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Posts Tagged ‘Statism’

A few days ago, using several methodologies, I calculated how fast government spending increased during the presidencies of Lyndon Johnson, Richard Nixon, Jimmy Carter, Ronald Reagan, George H.W. Bush, Bill Clinton, George W. Bush, and Barack Obama.

One of my big takeaways was that Republican presidents – with the exception of Reagan – allowed the burden of government spending to increase far too rapidly. Oftentimes faster than budgets grew under Democratic presidents.

That column generated a lot of feedback. And whether the responses were positive or negative, a common theme was that presidents shouldn’t be judged solely based on the growth of federal spending – both because Congress plays a big role and because there are many other policies that also matter when assessing economic policy.

I fully agree, and I explicitly noted that the relatively good spending numbers during the Obama years were because of policies – sequestration, shutdowns, etc – he opposed.

And I also concur that other policies matter. That’s one of the reasons I’m always highlighting Economic Freedom of the World. Yes, fiscal policy is one of the variables, but monetary policy, trade policy, regulatory policy, and the rule of law are equally important.

Indeed, I did an overall assessment of Bill Clinton a few years ago, comparing the pro-growth polices that were adopted during his tenure with the anti-growth policies that were implemented.

The bottom line is that economic liberty increased during his presidency. Significantly. Others can debate about whether he deserves full credit, partial credit, or no credit, but what matters to me is that the overall burden of government shrank. And that was good for America.

It’s time to do an overall assessment of economic policy for other presidents. And we’ll start with one of America’s worst presidents, Richard Nixon.

He’s mostly infamous for Watergate, which led to his resignation, but he also should be scorned because every single major economic policy of his presidency expanded the size, scope, and power of the federal government. Here’s the list, with a couple of the items getting larger bars because the policies were so misguided.

Is it true that there were no good economic policies under Richard Nixon? I asked Art Laffer, who worked at the Office of Management and Budget at the time, whether there were any pro-market reforms during the Nixon years.

He mentioned that the top tax rate on labor and small business income was reduced from 70 percent to 50 percent as part of the Tax Reform Act of 1969. I would have included that law in the pro-growth column, except that was the legislation that also created the alternative minimum tax (for both households and corporations). And there was an increases in the tax burden on capital gains, as well as a more onerous tax regime for new investment. My assessment is that these bad provisions basically offset the lower tax rate.

For what it’s worth, Nixon also proposed a value-added tax, which is yet another piece of evidence that he was a terrible statist. But I only include policies that were enacted rather than merely proposed (if I did include proposed policies, Bill Clinton would take a hit for Hillarycare).

P.S. I’m open to revising this list. I probably missed some policies, perhaps even a good one. And maybe I’m overstating the negative impact of spending increases and price controls, or understating the bad consequences of other policies. Feel free to add your two cents in the comments section.

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Back in 2015, I mocked Venezuelan socialism because it led to shortages of just about every product. Including toilet paper.

But maybe that doesn’t matter. After all, if people don’t have anything to eat, they probably don’t have much need to visit the bathroom.

The Washington Post reports that farmers are producing less and less food because of government intervention, even though the nation is filled with hungry people.

Venezuela, whose economy operates on its own special plane of dysfunction. At a time of empty supermarkets and spreading hunger, the country’s farms are producing less and less, not more, making the caloric deficit even worse. Drive around the countryside outside the capital, Caracas, and there’s everything a farmer needs: fertile land, water, sunshine and gasoline at 4 cents a gallon, cheapest in the world. Yet somehow families here are just as scrawny-looking as the city-dwelling Venezuelans waiting in bread lines or picking through garbage for scraps. …“Last year I had 200,000 hens,” said Saulo Escobar, who runs a poultry and hog farm here in the state of Aragua, an hour outside Caracas. “Now I have 70,000.” Several of his cavernous henhouses sit empty because, Escobar said, he can’t afford to buy more chicks or feed. Government price controls have made his business unprofitable…the country is facing a dietary calamity. With medicines scarce and malnutrition cases soaring, more than 11,000 babies died last year, sending the infant mortality rate up 30 percent, according to Venezuela’s Health Ministry. …Child hunger in parts of Venezuela is a “humanitarian crisis,” according to a new report by the Catholic relief organization Caritas, which found 11.4 percent of children under age 5 suffering from moderate to severe malnutrition… In a recent survey of 6,500 Venezuelan families by the country’s leading universities, three-quarters of adults said they lost weight in 2016 — an average of 19 pounds. This collective emaciation is referred to dryly here as “the Maduro diet,” but it’s a level of hunger almost unheard-of… Venezuela’s disaster is man-made, economists point out — the result of farm nationalizations, currency distortions and a government takeover of food distribution. …The price controls have become a powerful disincentive in rural Venezuela. “There are no profits, so we produce at a loss,” said one dairy farmer.

