Turin, 17 April 2011 Biennale Democrazia 2011

Journalist Good afternoon everyone and thank you for coming. Id like to welcome you all, and in particular Id like to welcome Corrado Passera, who is here with us today for the second edition of Biennale Democrazia. He honoured us with his presence at the first edition in 2009, and wed sincerely like to thank him once again for coming to meet the citizens of Turin, both young and old. Im pleased to present Corrado Passera, particularly to the young people present here today, as I think his vast experience can be of considerable importance to their understanding of the issues dealt with, and can facilitate their exchange of ideas with him. Intesa Sanpaolos chief executive officer began his career with an honours degree from Milans Bocconi University (an example for all the students present here today I hope), and immediately afterwards he obtained a Masters Degree in the USA. During his professional career he has managed both private and public enterprises, and I believe that this is important as it allows us to make reference to diverse entrepreneurial models within both the private and public spheres. From being Olivettis CEO he moved into publishing, where he was CEO first at Mondadori and then of the Espresso Group, without forgetting the fundamental role he had as head of the Italian Postal Service from 1998 to 2002. Mr. Passera is here with us today thanks to his willingness to meet young people, and to talk about the present and the future, about economic and social sustainability, about economic development and about the opportunities that the future holds for young people. After this brief introduction, Id just like to say that this meeting is the result of cooperation between the public and private spheres; such events are only possible because of the will of the public administration, of the City of Turin, together with the trust and contribution we receive from companies like Intesa Sanpaolo. This meeting is possible not only as a result of economic backing, albeit indispensible: young people need to know that such occasions are the result of a collective effort, the end result of cooperation and the sharing of ideas. For this reason Id like to thank not only Mr. Passera, but also all his co-workers, first and foremost Mr. Meloni and Ms. Gemo. Let me conclude matters though with a special thanks to the young people in question.

This public event regarding the question of democracy was conceived specifically with them in mind, and they have responded with great enthusiasm. They have taken it very seriously, dedicating months of work and effort to see it come to fruition. So a special goes to all you young people, for having come together and dedicated your free time and energy in order that we may all grow together. Id now like to hand you over to the coordinator of this event, Emanuele Chieli, who is going to conduct the dialogue between Corrado Passera and the young people: he is here today as the representative of the Associazione Newton, a Turin-based association of young entrepreneurs and professionals who spend their free time examining and analysing the questions of generational turnover, growth and commitment within the professions. I hope you all enjoy what you are about to hear. Thank you very much. Emanuele Chieli Good afternoon to you all. The title of todays meeting is: The world of the future is sustainable growth feasible?. The question of sustainable growth is undoubtedly a very topical one, although hardly a novel one. What is new is the feeling of urgency that recent events have lent to the question, and Im not just referring to the recent economic and financial crisis, but to all those events that have shaken the world in recent months. In the words of Taleb, the world has found itself having to deal with a great many black swans within a very short space of time. All of this has highlighted the fragility of economic, environmental and social policies, and has challenged those paradigms and principles which formed, and continue to form, the foundations of our thinking. The question constituting the title of todays meeting - Is sustainable growth feasible? therefore needs to be transformed into the imperative form We must grow in a sustainable manner, as we no longer have any alibis or excuses for acting otherwise. This said, Id like to ask Corrado Passera what lessons we have learnt from the recent major crisis, what can be the drivers of sustainable growth and development, and what role can lending, and the banks in general, play in the promotion of such growth? Thank you. Corrado Passera First of all Id like to thank you for having invited me. I think that this is meant to be merely an introduction, and so Im going to take up as little time as possible, so as to leave more room for questions on any topic youd like to discuss.

