Mazzucato on the Iran war’s economic shock: Who pays the price?

Economist Mariana Mazzucato warns that the economic shock from the Iran conflict is being socialized, with ordinary citizens bearing the cost while corporate profits are shielded. | Contesto: cronaca

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• Mazzucato on the Iran war’s economic shock: Who pays the price?

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The economic shockwaves from the ongoing conflict involving Iran are being absorbed by the public, not by the corporations and financial institutions that often benefit from geopolitical instability, according to a stark analysis from leading economist Professor Mariana Mazzucato. In a recent interview, Mazzucato argued that the familiar pattern of privatizing gains and socializing losses is repeating itself, with governments using taxpayer funds to stabilize markets and shield key industries from the fallout of soaring energy prices and supply chain disruptions. Mazzucato, a professor at University College London and author of "The Value of Everything," pointed to immediate mechanisms like state subsidies for energy bills and large-scale bailout packages as primary examples. These interventions, while cushioning the immediate blow for consumers and some businesses, ultimately place the long-term fiscal burden on society. "We see a rapid socialization of the costs," she stated, "through increased public debt and inflationary pressures that erode wages and savings, while the profits of energy companies and certain financial actors reach record levels." This dynamic, she contends, exacerbates inequality and fails to build a more resilient economic system. The context for this critique is a global economy still fragile from the pandemic and previous geopolitical crises. Conflicts in critical regions like the Middle East trigger volatility in oil and gas markets, disrupting global trade routes and spooking financial markets. Mazzucato emphasized that this vulnerability is not an accident but a feature of a financialized global system designed to prioritize short-term returns and shareholder value over long-term stability and public welfare. The structure allows private entities to capture the upside of risk while the downside is routinely offloaded onto the public balance sheet. The implications of this cost distribution are profound for economic policy and democracy. Mazzucato warned that continuously asking the public to pay for systemic crises fuels disillusionment with government and institutions. It also drains public coffers that could be invested in a just...

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Categoria: cronaca