October 14, 2014
Dr Jean Tirole has won the Nobel Prize for Economics having pursued studies centred on regulations suited to ex State monopolies, like Power supplies, Telecom, Gas, Banks…
Mr Tirole concludes that those sizable companies, once privatized, tend to accumulate excessive profits, often not decorously compatible with the community of citizens.
Hence the opportunity to legislate in a differentiate way, paying due regard to the potential excesses of a specific market segment.
However, we should ask ourselves if the privatization of utilities is the right way forward or rather, we should direct the glance (the study) toward a better management of State enterprises. If a State-managed utility is not efficient in administering its services to the members of the public it might need less politics and better management with adequate salaries. A political system that is not capable of managing its state-enterprises economically will, almost surely, waste as well a large proportion of the national budget.
Dr Thomas Piketty, another French economist, has achieved a research that demonstrates the diminishing growth of a country to the widening of salaries beyond a certain point. In other words, the excessive accumulation of wealth in a few, compared to the whole population of a country, causes a dwindling in the purchasing power of citizens, hence the diminishing income to the State. The difference in compensation along the professional ladder is positive to stimulate motivation but if this difference becomes excessive then the economic system misfires. The work is detailed in his book “Capital in the Twenty-First Century”, a bestseller applauded by most economists and some of the political elite but insubstantially criticised by the “financial nomenclature”. Is this the reason for a missed ex-aequo? Dear Mr Piketty, the 21st century has just begun and you might enjoy a full bounty in the near future.Elio Pennisi