The coordinator of this meeting has indicated three questions which would take hours to deal with in any thorough manner, and so perhaps I could pick out a few selected points that may serve us later on in the discussion. The world to be, the world we are creating, is not the result of any external input, but the outcome of what we are doing right now, what we have done in the past, and what we continue to do in the future. The first issue regarding the question of sustainable growth and the lessons to be learnt from the crisis is that there was more than one reason for the onset of the crisis; there is no simple explanation of the reasons for the disaster, which started with the financial systems in the English-speaking world, and rapidly spread tsunamilike to the entire world of global finance, before hitting the real economy and employment. A disaster of this size would not have come about without the existence of numerous underlying causes. For the sake of brevity, Ill list just the principal such causes: problems of policy, of decisions regarding the management of the economic sphere, together with disreputable behaviour at the level of corporate administration; so Im going to be talking about policy, that is, about major macroeconomic decisions, about the excessive laxity of monetary policy which was to lead to the excessive availability of liquidity, about the imbalances between different parts of the world, whereby significant savings, massive consumption and substantial production are concentrated, respectively, in certain areas of the globe. It is clear that there has been an absence of adequate rules, which is only being partly resolved right now. In many countries, particularly in the English-speaking world, the unwillingness to regulate the financial system was almost considered a merit: the lack of proper rules was then exacerbated by the scarcity, or inadequacy, of checks and balances; had there been proper rules governing the financial sector throughout the world, like those adopted in certain countries such as Canada, Australia and Italy itself, the crisis could have been avoided. Why were there no such rules or controls? Because upstream there were, and unfortunately there continue to be, certain mistaken cultural and epistemological assumptions: namely that the market is self-regulating, that the market tends towards the equilibrium position - whereas the truth is that it tends to create bubbles and that the common good is the mere sum of separate individual interests. This is simply not the case; the fact is that guidelines, actions and responsibility are required in order that the common good be achieved. In fact, such false assumptions give rise to the wrong kind of rules and laws: if you believe that the market is self-regulatory, then you are not going to try and regulate, whereas history demonstrates the need for market control.

To put it very simply, if people think that the market tends towards equilibrium, then they do not bother implementing any control or stabilising mechanisms. These ideological assumptions have finally been challenged, albeit only to a partial degree; we should never forget all of the spectacular managerial mistakes made, such as excessive indebtedness, the excessive importance given to financial speculation among the banks business activities, and the tendency to collect funds in the short term and invest in the long term. Therefore, if we are not to labour under the illusion that the crisis was the result of something that can be easily resolved, we must accept that the roots of the present crisis go much deeper, and they concern global economic policies, rules, laws and controls; they concern the interpretation and understanding of the working of the economic system, not to mention the behaviour of individual institutions, which differs enormously from one company to another, from one country to another, and from one bank to another. This is how I perceive the first issue. Id now like to move on to the second issue, that of the drivers of sustainable growth. Clearly unsustainable growth is that of the non-existent variety: with no growth at all, there is no production of wealth or creation of jobs. This is the situation in a great many countries throughout the world, and is also one seen here right now, as for too long we have failed to grow enough: unsustainable growth is, above all, of this variety. Then, of course, there are other types of unsustainable growth: financially unsustainable growth, based as it is upon debt; ecologically unsustainable growth, where the planets, or societys, non-renewable resources are depleted; socially unsustainable growth which permits the accumulation of wealth for a limited section of society, excluding the largest part of it. Sustainable growth, on the other hand, in countries like Italy, is the kind of growth that over the course of time creates wealth and employment; it is based on four drivers, all of which must work together, because if one grinds to a halt, then so do all the others. The first of these four drivers is the force of enterprises, because growth and employment are measured on the basis of those companies that emerge, develop, and come to Italy from other parts of the world and grow. In order for them to grow, they must be able to innovate and globalise; they must be able to grow and get stronger in terms of size, within a regulatory framework, both fiscal and bureaucratic, that facilitates such growth; and above all, there must be the resources that give one system the competitive edge over another: the quality of human resources, the quality of financial resources guaranteed by the various forms of bank, and energy, which is another vitally important factor that makes the difference between the

