NEW YORK: Hurrah for Mario Draghi, prime minister of Italy. A decade ago, he promised to do “whatever it takes” to protect the euro, an iconic phrase that shaped policymaking in subsequent years.
Now he has produced another pithy salvo. Last week, he was challenged about what Italy might do if the European Union boycotted Russian energy, given that gas supplies from Russia account for around 40 per cent of Italian energy.
Draghi replied he would join the boycott, irrespective of the cost. “Do we want to have peace or do we want to have the air-conditioning on?” he asked. In other words: is the public willing to make sacrifices for the collective good?
It is a crucial question to ponder now, not just in Europe, but in the United States too. In recent decades, the word “sacrifice” has not often graced the lips of western economists or politicians (except, perhaps, during the religious festivals of Easter and Passover).
After all, back in 1979 Margaret Thatcher, former United Kingdom prime minister, famously claimed there was “no such thing” as society. Ever since, politicians have assumed that the best way to win votes is by appealing to economic self-interest.
And late 20th-century economists have also generally taken it for granted that consumers were atomised, profit-maximising – selfish – creatures. The idea of “sacrifice” was not something plugged into econometric models, or investors’ efficient market frameworks.
But right now the slippery issue of social cohesion matters enormously. The war in Ukraine has already caused energy costs to rise, contributing to a shocking 8.5 per cent US inflation number this week. Some European companies are braced for energy rationing this winter.