Stuck in Time: Italy’s Politics

by Matthew Melchiorre on December 19, 2012 · 1 comment

in Economy, Employment, International, Regulation

Things have a way of repeating themselves. This is especially true in Italy, where politics have been stuck in a time loop for the past 40 years.

For Italians, recent drama surrounding the imminent collapse of their government is merely part of the political routine.

Earlier this month, former Prime Minister and convicted tax felon Silvio Berlusconi pulled his party’s support from the coalition supporting Italy’s technocrat government. He claimed that Italy was on the “brink of the abyss” and was “in need” of his return to politics.

Never mind his abrupt resignation from government last November, forced by financial turmoil stemming from his refusal to countenance necessary reform. The technocrat government has been governing since.

Well, he’s changed since then, right? Wrong.

Berlusconi still believes printing money is a substitute for reform. He told Rai Uno in an interview today Italy should leave the Euro to print its own currency if the European Central Bank continues its resistance to lowering interest rates, which already are at historic lows.

Instead of reforming Italy’s rigid labor markets and broken legal system (which most likely will allow Berlusconi to appeal his tax fraud conviction until the statute of limitations makes the entire case moot), he views the printing press as the means to restore Italian competitiveness.

This is the cowards’ way out. Berlusconi, and Italian politicians in general, simply do not have the courage to stand up to Italy’s entrenched special interests that have benefitted from economically ruinous legislation for decades. More cheap credit puts off this inevitable confrontation for a little while, but Italy will have to face it eventually — and at a higher cost because of all the procrastination.

This is the problem with Italian politics. The cycle of political grandstanding followed by inaction on reform has been repeating itself since the 1970s.

In the EU Observer, I explain how Italy’s never-ending political time loop has led to its economic stagnation. The bottom line:

Until Italian leaders gain the courage to take on the special interests that have gorged at the public trough for decades, the best thing they can do is stay as far away from government as possible.

Read the whole article here.

Alex-28 December 20, 2012 at 6:21 pm

Very good thinking. Italy, just as many other european nations, just do not want to accept the rule of law instead of the rule of government (or the rule of politicians, tycoons and so on). Also, Italy still do not accept free market because people don`t believe they could manage well their own lives. So they transfer a part of their individual rights to the government expecting someone else would do better with their lives.

But this would not ever happen.

Only solution is Enlightenment which brings the rule of law, individual rights, freedom and free market. A few smart and good people who do understand the process. When would that happen? I think global crisis would make it very soon.

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