competitiveness of different economic systems. , Though competitive, capable and productive, companies lacking the support of a national economic system that functions as history clearly shows make no progress. What is the effectiveness and efficiency of a national economic system? First and foremost, the infrastructures, and with regard to these Italy is way behind its competitors. The system of education, training and research; the system of justice, because no economic system can function properly without a system guaranteeing rights, a system of regulations and mechanisms capable of resolving disputes; and then effectiveness, as well as efficiency of the public administration, that is, of those mechanisms that authorise, control, verify and ensure the system as a whole works which certainly makes the difference to a national economic system. These are the two fundamental aspects of competitiveness. However, history shows that it is not enough to be merely competitive, but we also require a united society, because if the corporations are solid but the population fears for the future, then there will be no room for growth; growth calls for a cohesive society with shared values, with rules that are not only shared but are also observed by everyone: think, for example, of the number of people in this country who do not observe tax regulations, think of the entity of tax evasion here. Another fundamentally important aspect of social cohesion is the welfare system, that is, all the mechanisms that help dispel our fear of the future. We are talking about assistance, social security, healthcare, that is, everything that serves to protect the weaker or more exposed members of society at a given moment in time, with particular attention to the basic social units - the family and the community. These are extremely important elements, where an increasingly important contribution towards social cohesion is given by the Third sector: the world of social enterprises, charitable organisations and foundations, which provides when the public sector cannot provide and the private sector is absent; very often these are non-profitsector initiatives. The final driver of growth is dynamism: the energy within society and its dynamism are the result, in turn, of very real things, namely social mobility, meritocracy and competition. Another fundamental question is the decision-making process. One of our major weaknesses is not the lack of resources, but rather the lack of rapid decisional mechanisms, as a result of which everything takes ages and many opportunities simply go begging investment opportunities, employment opportunities due to the fact that the entire administrative, legislative and institutional process is as if it were entangled, bogged down. When reactions are slow, and when there is no respect for

the time people have available, then the level of dynamism plummets and the vital energy of a society and an economy drains away. This is the very point where the demands of the economy and of society need to meet in order that an efficient decisional process lead to the effective functioning of democracy as a whole. What we thus have is two sides of the same coin: the economy cannot perform properly without real democracy, even though certain countries would like to prove the contrary to be true. In a country like ours, the quality of democracy and of its decisional processes is extremely important to the defence of that very democracy; a democracy that fails to decide is a democracy that lets its members down and fails to satisfy its citizens needs and expectations. These four drivers of growth have to work together in unison, and we are all responsible for their proper functioning. Of course, the political class, the governing class, has the largest share of responsibility here, even though at the end of the day this is something that involves every single one of us. When these drivers of growth all work together in unison, or at least in the same direction, they create a boundless form of fuel called trust: if there is trust, all problems can be overcome; without it, on the contrary, everything grinds to a halt. This fuel is the result of the synergetic work of our four drivers of growth. Within this context, banks can make a significant contribution: they can aid companies competitiveness both by providing credit and by facilitating investment in innovation and globalisation; they can help companies grow in size, and can help other new companies to emerge. Thus banks can do a lot, and we have equipped ourselves to do so in the best possible manner, by improving infrastructures and finding the funds and resources necessary even when the public sector does not dispose of such. Banks are involved in all of those projects that make the difference in terms of the systems productivity, in the field of social cohesion to give but one example, or in the Third sector or the world of the social enterprise: the latter was one sector where the banks were previously not particularly well equipped to operate, and so we set up a special bank for this purpose called Banca Prossima. The group as a whole currently serves more than fifty thousand third-sector organisations. I could give many other such examples, and I say this because each one of us even more so a large, important enterprise such as our bank must feel jointly responsible for the functioning of the entire system. All of this does not mean missing out on ones business objectives; however, in addition to our own objectives, each of us must assume a share of the responsibility for the working of the system: these

