Passera a true Politician

Yesterday, LSE held a short presentation on "Austerity and growth: time to shift gear" by the Italian minister for economic development, transport and infrastructure Corrado Passera. This event was pretty much in line with what  is going on at the moment, with Hollande coming into power and IMF changing its tune to how the budget deficit is apparently no longer important.

By occupation Mr Passera is a Politician and he stuck by his occupation. Perhaps it was the language barrier or just that I misunderstood him. Regardless. He presented his understanding of the four shifts that are absolutely critical for moving forward. The idea is that if we embrace these shifts then a new dawn will rise in the economic sphere.

Below I will out the four shifts briefly so you get an idea of what he was saying.

1. We must make a shift to credible austerity - so essentially do take some austerity measures so that markets begin to trust you and you have funds for whatever may befall you. He said that in Italy this is being done with the new pension and fiscal reform. At this point I thought there was a fair shift that has actually taken place already in Europe, at varying degrees. For a man who was CEO of four banks, I did feel it was largely generalised I mean anybody could tell you after the 2008 financial crisis shift has been to "credible austerity" to get market support.

2. Shift from pure austerity to sustainable growth. So essentially he tried to say that instead of having pure austerity, it should only be credible so any remaining funds can be used to initiate financially sustainable growth. Here he discussed how globalisation and opening up markets is extremely beneficial to countries. I got the feeling he was trying to say a financially sustainable growth is one which comes from exporting. Which is a fair comment for a country like Italy which has a range of possibilities for exporting. What he didn't say however, is how this sustainable growth was going to happen? And is it even logical, because he was saying these shifts in relation to all euro countries, that Eurozone countries make a shift to exporting. Absolute and Comparative advantage theory tells us otherwise. We cannot all be net exporters it does not work.

3. Now he wants to shift from austerity to growth but on the European level. Exactly same point but just that Europe as a whole can achieve financially sustainable growth through export. Which actually with opportunities becoming clear in India and China I can believe. The problem is just is it likely that Europe can be more competitive than South American or Africa countries? I think not. But a possibility does remain.

4. Now this shift was specifically aimed at LSE, did annoy me a but as a SOAS student as it is something that SOAS has always done and is the reason why I chose SOAS over LSE, it was the shift of top educational institutions to teach multidisciplinary subjects as opposed to pure economics. And of course with my 360 society I totally agree with.

So why was I so negative, what is my problem with him? First, he said nothing new, exciting or high level which he could have done given his tremendous career. Secondly, the shifts - can austerity be backed with growth through international trade?  I am not convinced that international trade is enough. Thirdly, the forth shift was a little but unnecessary and seemed just a way to butter up LSE so to speak. And finally, when the Q&A session came his answers weren't clear, consistent or actually contained any content and these are characterises of a true politician, and given his background I expected otherwise. It seems there is no Italian equivalent to Vince Cable!