Saving businesses to tell them where to invest
By Alberto Mingardi
Mariana Mazzucato is now advising the Italian prime minister on the transformation of the economy in a “green” direction and how to move out of the crisis produced by COVID-19 lockdowns.
In a recent interview (alas gated version here) Mazzucato advanced the idea that government aid to businesses should hence be conditioned on taking different directions than in the past. Mazzucato argues that businesses may not have to devote themselves immediately “to a policy of cutting emissions” but she thinks “government shall help them, with a clause, that they should follow some rules, for example on how and on what they should invest”. Notice the nonchalance with which she deals with a matter which is at the heart of the activity of any business: what shall it invest in, and what shall it, eventually, produce.
Similar ideas are alas common. The UN secretary general, Guterres, thinks that “where taxpayers’ money rescues businesses, it must be creating green jobs and sustainable and inclusive growth. It must not be bailing out outdated polluting, carbon-intensive industries” and that “fiscal firepower must shift economies from gray to green”. George Monbiot, in the Guardian, argues that government aid should not “resuscitate” the “oil, airline and car industries”.
At the end of her interview, Mazzucato praises the Italian government for moving in the right direction by extending its “golden power” discipline. I’ve written on it here for National Review. Not surprisingly, it curtails individual entrepreneurs’ property rights. The ostensible aim there is to advance national security by not allowing capitalists to sell stakes in their companies to foreign investors. Still, apparently for Mazzucato “anything goes”, insofar as it helps in reinforcing the basic structure of the “Entrepreneurial State”.
By the way, contra Terence Kealey, she believes that “countries that answered better to the pandemic crisis like Germany and [South] Korea” prove that “our economy does have everything to gain from an entrepreneurial State “. It is worth mentioning that South Korea’s public spending is 30% of GDP and that Germany has a robust private hospital network. Terence Kealey is convinced that South Korea was so effective in producing tests for Covid19 precisely because it is less of an entrepreneurial state than most of the Western governments.