Daniel Franco, Draghi’s Minister Wants More Immigrants to “Lower Debt-to-GDP Ratio” – Libero Quotidiano

On page 131 of Economics and Finance Document Freshly baked from the minister’s offices Daniel Franco There is a seemingly technical and neutral paragraph entitled “Sensitivity to demographic variables.” Who knows if university ministers read it before agreeing to it. They sure would do well to have a look. Because the content of these two pages, expressed in the form of analysis of different scenarios complete with a diagram, is the most political thing that could be: He argues that bringing in more immigrants is a great way to reduce the public debt-to-GDP ratio. Or to help Italy in the great post-Covid battle. To do the opposite, that is, to reduce the influx of foreigners destined to remain in our country, would be harmful instead.

It is a fact that demographics have a huge impact on economic growth. Just think about the relationship between workers and retirees: in Italy, 1,000 of the first (who pay contributions) correspond to 602 of those (who collect an old-age bonus), one of the worst ratios in Europe. And then, the more people residing in the state produce goods and services, the greater the GDP growth. The reasons for which, if the burden of the public debt towards the latter is to be reduced, the number of workers must be increased, as well as the increase in the working-age population. There are two ways to do this. The first is the promotion of births, that is, the focus on increasing the fertility rate, the average number of children per woman of childbearing age, which has decreased to 1.18 for residents of Italy (pre-epidemic data: it may now be lower). It takes time, but it doesn’t disturb a nation’s identity and culture. The second plans to import weapons from abroad.

The truth is that the increase in fertility, which may have been encouraged by ad hoc economic policies, has not been taken into account by economists at the Ministry of Economy. On the other hand, tell us what will happen if the average number of children per woman drops again this year. “Assuming a gradual decline in the fertility rate of 20 percent,” they wrote, “we observe a marked increase in the long-term debt / GDP ratio”: After half a century, the debt will be more than twenty points of GDP. . And as if to say so, one thing is a lot, we need to look in the other direction: the increase in the “net flow of migrants”. In the baseline scenario, that is, in the absence of interventions, the government estimates it “at an average of 213,000 units per year.” However, it is an increase: since 2001, an average of 195,000 immigrants entered annually, and in 2019, the most recent year for which data are available, the net increase in resident foreigners was 143,000 units. So the Ministry of Economy asks: What will happen if the number of immigrants is, indeed, this year, 33% higher or lower than the basic premise, and this continues for years to come? Unsurprisingly, the conclusion is that “an increase in net migration flow by one-third compared to what is expected will allow the debt / GDP ratio to decrease in the next twenty years.” In short, around 2040, our public accounts will start to improve and debt will decrease, 50 years from now, by about 30 points of GDP.

On the other hand, if the flow of migrants immediately decreases (implicitly: as the center-right asks)? Here, in this case, the economic and financial document warns that this will be an immediate pain: “A significant reduction in migration flows will actually increase the debt / GDP ratio in the short term”. As a result, within half a century, “public debt will be about 50 percentage points higher than GDP than the reference scenario.” Although written in the sterile undertones of the simulation, the message is clear: With debt at 160% of GDP, no kidding and we need to increase the number of foreigners residing in our country to make the burden less stressful. For the left, another weapon. And when will these migrant workers retire and weigh INPS accounts? Presumably, the recipe is to have the others, both younger and more numerous. What is the country that will become Italy? Grandchildren’s problems anyway. Not from this government.