Commentary. Although the idea of secular stagnation is probably a good snapshot of the current economic situation, foreshadowing further developments, interpretations of the crisis have so far ignored a fundamental issue: namely, demographics.

Immigration, emigration and secular stagnation

The current political thinking on immigration at the national level is not able to handle the complexities underlying the phenomenon. In fact, migration policies (both regarding immigration and emigration) should be talked about in the context of the demographic question and its economic and social implications, which have been recently described as the so-called Secular Stagnation phenomenon. 

Although the idea of secular stagnation is probably a good snapshot of the current economic situation, foreshadowing further developments (some economists think we are in the midst of a crisis of the techno-economic paradigm, others have dusted off the notion of the liquidity trap, while yet others are focusing their attention on income distribution), interpretations of the crisis have so far ignored a fundamental issue: namely, demographics. 

The latter has devastating implications on how and how much the dynamics of GDP, in conditions of small or nonexistent growth, are changing the nature of the relationship between capital and labor, as well as the intrinsic characteristics of the economic output, i.e. the actual and potential demand, in addition to affecting economic actors and the uncertainty underlying the “business cycle.” Demographic polarization is changing the structure of the economy, and therefore the structure of society. But just how crucial is the issue of demographics, and what are its implications?

According to Italian National Institute of Statistics (ISTAT) data, we know that for too long now, Italy has been getting older: the “best young minds” are emigrating, and the immigrants are too few to reverse the polarization of the population. Although the situation of an aging population and a negative generational progression in terms of numbers is by itself very serious, the macroeconomic effect is also much more significant than people imagine. In fact, the demographic evolution of the population is the structural challenge of our century, which demonstrates, more than any others, the need to find new and better forms of equilibria. 

If the percentage of people over 60 years old is increasing over time compared to that of people under 30, as a result of the improvements in health services and life expectancy, the structure of consumption and investment will also reflect this new structure of the population. We know from statistics that the consumption of the younger and older populations differs both in content and quantity. 

Overall, the consumption of the older population is aimed at meeting the demand for primary goods, while the younger population is mostly interested in the demand for secondary goods with a greater technological content. The side effect is that of a displacement of the growth of secondary assets in favor of primary goods, linked to the reduction in the younger segment of the population, which, in the final analysis, is the one that allows for capitalist accumulation. 

In other words, without a large enough young population, the potential GDP growth is reduced, affecting the demand for labor and thus the income of the population as a whole. 

In Italy, this phenomenon is occurring to a much more serious extent than the European average, exacerbated by the emigration of young people who can’t find work in Italy, and by the immigration level, which has reduced over the years, mirroring the movements of the GDP. It was not so much the policies of Minniti and Salvini, but rather the reduction of our national GDP which has disincentivized and reduced immigration to Italy.

The point is not “helping these people at home,” a slogan that is ignorant of history—but rather the manner in which immigration and the mitigation of the emigration of young people must be combined and work toward shaping an adequate economic and social policy. 

To bridge the gap between the potential demand for secondary assets and the actual demand linked to the number of young people, a kind of “socialization of investment” would be needed: investments that would compensate for the new (structural) characteristics of society, both in terms of age structure and in terms of the targets of consumption. Otherwise, the primary assets sought by older people will become not only the fulcrum of economic development, but will shrink, little by little, the base of prosperity linked to the dynamics of the secondary goods, leading to a structural contraction of effective demand and, worse still, to a contraction of the potential GDP tied to the socialization of investments, which are, in the final analysis, a public good for the community. 

The challenge raised by migration flows pertains both to natural rights (regarding persons) and positive rights (regarding society). If we don’t address these issues, the question will remain at the level of a sterile debate between “good” and “evil,” disregarding the fact that good and evil must be understood in connection with the society that we intend to build.

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