considerations are particularly true in the case of a major banking organisation whose activities concern all four of the drivers of growth I mentioned beforehand. Thank you. Emanuele Chieli Before leaving the word to the students, Id like to go back to the four drivers you mentioned, and the Italian economic system. Is there someone, or something, in our country that counters the action of these drivers? Someone who is not going in the same direction? Perhaps you would all say no, but in truth I believe that theres something in this claim. Corrado Passera If people could choose their place of birth, a great many would opt for a country like ours. We Italians must not forget this basic truth: despite the many problems we have, we should always bear in mind what previous generations managed to produce and accumulate, and not only in terms of economic wealth. However, going back to the matter of our four drivers, I would be tempted to say that the first of them the strength of enterprises works really well, otherwise we wouldnt be the one nation that has lost the smallest market share of international trade over the past ten years, if our companies were not truly competitive. Last year, exporting companies, operating in an extremely competitive environment, quickly recovered, thus providing proof that a significant percentage of the nations business enterprises our first driver - function, and do so very well, even though a lot still needs to be done. Another stronger driver of growth, one which functions better than in other countries, is social cohesion. We are among those few countries capable of guaranteeing their citizens a good level of basic services, of networked, protective services: from social security (pensions) to the healthcare system, which overall is one that many countries are envious of, despite the various problems it suffers from and the disparities between different Italian regions. We are talking about a question which in the United States, at this very moment in time, sees politicians still debating whether to give 50 million citizens basic healthcare cover; in Italy, the risk of a person dying due to lack of medical assistance is inconceivable. The world of assistance, community and the Third sector, that is, everything related to the question of social cohesion, sees Italy among the leading countries in the world. There is still a lot to be done to modernise and

strengthen these mechanisms, but in terms of international standards it could be said that social cohesion is one driver of growth that functions rather well in Italy. On the other hand, we are weak, extremely weak, when it comes to the other two drivers: the national economic system, which has seen Italy accumulate a 250 billion euros infrastructural gap with regard to roads, ports, refuse-to-energy incinerators, gasification plants, that is, the entire range of infrastructures that create employment, attract investment, stimulate productivity and lead to growth. We are undoubtedly not particularly strong when it comes to education, training and research; we do not possess (with one or two important, excellent exceptions) a Public Administration geared towards producing results, taking rapid action or resolving problems; indeed, we have produced a decisional mechanism, as I said before, that is extremely weak and cumbersome, and we have a judicial system that fails to offer protection, as a trial lasting anything up to 10, 15 years does not guarantee the protection of peoples rights, but on the contrary is in danger of triggering the unjust mechanism that is statutory limitation. As regards the driver of dynamism, as a nation we could do much more. Our society is immobile; we do not encourage or facilitate mobility, and we only promote meritocracy in certain sectors of society, whilst a great many other sectors are excluded and could be opened up to competition. Emanuele Chieli At this point Id like to invite five students to come up and join us: it would be wonderful if we could invite you all, but this is not really possible and so Im going to present the five who are now going to submit questions to Corrado Passera. Afterwards, we welcome questions from the public: anyone who wishes to ask a question will be able to do so. So, first off we have Niao Wi Ling, who is a member of the creativity and innovation group at Turins intercultural centre, and who has worked with the Biennale Democrazia. To my left is Federico Berlingeri of East Superop, a higher education institute with 5 schools throughout the world, one of which is in Turin; to the right of Corrado Passera is Maria Medori, a student at the Economics Faculty of Luiss University; there we have Antonio Barcolloni from the Acmos association, part of the Libera network, very active in the organisation of the Biennale Democrazia and other parallel events; last but not least, Paolo Gallo from the Libera Renata Fonte sit-in in Turin. So, Im going to leave the word to you, Federico, as you are the closest.

