Italy’s Government for Change gets off to a slow start on the Economy

The Corriere della Sera of June 25, 2018, in its insert on “L’Economia” proffers its suggestions to the present coalition government on how best to breathe new life into an Italian economy chloroformed by seventy years of labor-biased economic policies that have worked well to impoverish the presumed beneficiaries, all the while encouraging employers to sell out, close or migrate to more business friendly venues. Italians are still stunned by Fiat’s migration to the USA.

In the first of two interesting articles, Mauro Marè and Nicola Rossi address the issue of taxation and current plans to simplify the system by scrapping non performing tax credits held by Italy’s IRS, “The Agenzia delle Entrate,” which thanks to Italy’s non performing judicial system would, regardless, find difficult to make good in the event delinquent taxpayers resisted prosecution in the courts. Hence, the Conte Administration is contemplating cancelling all outstanding tax credits under € 100,000. against upfront cash settlements of 6%, 15% and 25% of total amounts due.

In the second article, Guntram Wolff, Simone Tagliapietra and Alessio Terzi provide insights on how better management of human resources, the State Bureaucracy, and investing in the so-called green economy (all “sacred cows” of the “ancien régime” for which the Corriere’s heart still bleeds) are needed to grow the Italian economy. Of course in Italy’s situation, doing just about anything would be helpful; nevertheless, a few of the Authors’ suggestions are worthy of note.

That Italy is below the EU average in education is a known fact. But how to remedy a situation based almost exclusively on the near monopoly afforded the State’s Public School System? The Authors make no suggestions here other than to underscore the problem, suggesting that more public funding, especially in the forever underprivileged south, is urgently needed. Money alone, however, is not going to change the reality of a “system” based almost exclusively on public schools.

This Author suggests Italy and the Vatican may want to revisit the current Concordato and renegotiate the respective roles of Church and State in the education of Italians. A model for such an undertaking might be the USA, which integrates well a system of education based on state and private schools of all denominations, including privately funded lay and religious organizations. Competition is one sure way of breathing life back into Italian education. For sure it will take courage and vision for an “out of the box” solution such as the aforesaid, one that would be seen as breaking with established tradition, requiring the abandonment of old political and religious prejudices. Who better than Italy’s new Government for Change? The American Catholic Church, which successfully runs a parallel system of education from the elementary to the post-graduate level, numbering Universities of excellence ranked on a par with the best of America’s Ivy League Schools could be of help to Italy’s Government for Change, should they want to break with a long-standing tradition that has failed Italians.

Getting the Italian State Bureaucracy up and running is going to be a challenge that will require more than money or the idea suggested by the Corriere’s journalists in the second article that the time has come to invest in the “digitalization” of the State Bureaucracy. It is true that Italy is finally getting around to laying down a network of fibre optics destined to hook-up most cities and outlying areas, making possible high-speed, broad-band connections. Still, Italians are more into smartphones than computers and of those having access to a computer few are Internet savvy. And of the few with Internet experience, even less go online to interact with the State Bureaucracy. The idea of the Corriere evidently still lies in automating, rather thai cancelling the countless number of (mostly) useless certificates that Italians are still forced to request from their State or local Statistics Bureaus whenever applying for  the issuance of licenses, permits and the like.

The present Government of Change has promised to repeal hundreds of laws that while officially still in force have fallen into disuse and are no longer enforced or enforceable. Likewise, rather than automate the State Bureaucracy, much thought should go into rethinking what Italians really need in terms of civil servants and the services they provide. Putting the State Bureaucracy online and getting a still mostly paper and pencil organization used to working with computers will take more time than money and the effects will not be felt on the economy any time soon.

Anyone that has opened a checking or other bank account in this country knows the incredible amount of paperwork involved to comply with Italy’s complicated laws and privacy statutes. People are forced to sign their names untold number of times, which is irritating and outright silly considering the inefficacy of the judicial system and courts.

The second article suggests that investing in the “green economy” would be of great help in boosting economic growth. Renewable energy and the like are industries dear to the Corriere and the Dems from even before Renzi and Gentiloni. If they alone had the power to spark growth, Italy would have felt the effects long ago.

In Italy business is done mostly via the State and its multinationals or it is not done at all. Before growing again, Italy will need to rethink the State’s role in the economy: how much State vs. how much private enterprise does the Country need / want. Today, practically 70% of GNP is generated directly or indirectly by the “State,” meaning the Government and / or its agencies. Since the financial crisis of 2007, Italy has lost 25% of its GNP. For this Author that would have been reason enough to warrant a complete reversal of the State’s role in the economy. But for a country hooked on Big Government since the first post war years, it is not realistic to expect a complete reversal. Government is Italy’s biggest employer and not much more can be expected from the State in terms of finding and / or employing additional financial resources in order to stimulate the economy. State resources are already stretched far too thin. Like it or not the only alternative, short of taxing Italians to death, is enlisting the aid of private enterprise, domestic and foreign, in making the investments required to get the Italian economy growing again. How? The options are not endless but varied enough to give the Conte Administration some leeway.

To get Italy growing again at a significant rate is going to take all of the available State / Government resources plus whatever resources can be mustered from a long neglected private sector.

N. B. The term “Government” is used above as a synonym for “State” and vice-versa. For Italians the term “Governo” is used almost exclusively in connection with the Executive Branch.


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