not exceed 3% of gross domestic product and national public debt must remain below 60% of GDP. Conditions that are not easy to achieve. Above all because Europe will require member countries, and therefore also Italy, a detailed reform plan (along the lines of what is already happening with the Pnrr) which will have to be implemented under the strict periodic control of the European Commission. In short, there is little room for action.
These are the preconditions of what is happening at this historical juncture. With a finance minister who, in contact with the reality of things and with a great sense of the State and profound respect for citizens, in an interview with Bloomberg talks about sacrifices to be made and a prime minister who is annoyed at hearing the tragic word. It is precisely in these historical moments that populism crashes against reality. Because, to maintain the status quo, between bonuses and electoral promises, at least 20 billion would be needed. And reality, however, says that 13 billion in cuts will have to be made. And so, here comes a new populist myth: extra-profit. That is, we tax those who have produced profits above a certain threshold, so as to rebalance the contribution and increase the tax revenue.
Populism distorts the meaning of words
Populism distorts the meaning of things and, therefore, the very meaning of words. According to the national-populist narrative of the moment, extra-profit is like leprosy. It is a negative, bad thing, to be punished in all ways. And anyone who produces extra profit and benefits from it is – as they would have said in the Stalinist Soviet Union – “враг народа”, or “enemy of the people”. And it is this purely and fundamentally statist vision that distinguishes the entire constitutional arc of the country, which favors a distorted consideration of the market. Almost as if those who produce profit must repent and pay more than others. An entirely Italian trend that combines the doctrine of the social Church, which tends to condemn economic profit, with the pauperist tendencies of the populism of the far right and the equally far left, both perfectly personified by the first period of the 5 Star Movement of Grillo and Casaleggio . With bizarre drifts that recall Serge Latouche’s “happy degrowth”.
The extra profit of beach resorts and taxi drivers
But let’s stay on the topic of “extra-profit”. Again according to economic doctrine – because this is what we are talking about and certainly not a moralizing vision of the economy – there is extra-profit if there are specific market conditions: “innovation”; “market control” in relation to a dominant position, such that it can dictate prices; “barriers to entry”, with a monopoly or oligopoly regime; “scarcity of a good”. And it comes to mind that, in addition to the “infamous” banks – always detested by the pauperist rhetoric of the right and left, together with the “multinationals” – there are other specific business categories that benefit from almost all the conditions that lead to extra-profit: the beach resorts and taxi drivers. Two of the most powerful lobbies in this country. These enjoy, in order, “control of the market”, precisely because there are “barriers to entry” and, in virtue of this, “scarcity of good”. I don’t even talk about “innovation”. They barely use Pos. But they certainly enjoy the protection of governments, from right to left, through the 5 Star Movement, so much so that for decades now they have Italy is paying very high fines for failing to adopt the Bolkestein directive which aims to liberalize the markets.
Ultimately, in comparison with Europe, our beautiful country comes up against its own cultural defects and ancient vices. Rather than chasing extra profits, it would be necessary to open markets, promote competition and truly fight tax evasion. And you would see the billions in revenue rain down. And yes, because then, the true champions of extra-profit are the tax evaders. Nobody beats those.