Economania

On 6th September 2011, Italians of all classes and persuasions came out on a 1 day general strike over the latest proposed austerity measures. Public transport such as trains and buses was disrupted and a number of flights were cancelled across Italy. The main unions have also gone utterly epileptic over a proposed clause in new legislation that will make it easier for any employer to dismiss workers.

This strike will achieve nothing in creating a more stable economy and improving the lot of ordinary workers in both public and private sectors. It will only discourage badly needed investment that could create new jobs. The Italian government has been forced to debate a new round of austerity measures after pressure coming from the financial markets notably over the yield on government bonds. The cost of borrowing for the State was going up all the time until the government was forced to recognise reality and do something about it.

This is a failure of economic policy-making going right to the top. For many years Italy has lived beyond its means and government debt is amongst the highest in the Eurozone almost on a par with Greece. The country desperately needs structural reforms to make it more competitive with the rest of the world. To their credit, Italians have managed to avoid the worst side effects of the credit crunch by discouraging the kind of property speculation often as not seen in the UK.

The next day, the Italian Upper House of Parliament passed a new austerity package 165 to 141 votes that should cut the deficit by 54 Billion Euros over 3 years. Ultimately they were given no choice in the matter. It took continual pressure from the markets to make them sit up and do something. Neither is it any good for the populace to go on strike at every opportunity when strikes only hurt the poor, not the rich.

Italy is a country renowned for its employment law that makes it almost impossible to make someone redundant. The process is prolonged even by UK standards and costs the company an arm and a leg. This is what is holding the nation back in terms of economic growth and one of several reasons why Italy is struggling. Tax evasion by the wealthy has also become a national pastime and this needs to be eradicated too.

Italy does have some world class firms such as Fincantieri and Ferrari. The nation has become iconic in terms of fashion brands such as Gucci or Versace but does need to acknowledge the economic landscape of the 21st Century post credit crunch. Nobody is suggesting that there is any panacea to current issues such as stagnant economic growth. But nations can help themselves by maintaining their public finances within reasonable order.

(See www.bbc.co.uk/news/business-14827742) or (www.bbc.co.uk/news/world-europe-14798534)

Mark Sandford - Permission granted to freely distribute this article for non-commercial purposes if attributed to Mark Sandford, unedited and copied in full, including this notice.

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