In German “Schuld” means both “debt” and “guilt”. Mario Draghi then proposes to distinguish between good and bad debt. The judgment must be based on a mixture of economic analysis and ethical considerations. The German philosopher Immanuel Kant, in his work “Metaphysics of Morals” (published in 1797), defines ethics as a moral imperative.
Given that today’s financial commitments will be repaid by the young, debt becomes a “fault”, or “uncollectible claim”, if the capital is squandered to run companies and programs with no future, whereas it is “good debt”, without “guilt”, if these funds are channeled to rescue and develop innovative companies and programs that will be the foundation for future growth.
by Garibaldino
Due to the pandemic, the economy has contracted at a pace comparable to that recorded by major countries during World War II.
Our freedom of movement, our very physical and psychological human interaction have been sacrificed, entire sectors of our economies have been shut down or placed in a non-operational position. The dramatic increase in the number of people out of work will be difficult to quickly absorb, and the closures of schools and other learning places have interrupted professional and educational pathways, worsening inequalities.
The return to growth, a growth that respects the environment and does not humiliate the person, has become an absolute imperative for the economic policies implemented today to be sustainable, to provide income security especially to the poorest, and to strengthen social cohesion weakened by the experience of the pandemic and the difficulties that the exit from recession will entail in the coming months.
The objective is difficult, but not unattainable if we manage to dispel the uncertainty that currently hovers over our countries. Europe can emerge stronger from this crisis. The actions of governments rest on a solidified basis by politics. In the strong and stable Europe that we all wish for, responsibility goes hand in hand with and legitimizes solidarity. Therefore, this progress must be cemented by the credibility of economic policies at both European and national levels. All available resources have been mobilized to protect the workers and companies that form the fabric of our economies. The recession could not turn into a prolonged depression. But the urgency and the measures it justifies will not last forever. The time has come to demonstrate wisdom in choosing the future we want to build.
The reconstruction will inevitably come with debt levels destined to remain high for a long time. This debt, subscribed by countries, institutions, markets, and savers, will be sustainable, meaning it will continue to be subscribed in the future, if used for productive purposes, for example, investments in human capital, in crucial infrastructures for production, in research, etc., therefore if it is a “good debt”. A sector essential for growth and thus for all the transformations I have just listed, where long-term vision must marry immediate action, is education and, more generally, investment in youth.
This has always been true, but the current situation makes a massive investment of financial resources in this sector imperative and urgent. Participation in the society of the future will require today’s young people to have even greater discernment and adaptability skills.
The debt created by the pandemic is unprecedented and will have to be mainly repaid by today’s youth. It is our duty to ensure that they have all the tools to do so while living in better societies than ours. For years a form of collective selfishness has led governments to divert human capacities and other resources for the benefit of objectives with a more certain and immediate political return: this is no longer acceptable. Depriving a young person of the future is one of the most serious forms of inequality.
(excerpt from Mario Draghi’s lecture at the Meeting of Comunione e Liberazione, July 2020)
