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Editorial: a country adrift PDF Print E-mail
Sep 06, 2011 at 09:02 PM

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I haven't been updating my blog much over the last month or so; too much work of the paid variety, some vacation (stay tuned for a report on the beautiful Aeolian islands, off Sicily) and quite a bit of boredom where it comes to things Italian. I mean, how many pieces can one write about Silvio Berlusconi and the damage he is doing to his country? About scandals involving him and about his government's ongoing failure to take serious measures regarding Italy's economic problems? But somethings cannot be ignored and one of these is the fact that this country's politicians seem unable or unwilling (the picture on this page shows the Senate in early August when parliament was reconvened to consider a package of emergency measures to deal with Italy's debt crisis ---11 senators out of 300 showed up!) to do their job: make effective and incisive laws to deal with present and future crises.


In recent years, this has been largely because the Italian parliament, dominated by Berlusconi's majority, has spent more time on dealing with the premier's personal and/or political problems than on anything else. But the recent stops and starts on the emergency economic package designed to deal with the country's extreme financial weakness indicates that the country's leaders, in general, what Italians refer to as the classe politica, the political class, are simply not serious people.

The Italian economy is in serious trouble, mostly because of a budget deficit that while below the European average is too high a percentage of national income (around 4%) to permit growth, now under one percent per annum, and a mammoth public debt - 120 percent of gross domestic product, the second-highest in Europe, after Greece - which means the country has to spend so much each year paying back bondholders that it doesn't have enough money to govern the country properly. Italy's finances are in deep, deep disarray and Europe's support has only come because of the Berlusconi government's solemn avowal that it would introduce serious structural reforms of the pension system and of public finances in general.

And yet, and yet, a special austerity plan announced on August 12 (to replace an earlier $70 billion package of tax increases and spending cuts that was subsequently deemed insufficient to generate the 17 billion euros needed to balance the budget by 2013 as promised) has been turned inside out and upside down so many times - today the fourth version was presented -  since then that its final content is still unknown. In contrast, it would appear that all the major provisions that could have had a favourable effect on the country's financial credibility have been removed. And this while in troubled Spain, the ruling majority and the opposition had little trouble in getting together on a constitutional amendment (only the second in post Franco Spain) to set a lid on deficit spending, and the Portuguese parliament passed a budget law that will significantly reduce public spending in the next few years.

The original Italian decree included measures such as an increase in VAT tax, a special wealth tax on Italy's very rich, a cutback in subsides to Italian municipalities, the elimination of the country's 88 provincial administrations (something that has been suggested for years now), and the halving of the country's 930 MPs. Also proposed, to increase productivity, were the moving of three national holidays to Mondays, as is the case in the US and the UK, the immediate increase of the retirement age for women (still at 60) and a radical retroactive change in the pension system that would annul the long-standing rule that the years of military service and university education could count as work years making retirement possible at an earlier age.

But most of these items now seem to have disappeared while the emphasis has been moved - or so it appears - to doing something to the pension system and to stepping up the fight against the massive tax evasion the Italian styleof life that characterizes. Experts agree that one of the things that is urgently needed is the reform of the welfare structure, in particular the pension system. The average age of retirement for men is still only 58.8 years and even in the private sector women are still leaving even earlier. Furthermore, the Italian state spends an incredible 38 billion euros a year for what is known as pension reversibility - when your spouse gets your pension after your death. But this is politically quite risky.

That leaves tax evasion and although much could be done on this front, financial experts question whether reforms in this sector could bring in enough money quickly enough to have an effect on the immediate problems. For if things have been financially calmer over the last month, that is only because of the (European Central Bank's controversial decision to spend 43 million euros to buy Italian bonds and - at least for now - keep the market steady.

I know, I know. All countries have their problems. The failure of the American congress to deal with our own debt problem in a timely and effective manner was shameful and embarrassing and has ended with the suppression of our much-touted triple A rating. In the UK, the Murdoch affair has revealed a spate of nasty collusion between police, parliament and unscrupulous tabloid journalists. Greece's politicians have lied to their voters for decades now and as everyone knows are in deep financial poo.

But Italy, Italy seems to be trapped in a miasma all it's own, a place where the res pubblica is dominated by unbelievably rampant cronyism, widespread corruption and political blindness. One of Berlusconi's recent reassuring speeches to Parliament - making reassuring speeches seems to be his specialty - there was a seemingly spontaneous outbreak of laughter from Antonio Di Pietro, leader of one of the country's several opposition parties, that was particularly telling. Commenting on Mr. B's speech, Di Pietro looked at the premier and asked, "and what planet do you live on?"

 

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