The knot of public decision-making processes in the management of the EU Recovery Fund

by Fabio G. Angelini (Uninettuno), Flavio Felice (Università del Molise)

Il Sole 24 Ore, 9 febbraio 2021

As recently highlighted by the Financial Times, the key point in the use of EU Recovery Fund resources by Italy, on which the Mario Draghi government will have to mark a clear discontinuity with the past, is represented by this. “Italy’s structural incapacity to spend money, which is related to the public sector’s ability to make decisions, pursue transparent processes, and undertake auditing,” to use the words of Lucrezia Reichlin. The correct use of the available resources – the so-called “good debt” in Draghi’s words – will depend on the degree of efficiency in the decision-making processes that, both upstream and downstream, will determine the relative choices concerning employment of these funds. It will be precisely on this terrain that the exercise of “subsidiary sovereignty” or “structured sovereignty,” as it may be called, for Italy will be played out.

Tackling the health, social and economic emergency will require the adoption of precise choices of public intervention. Therefore, decision-making processes that will have to be able to lead to results consistent with the European legal-economic order, limited in time, inspired by the logic of subsidiarity and aimed not at occupying the spaces belonging to civil society, but rather at supporting its initiative in an inclusive and not extractive logic. As a result of this, the allocation of the benefits of public intervention can be object of a widespread social benefit, rather than political rent. This is a precondition for the recovery and resilience of our economic system and, ultimately, for the sustainability over time of our model of protection of fundamental human rights.

We believe that the conformity of the choices of public intervention to the European legal-economic order marks an absolute novelty with respect to other seasons of Italian public intervention. Since these choices are the outcome of political dynamics and administrative action, to ensure conformity, it is necessary to be able to count on a coherent legal-political order. The functioning of such an order – rules for the game and rules of the game – should promote the adoption of cooperative behavior capable of leading – indirectly – towards satisfactory social outcomes: the interaction of the various actors who confront each other in the public sphere, political parties, bureaucrats, voters, stakeholders, etc.

The efficiency of decision-making processes is an essential condition for an allocation of resources. This works to support the protection of fundamental human rights and an expansion of overall social welfare, although we have to record how this awareness is still not very mature, especially at the political level. The next executive will have the task of supporting a similar process of maturation.

Continuing to postpone the problem of the allocative efficiency of public decision-making processes – deluding oneself that they can be eliminated simply as a result of a greater possibility of resorting to public spending – risks, on the other hand, aggravating the problem of the financial sustainability of our guarantee paradigm and its compatibility with an economic system. Once the emergency has passed, this risks degenerating towards forms of greater dependence on the public sector. This would lead to an increase in the stock of debt and a reduced ability to resort to automatic stabilizers. It would be an ominous outcome, having to reckon with a blocked-up society, incapable of triggering the processes of social mobility typical of liberal democracies: “Sombart’s and Schumpeter’s “creative destruction” or “Pareto’s “circulation of elites,” the efficient cause of the quality of public decision-making processes, according to the Acemoglu and Robinson theory of “inclusive institutions.”

Therefore, even before asking which interventions should be included in the Recovery Plan, there is a question of rethinking the rules of the decision-making processes themselves. They are necessary conditions for public intervention to respond simultaneously to the needs of equity, expressed by the constitutional paradigm of guarantees, and of efficiency, without which the very effectiveness of fundamental rights could be seriously jeopardized. They are necessary not only in terms of financial sustainability, but also in terms of the overall stability of the relationship linking rights to constitutional duties.

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