What’s Italy’s Destiny?

Ian Fisher has recently written an article in The New York Times called "In a Funk, Italy Sings an Aria of Disappointment."

It describes the recent (and obvious) problem with the Italian economy.

Europe as a whole has been highly regulated and socialist. This has stunted their growth comparatively to the United States.

Fisher states that "Italy doesn’t seem to love itself" and are the "least happy people in Western Europe."

They seem to be suffering from "fractured politics, uneven growth, organized crime, and a tenuous sense of nationhood."

This is one thing I really noticed when I visited Italy this summer:

"Italy’s low-tech way of life may enthrall tourists, but Internet use and commerce here are among the lowest in Europe, as are wages, foreign investment, and growth. Pensions, public debt, and cost of government are among the highest."

This pretty much the summary of why Italy is now struggling.

As I’ve mentioned (My Post: Is Atlas Shrugging at Europe?)before they have the strictest laws at starting your own business and owning your own home. This article reports that :

"70 percent of Italians between 20 and 30 still live at home, condemning the young to an extended and underproductive adolescence. Many of the brightest, like the poorest a century ago, leave Italy."

The people are ready for change as "250,000 [Italian Citizens] signed a petition for changes like term limits and the direct election of lawmakers."

The lawmakers don’t have it easy. It is very hard to deregulate, when people have been under regulation for so long.

One bill caused "’Pharmacists [to] shut their doors this year when the government threatened to allow supermarkets to sell aspirin. The cost for just 20 aspirin tablets at a pharmacy is $5.75."

"Then there is family. The divorce rate has risen. Large families are a thing of the past. Italy has one of Europe’s lowest birth rates, the fewest children under 15 and the greatest number of people over 85, apart from Sweden. Unemployment is low, at 6 percent. But 21 percent of the population between 14 and 24 did not work in 2006. And the old are not letting go."

Businesses are struggling too. Massimo Martino who is the director of Maxdesign, a furniture company says, "At first they [the businesses] thought this phase would just pass, but in reality, many businesses ended up closing because fundamentally they market didn’t need them anymore. They didn’t want to change."

Mr. Martino sure understands the market forces in Economics.

This sentence in the article summarizes my recommendations to the Italian government.

"Businesses want less bureaucracy, more flexible labor laws and large investments in infrastructure to make moving goods around easier."

This would be a good start…

Published in: on December 19, 2007 at 5:05 am  Leave a Comment  

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