L’Osservatore Romano: Noah's horizon (Editorial by the President of the Institute for Works of Religion)

Albert Einstein said that reality, to be explained and confronted, must be simplified rather than made deceptively simple. The ability to simplify complex situations is a quality of leaders; to pass off as simple something which, on the contrary, is complicated is a shortcoming of amateurs. Today it is intuited that an effort is being made throughout the Western world to explain the economic crisis in an apparently simple way, pointing to solutions that are easy to implement in the short term but without wondering whether these presumed solutions might not even exacerbate the crisis.

The public debts contracted by various countries were not produced in comparable contexts so it is impossible to make a similar analysis of them. In fact, the size of the debt, its cost and the possibility of renewing its expiration – variables that are such a cause of anxiety to markets and governments – may only be reduced and absorbed, in a phase of difficulty such as the current time, with economic growth. Without a true strategy for growth - which moreover is in contradiction to the tax levy itself – taxation in all its forms only permits further growth in public spending, inevitable if economic interventions are to be permitted in the absence of development. At a time like this, growth is obtained solely by the appropriate use of the available resources in order to benefit businesses that create wealth and sustainable employment, pay their taxes and thereby make absorption of the debt possible.

During a prolonged crisis, inheritance taxes, new forms of taxation or similar alternatives reduce or wipe out resources for investments, discouraging the trust of investors, penalizing the cost of the public debt and the possibilities of its renewal at its expiration. In this context, imposing taxes on property and on income is equivalent to a suicidal anti-subsidiarity of the state to the citizen. Those who legally possess assets, on which they have paid the proper taxes, have contributed to creating wealth and, thanks precisely to these assets, continue to produce them with investments and consumption.

Further forms of taxation would not be synonymous with solidarity but only with greater public spending and, perhaps, a higher debt and more widespread poverty. High taxes penalize saving, generate distrust in the ability to stimulate recovery, hit families and prevent the formation of new ones, as well as creating uncertainty and precariousness in employment. In short, they lay the foundations for another phase of unsustainable development.

This is the situation to explain, avoiding - to borrow Einstein's words - deceptive simplifications. Every important action, to obtain success, must be clear in its context, in its objectives, clear in assessing the necessary resources and about their organization. Authentic global solutions to the crisis must therefore take into account what gave rise to it, its extent and the time and means required to resolve it. In other words it is necessary to reach a broader horizon. As Noah did when he raised his gaze and succeeded in going beyond himself and in saving humanity.

Ettore Gotti Tedeschi, President, Institute for Works of Religion (IOR)

Photo: Rueters, Ettore Gotti Tedeschi, President of the IOR ("Vatican bank")