Federico Berlingeri The very idea of sustainability is associated with time, and thus with the concept of waiting. Sustainability means that the idea of economic gain is accompanied by other, more ethical considerations. These two factors are in danger of slowing a companys growth, of reducing its profitability in the short term, and we all know that the managers role is often strictly correlated to short-term results. Earlier on you spoke about imbalances leading to crises, and perhaps this can be related to the fact that maximum profitability in the short term is called for regardless of the cost involved. So Id like to ask why anyone should risk limiting the short-term profits a company makes, that is, why should anyone curb the, lets say, quarterly results of their own company? Id now like to ask my real question, which is: in your view, are there objective criteria than can be established to ensure that ethical action is not merely a personal question, but is also a question of profitability and profit in the short term? Thank you. Corrado Passera This is an important question, but one for which no universal answer can be given. Each one of us has his or her own ideas regarding this matter. During the years leading up to the crisis, many companies behaved in a certain manner, while others behaved differently. Some companies including banks and finance companies, especially in the Englishspeaking world acted excessively in order to obtain short-term gains at all costs. In many cases their conduct was not illegal, but rather directed towards the extreme pursuit of short-term profits, and many of these companies were even rewarded by the market, because each manager of a company listed on the stock exchange is constantly and daily assessed by the market, by the analysts, by the investors, by the investment funds, by individual savers buying shares. Very often the market rewards those who pursue short-term, or extremely short-term, targets. In many cases this has led to improper forms of behaviour resulting in very slow growth, or no growth at all, for the simple reason that if you want to obtain short-term gains by any means, then important, structural investments, which produce results over the course of time, rather than in the short term, tend not to be made. And if you say well, Im only going to be here for a few years anyway, the most important thing is to obtain the maximum gains in the short term, then who comes after will deal with it, this kind of attitude may well result in decisions that optimise shareholders short-term interests, but fail to strengthen the company in the longer term; they do not optimise the value of time, and in particular do not optimise value for all stakeholders, that is, for all the other

subjects with an interest in the company other than the shareholders. At Intesa Sanpaolo, on the other hand, we believe that all stakeholders are very important. You find yourself having to make such decisions, often faced with a market that urges you to put your foot down on the accelerator, concerned exclusively about the present, with no thought for the future; our company, on the contrary, has to ensure growth in the long term, it has to promote employment and the creation of wealth: this is a moral imperative. Prior to the crisis, we, like many others, refused to accept those short-cuts to profit associated with the utilisation of financial derivatives, with the bundling of receivables and the famous uncontrolled securitisations in the market which of course produced substantial results in the short term, but which also destroyed the fundamental value of a bank like ours, namely the long-term and very long-term relationship with our customers. At the time we were considered to be living in the past; however, we believe in other things which in the long term, unfortunately for the rest of the world, have shown that we are in fact right: the sustainability of banking methods has been seen to be much stronger in the case of the more traditional, solid approaches orientated towards the medium/long-term, than it has in the case of those much more aggressive approaches which appeared to be so fashionable in the early years of the previous decade. We need to choose, we need to say no, we need to look for investors who appreciate the worth of long-term results and pursue a balance of short-medium and long term profits that at times requires a certain degree of courage, when it would be much easier to maximise short-term gains. Given that earlier we spoke about cultural assumptions, I am convinced that the medium-term good (both at company level and in everyday life) is not merely the sum of the good obtained in a series of short-term periods, but rather the result of its own dynamics. We need to adopt a medium/long-term viewpoint, to believe in the fact that we will be what we want to be, in the long term, and not just what we are right now; Im fully aware that this view is not necessarily shared by everyone. Recent history would seem to suggest that there is a wiser way of managing businesses, although there are still observers, professors, theoreticians who claim that short-term corporate profits need to be maximised, without any concern for the common good. I dont agree with this position: the common good derives from the shared assumption of responsibility and long-term goals, and not just from the short-term conflict of individual interests.

Federico Berlingeri Thank you very much. I wanted to digress for a second, because as you rightly pointed out it will always be a question of choice, also because there are no absolute moral values, given that each of us does what he or she likes when on home ground. You often hear such things being said. Is it possible, do you think, to take a step backwards in terms of the choices made by those who manage companies, in favour of the community? Can human beings take a step backwards with regard to his/her individual freedom, in order to guarantee better conditions for the community as a whole? Corrado Passera We need to be careful here, as there is no moral authority that can decide what is good or bad for you: it would be a serious mistake to return to such state-controlled, or indeed authoritarian, methods of a purported morally superior order, one capable of telling each one of us what we are supposed to do. That would be a real mistake. However, in a free world subject to shared rights and rules, we need to try and reward behaviour that over the course of time provides benefits for society as a whole: Im talking, for example, about long-term investments in the energy field, where it makes sense to invest in renewable forms of energy rather than in forms that inexorably consume common goods. A lot depends on the conduct of each one of us, whether we be stock-market investors or common citizens. The press can contribute greatly in this sense. I believe that we should continue to the very end to enjoy the freedom we have acquired up to now, in all senses of the word, and not return to state-controlled mechanisms and behaviour. However, I also believe that we all ought to move towards forms of behaviour that we deem to be more in keeping with the good of society as a whole, rather than just that of specific individuals or companies. Emanuele Chieli Thank you Federico for your question. Id now like to move on to Niao Wi Ling, who has a question for Corrado Passera. Thank you. Niao Wi Ling Id like to ask two questions. Firstly, do you think it is right to invest in youth? And secondly, do you believe that foreigners represent an important resource for society? Is it right to invest in them?

