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Reflecting on current events

Di Antonio Caneva, 29 Agosto 2013

Before the holidays, I received the newsletter from Società Libera, a liberal association unrelated to political parties (www.società which published an interesting contribution by Giorgio Ragazzi on the current situation in our country. Even though the topic is not strictly tourism, I wish to propose it as a stimulus for reflection.

The Soviet Union collapsed because its leadership had lost prestige and credibility and, above all, because it had become too apparent that its inefficient economic system was unable to keep pace with technological progress and generate new wealth. The collapse was sudden, but it was caused by missed reforms and wrong policies which had accumulated during decades.
Italy is being governed on the strength of announcements – the announcements of reforms that are in fact not enforced except to a minimum extent, as shown by the Monti government experience. Abolition of provincial governments, electoral law, reduction in the number of parliament members, consolidation of lower courts, bureaucratic consolidation, payment of debt owed by the public administration to private-sector suppliers.
We are forever listening to rambling speeches about growth, youth and women unemployment, but the little they do in concrete terms seems to be going in the opposite direction. Among the most impactful negative aspects, there is the difficulty of enforcing contracts, where we rank 160th in the world. Is it possible that we cannot make our civil justice system work better, by a reform that would certainly not involve a great cost for the State? Another negative factor is “paying taxes” where we rank 131st, due not only and not especially to the tax burden in itself, but to the numberless formal obligations tax-payers are required to comply with, to which – according to a World Bank estimate – a small business has to devote 269 hours per year, against 176 in the OECD average.
Our ruling class excels in the imposition of asphyxiating bureaucratic procedures, without any consideration for the ensuing costs to be borne by businesses and citizens, and this is another factor towards reducing the system’s competitiveness. Even the Monti government, in spite of its many announcements, did its part in further complicating this legislative maze, also worsening the labour market flexibility, where no improvement of social amortisers seems to be possible, and companies and entire industries are paralised by the use of redundancy funds. Fiscal federalism, introduced by a constitutional reform hastily adopted for contingent electoral reasons, has further aggravated the legislative jungle and the opportunities for corruption.
Now it is fashionable to expect Europe to solve our employment problems, and there is great talk about the benefits we may achieve from the closing of the excessive deficit procedure – still another example of the pettiness and parochialism of our political class, which seems to forget that any public spending, even though kindly permitted by Europe, will have to be financed by public debt, which we will need to place and eventually reimburse. Having postponed the abolition of the IMU property tax on main residences, the government promised to review the entire property tax system by the end of August without providing the slightest indication of the relevant inspiring criteria (they possibly don’t even know themselves), thus getting themselves into a trap – and it is still unclear if and how they will release themselves from it unharmed.
The parallelism with the Soviet Union leads us to think that our institutional system is in real danger of coming to the end of its run, possibly in a sudden way, due to triggering factors as yet unpredictable: a referendum to exit the euro, violent demonstrations, who knows? Maybe we can still hope that the big players of Italian politics of recent decades will disappear from the scene for some (natural) reason, with a radical turnover in our ruling class.

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