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Luiss Guido Carli

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LUISS Open: the threefold inequality that Europe must fight

The research magazine interviews Fabrizio Barca, economist and former minister for territorial cohesion

LUISS Open Fabrizio Barca

LUISS Open has met with Fabrizio Barca, an economist and former minister for territorial cohesion, who held a cycle of lectures as part of the Master in European Economic Governance organized by the LUISS School of European Political Economy (SEP).

Is inequality really more an American problem than a European one?

Over the last thirty years, Europe has lived the same story of the rest of the Western world, so it is not surprising that the continent is going through some strong economic and social inequalities, namely about the quality and accessibility to basic services such as the school and healthcare systems as well as the digital coverage allowing a modern communication. Europe is also characterized by significant “recognition inequalities”, that is to say recognizing the role of people. Recognition inequality is there when it hits those in manufacturing work in those countries where we forget that switching the lights on is made possible exactly thanks to that same manufacturing industry; that inequality is what workers go through when their central roles are lost in the excessive discussion about the advanced tertiary sector and automation. Recognition inequality has its roots today in those rural areas, in Europe as well as the United States, which feel like they don’t belong in history, like they’re far away from modernity, as if it was only cities that were inevitably made creative and pioneering thanks to globalization’s technological processes. Which is a false assumption, by the way, because climate change, innovation and a demand for diversity in today’s capitalism make rural areas potentially very rich. All of these three inequalities – income inequality, social inequality, and recognition inequality – creates territorial faults throughout the Western world.

However the issue of inequality, in its various facets, is now at the center of international debate. Is anything changing?

A renewed attention towards said territorial faults has also returned to the international agenda, even central to such media as the English weekly magazine The Economist, which hadn’t covered them in a very long time. The Economist has observed for instance how that in the twenty years leading up to 2014 “the gap in productivity level between the frontier regions of Europe and the bottom 10% ones increased by 56%”, adding that “unless policymakers grapple seriously with the problem of regional inequality, the fury of voters […] will only increase”. The three types of inequality mentioned above often contrast the suburbs with the centers, the rural areas with the cities, and they have become so blatant that they provoke an angry reaction towards modernity, globalization and the technological change. However, the fact remains that the ruling class has made mistakes, we have made mistakes. The reason why we find these inequalities in Europe, as per the skillful examination, for example, by  the economist Branko Milanovic, is not the one generally agreed upon by the authoritarian narrative; such inequalities are not, that is, the inevitable result of new technologies, of opening the markets to China or welcoming migrants. At the root of these imbalances, there are some precise policies that have not been able to govern and direct change. For some time now, in fact, the ruling classes have had the feeling that they can no longer manage change. This attitude is uncalled for. Something becomes inevitable when it is the result of a process that you did not govern in the past. If you want to influence the future, then you have to govern the present. The message of helplessness that the ruling classes are sending out, in addition to being a wrong one, is unsettling to the public opinion. When you have been arguing for years that you can do nothing at local level if the regions do not intervene, then that at regional level you can not do anything if the state does not intervene, that even at national level you can’t do anything if Europe does not intervene… Then what else is left? This is pushing people towards a closed communitarianism, and towards authoritarianism.

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