Corrado Passera These are questions with an obvious answer, although simply replying yes would be overly simplistic; we need to understand, rather, whether we are doing enough. Investing in youth is right, each of us invests a large part of their lives in young people, in the sense that we have children, we bring them up, we help them make a start in life. Thus the answer is clear for us as parents. From a business and social point of view, in terms of systems, investing in youth means first and foremost investing in training and education systems in general. A number of countries do a lot in this sense, others, among which there is Italy, less so. We have still not yet adapted our education and training system to educate young people to easily enter the labour market: a large number of young people today finish their school education only to encounter great difficulty in finding a job. This situation is a result of the limited growth of the economy in general, but probably a lot depends also on the fact that we do not educate and train young people properly given the requirements of the market and of the world of employment, and when I say world of employment I mean this in the broadest possible sense, not only in that of the more obvious world of employment within companies, but also the new trades and professions, new technologies, non-profit making enterprises, those skills needed to go and work outside of Italy knowledge of languages and of other cultures. It is clear that a lot is still to be done, especially as we have to deal with the growing, underestimated problem of unemployment. There are two million, statisticallyregistered unemployed, people in search of a job but who cant find one. This total does not take into account a number of other categories populating the undergrowth of non employment: the non-employed, that is, those who have given up looking for a job; the underemployed, ranging from the extremely precarious to the underemployed in terms of the amount of work they do during the course of a week or a month; those laid-off from their jobs, such as the temporarily laid-off workers receiving a temporaryredundancy allowance. Therefore the total number of non-employed is substantial: at the European level, we are talking about some 25 million unemployed, and probably just as many underemployed. In other words, we are talking about some 50 million families suffering the stressful consequences of this situation. When such situations of social hardship arise, the implications go beyond purely economic considerations; there are social and psychological implications, which are as history shows also very dangerous from a political point of view. And if investing in youth means hiring young people, we have been fortunate enough, as a company in recent years, to have hired some 7,000 people, which perhaps constitutes one of the largest hiring

operations ever witnessed in Italy, and we hope we can hire more young people in the future. Then there is the question not only of getting young people started in whitecollar jobs, or in any case with existing companies, but also of helping them to set up new enterprises. In many parts of the world, this is one of the principal drivers of growth in business competitiveness, which significantly affects the likelihood of other businesses and companies being set up in the future. Within this context, it is wonderful to see what we can do in our trade, the number of technological start-ups created by people who have carried out research at university level and in medium-sized and large companies and then, thanks to a brilliant idea, decide to set up their own businesses. At this point, the banks role could be to transform the idea into a business plan, to find the start-up capital needed to present these new small enterprises, perhaps accompanied by corporate incubators, to the world of investors who choose to place their trust in new technological companies. This is one of the things that we do, and that gives us enormous satisfaction: when new enterprises are set up, substantial energy is inevitably generated. The second question is related to the first, and concerns the new youth, the new citizens who come from other countries to live in Italy. This is another important issue where Italy is not lagging anymore than other countries. You only have to consider the integration of the four million new citizens who were not born in Italy: this phenomenon has not led to those dramatic situations witnessed in certain other countries, with the exclusion and ghettoising of such people. Of course, more could be done. We are directly involved in this when it comes to lending, where we tend not to distinguish between existing citizens and new citizens. One extremely rewarding experiment consisted in launching a mechanism whereby the initial guarantees, that often immigrant entrepreneurs cannot provide, are offered, so that they may make their first investments and their first purchases. This experiment was conducted jointly with the Provincial Council of Milan and with the usury-prevention (Antiusura) foundation, which helped us select the projects submitted by entrepreneurs from other countries. In this way we managed to share the business risk, at least as far as credit was concerned, and to launch dozens of business ventures which subsequently became firmly established. Therefore I would reply yes to both questions. But if the implicit question was: are we doing enough?, then the answer would be no. What can we do? First of all, we must make improvements to the world of education and training, and make those mechanisms that facilitate and accompany the setting up of new companies more effective.

