Abstract
Including the so-called structural parity of the budget in the Italian Constitution, and more in general, the issue of the new rules for the convergence of the economic policies of the Member States of the European Union, highlights the severe consequences on the room for maneuver that the organs of representative democracy are left with at both National and European level.
A joint analysis of the National and European legislations, with renvois to the European rules on matters concerning the convergence of budget policies, shows that the so-called “automatic pilot” heavily affects the national institutions in determining their economic policies, with the ensuing strong limitation on the choices made by the institutions of representative democracy; the latter choices are replaced by “virtual” tax rules that, in turn, replace the Law with procedures designed to ensure that the targets set by technical experts are achieved.
The budget rules that are meant to ensure reliable, transparent forecasts—removed from the remit of national executive bodies—of public finance and their monitoring have been transformed into legal and numerical restraints introduced into the legal orders of the Member States through processes that have not been validated by a democratic discussion. Such choices have deepened the democratic legitimation crisis of the European integration process.
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Notes
- 1.
See Saraceno (2014). As maintained recently by Larry Summers, historially low interest rates make the expected yield from infrastructure investments particularly high for the United States. In his last editorial in the Financial Times, the ex-Secretary of the Treasury under Bill Clinton goes so far as to affirm that public investment today represents the forbidden dream of every economist, a ‘free lunch.’ This is even true for the euro zone, where debt is inferior to that of the United States (94 % of GDP). If we lived in an ideal world, a vast plan of public investments at the European level would be launched, for example in energy transition projects, financed by shared debt. This will not happen, despite the fact that the eurobond, project bond and other similar proposals are periodically re-launched, on account of the opposition by Germany and a few other countries. The necessary re-launch of public investment therefore will have to take place at the national level. And it is difficult to imagine that a public investment program of the dimensions necessary for recovery can be undertaken without bending the political and institutional rules.
For this reason, the English experience of the last decade can come to our aid. The “golden rule” adopted by the then Chancellor of the Exchequer Gordon Brown in 1997, abolished in 2009, provided that the government should guarantee medium-term budget parity, but that, contextually, investment expenditure could be financed by issuing debt. The principle is simple and irrefutable. Investment creates public capital, the payment of which can thus be shared with future generations that benefit from it; current expenditure, on the other hand, must be financed by the present generation that benefits from it. The golden rule therefore respects the criteria of intergenerational equity and, it can be shown, stabilizes public debt.
The golden rule seems to return to the debate on European fiscal governance. With Kemal Dervis I recently maintained that the definition of “public investment” could be made to depend on the economic policy priorities of the Union, to become a topic of discussion among the European Council, Commission and Parliament, and so to become an embryo of European industrial policy. And an article by Senator Monti in the Financial Times a few days ago brings again to the fore of the European policy debate the idea of eliminating investments from the calculation of the deficit.
The two countries that have re-launched the topic of public investment, France and Italy, should seize the occasion and try to push for a change in European fiscal rules. This alone would allow for the re-launching of public investment to such a degree as to re-start the economy. Above all, it would be the only way to fill the investment gap that is hindering potential European growth.
- 2.
- 3.
- 4.
Most recently by Boitani and Landi (2014).
- 5.
For a complete and documented account of the parliamentary debate under the new constitutional framework on budgetary balance, see Bergonzini (2014). For a first juridical reconstruction of the new constitutional context, see Luciani (2012); Luciani (2013); Lupo (2012). The journal Quaderni costituzionali devoted the 1st issue of 2014 to budgetary discipline. The essays of Della Cananea and Morrone deserve a particular mention.
- 6.
On the same possibility of rebuilding some sort of European lex fiscali, see in particular Della Cananea (2014).
- 7.
- 8.
Guarino (2014).
- 9.
On the opportunity to exclude, de jure condendo, investments from the MTO formula, thus adopting some kind of golden rule, see De Grauwe (2013). On the importance of structural investments in intergenerational relations, see Caravita (2014) and Baratta (2014). The position of Giuseppe Guarino is comprehensively presented in Cittadini europei e crisi dell’euro.
- 10.
- 11.
De Ioanna and Landi (2012).
- 12.
See Habermas (2014).
- 13.
- 14.
See Landi (2013).
- 15.
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De Ioanna, P. (2017). Was It Appropriate to Include Structural Parity in the Constitution? Notes for Beginning a Discussion on the Cognitive Democracy Crisis. In: Mangiameli, S. (eds) The Consequences of the Crisis on European Integration and on the Member States. Essays on Federalism and Regionalism, vol 2. Springer, Cham. https://doi.org/10.1007/978-3-319-47964-4_7
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