Emanuele Chieli Maria, its your turn. Maria Medori Earlier on you spoke of disenchantment, of the loss of hope not only of todays workers, but also of future generations. I wanted to ask you how the credit and financial systems can help bridge market limitations, creating renewed trust among young people and among current and future workers. Corrado Passera Perhaps we can now examine in greater depth some of the topics we have already mentioned. If disenchantment means the loss of hope, the loss of faith in the future, the loss of belief that ones own efforts and energy can help towards building a good life, particularly from an economic point of view, then everything that we do to encourage growth hence the four drivers of growth mentioned before is aimed at creating the bases for facilitating demand, dynamism and creditable action. As a bank, we do, and we shall continue to do, all that we can to help new enterprises emerge, and to strengthen existing enterprises and help them hire workers and attract foreign investment. And its not because we are a country where its not good to live, or because the cost of labour is higher, since other countries, such as France and Germany, or the Scandinavian countries, where labour costs are higher than in Italy, still manage to attract greater levels of investment than we do. So its a combination of factors including the cumbersome justice system, and the lack of security in certain parts of the country, problems that must be dealt with if we want to facilitate job creation and the promotion and development of new projects in a more structural manner. The reasoning set out previously regarding start-ups is also valid here, but its also valid for a great many other sectors that are strong, or that in the past were strong but have been recently abandoned; its a vast area for which we, as a banking system, can do a lot more than we are currently doing. We should not think of globalisation in one direction only; just as others come here, we can go to the rest of the world. Weve got thousands of young people who are successful researchers, academics, workers in high-tech industries around the world, thanks largely to the excellent training and education they received here in Italy. Their first, second, perhaps third jobs are not always here in Italy, of course, but this is a challenge we must accept; nevertheless,

the world is one; theres not only Italy, but the rest of the world where you can go and train in certain specialised fields. There are many opportunities, not only for those who have the means to do so; there are zero-cost opportunities, where all that counts is the effort one puts in, and passing the competitive selection procedure. So we must encourage and promote economic growth, we must improve training, we must emerge from our corner of disenchantment in which we are forced to hide at times. A great many traditional solutions no longer work, and many traditional trades have disappeared for ever. We must invent new trades, we must be prepared to go around the world in search of them. We must pursue globalisation in the full sense of the word, in places where perhaps we would never had thought we could end up in. Corrado Passera If the only aim of growth is profit, then it is destined to lead nowhere. There is no one type of growth, but structural forms and finance-induced forms of growth; honest growth and dishonest growth, long-term growth and short-term growth. So growth may be seen more as a means than as an end. Then the growth we are looking for in a country like ours has to be of a structural, inclusive nature; growth that creates employment for all, rather than being concentrated in selected areas of society, without consuming goods than can no longer recreated either by society or by nature. The reduction in the number of people living below the bread line is a crucially important target for many countries; fortunately for us this is not the case. We can set higher targets in terms of the standard of living, the standard of our democracy and the standard of our living together, where wellbeing is perceived as the satisfaction of all those intellectual, human, social, democratic requirements that many other countries cannot afford to pursue. Both in the underdeveloped world, in the emerging nations, and also in those more fortunate nations with a high standard of living, I believe that the recipe for nongrowth or negative growth is in itself a mistaken approach, in the sense that we absolutely need to create wellbeing through the type of growth Ive just described. Just think of the situation here in Italy, of the challenge represented by the ageing of the Italian population, which while being a considerable achievement also represents a heavy burden in terms of minimum healthcare requirements. Due to the simple fact that average life expectancy is constantly rising, the countrys healthcare spending will easily reach an unsustainable level; if we no longer had sufficient finances to pay for it a dramatic prospect from the social point of view we would simply have to lower the level of assistance provided to a substantial sector of the population. Growth

serves if its good growth, competitive growth, financially and environmentally sustainable growth. Therefore the short-cut represented by the no growth line is, in my opinion, totally unrealistic and as such not worth taking into consideration. Its a completely different matter reducing waste, combating injustices such as tax evasion. The present level of GDP being equal, tax evasion in Italy amounts to 100 to 150 billion euros. This constitutes theft, and is the result of the lack of observance of the laws, and as such is the fault of all of us: at the end of the day a great many situations are tolerated which, on the contrary, should never be tolerated and that lead to the lack of those resources we need to invest in shared objectives, which in turn would result in a higher standard of living of all concerned. This is one of the many reasons why, as I said before, we must all feel responsible for the common good. Paolo Gallo I believe that the present crisis derives from two directions. First there was the idea that profit is an end in itself, to be pursued at all cost. At the same time, there is the belief that we live in some kind of golden age, one in which we can happily consume as much as we like forever, because the resources we dispose of are infinite, and this has led to us being slaves to this very same impulse to consume. So, taking this as our starting point, how exactly can we ensure that the economy is at the service of the countrys citizens, and not the other way around, knowing that the problem is as much a political one as a judicial one? And how are we to implement an effective control over this system, one that cannot rely on any invisible hand, but which on the contrary needs to guarantee our rights and prevent us from becoming slaves to our own needs? Corrado Passera This brings us to the most difficult question of all. There may well be extreme, excessive levels of consumerism, and intolerable, undue waste; but we need to bear in mind that a substantial section of society still cannot manage to satisfy its most basic requirements. There are millions of people in our society who plan their lives to perfection, who manage to save, invest, bring up their families and also help others; on the other hand, there is also a sizeable section of that same society that has yet to attain sufficient levels of consumption. Of course, there is the question of the way people approach life and behave in general; it depends on how we behave as individuals when choosing the way we live our lives, and the degree and manner in which we participate in society and in democracy; we need to be more involved you in particular need to do more to guide society in the most suitable, fairest, best

possible direction in order that it becomes what you want it to be, what we all together wish it to be. The world of economics and that of democracy must be intertwined, because in order to change the former we need to take advantage of our good fortune in having a democratic system based on the protection of individual and collective rights, which can effectively impact the functioning of the economy as a whole. In many economically-advanced, lets say capitalistic nations, this association of the economy and democracy is not made since people believed the two concepts to be distinct and unconnected, which is not true. Unfortunately there is a market where no rights, no freedom, no democracy exists, a market that fails to provide the means and opportunities for people to decide. We are lucky to have a system and this is the great advantage of Europe and the western world which we need to recognise as such, acknowledging the importance of the economy as a means for improving the workings of democracy, but which recently has not been performing to its true potential. We must continue to look ahead and to create an economy that serves those shared values we believe to be important, and which we democratically decide are the values we must focus on and judge our actions against. Basically, we now possess greater means with which to live better than any previous generation. Of course, we need to do more in order that the four drivers of growth function at one and the same time, without competitiveness, profitability and business enterprise prevailing to the detriment of the system as a whole, of social cohesion and of dynamism. There is no invisible hand adjusting things and transforming egoism into altruism, or individual interests into the common good; its up to each one of us to do more, but this is something that is well within our capabilities. Emanuele Chieli We have come to the end of our meeting now, so I would like to thank Corrado Passera for his thoughts and analysis, and for his optimistic reflections. I would also like to thank all of you for being here and actively participating: thanks in particular to Biennale Democrazia for this latest meeting - a true opportunity for growth. Thank you.