Here’s where we get to the economics lesson. When producers aren’t allowed to profit, they don’t produce.

And when we’re looking at the production of food, that means hungry people.

Even the left-wing Guardian in the U.K. has noticed.

Hunger is gnawing at Venezuela, where a government that claims to rule for the poorest has left most of its 31 million people short of food, many desperately so. …Adriana Velásquez gets ready for work, heading out into an uncertain darkness as she has done since hunger forced her into the only job she could find at 14. She was introduced to her brothel madam by a friend more than two years ago after her mother, a single parent, was fired and the two ran out of food. “It was really hard, but we were going to bed without eating,” said the teenager, whose name has been changed to protect her. …Venezuela’s crisis has deepened, the number of women working at the brothel has doubled, and their ages have dropped. “I was the youngest when I started. Now there are girls who are 12 or 13. Almost all of us are there because of the crisis, because of hunger.” She earns 400,000 bolivares a month, around four times the minimum wage, but at a time of hyperinflation that is now worth about $30, barely enough to feed herself, her mother and a new baby brother.

This is truly sad.

Our leftist friends like to concoct far-fetched theories of how prostitution is enabled by everything from low taxes to global warming.

In the real world, however, socialism drives teenage girls (or even younger) to work in brothels.

That’s such a depressing thought that let’s shift the topic back to hunger and toilet paper.

Especially since Venezuela’s dictator is bragging that the nation’s toilet paper shortage has been solved!

This is definitely a dark version of satire.

But Venezuela is such a mess that it’s hard to know where to draw the line between mockery and reality.

For instance, here’s another “benefit” of limited food. If you don’t eat, it’s not as necessary to brush your teeth.

And is the socialist paradise of Venezuela, that makes a virtue out of necessity since – surprise – there’s a shortage of toothpaste.

The Washington Post has the grim details.

Ana Margarita Rangel…spends everything she earns to fend off hunger. Her shoes are tattered and torn, but she cannot afford new ones. A tube of toothpaste costs half a week’s wages. “I’ve always loved brushing my teeth before going to sleep. I mean, that’s the rule, right?” said Rangel, …“Now I have to choose,” she said. “So I do it only in the mornings.” …The government sets price caps on some basic food items, such as pasta, rice and flour. …those items can usually be obtained only by standing in lines for hours or by signing up to receive a subsidized monthly grocery box from the government… Since 2014, the proportion of Venezuelan families in poverty has soared from 48 percent to 82 percent… Fifty-two percent of families live in extreme poverty, according to the survey, and about 31 percent survive on two meals per day at most.

Isn’t socialism wonderful! You have the luxury of choosing between two meals a day, or one meal a day plus toothpaste!

By the way, the central planners have a plan.

Though it won’t make Bugs Bunny happy.

Rabbit is now on the menu! Here are some excerpts from a CNN report.

Let them eat rabbits. That was basically the message from President Nicolas Maduro to Venezuelans starving and struggling through severe food shortages… The Venezuelan leaders…recommend that people raise rabbits at home as a source of food. …The agriculture minister argued that rabbits easily reproduce and are a source of protein. He also recommended citizens consider raising and growing other animals and vegetables at home. It’s just the latest attempt to try and solve the food shortage problem. The government forces citizens to pick up groceries on certain days of the week depending on social security numbers.

Gee, isn’t this wonderful. The government cripples markets so they can’t function and then advocates people live like medieval peasants.

Maybe there should be price controls on clothing, along with having the government in charge of distribution. That will wreck that market as well, so people can make their own clothes out of rabbit pelts.

I wonder whether a certain American lawmaker is rethinking his praise of Venezuelan economic policy?

Based on what he said as recently as last year, the answer is no.

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There are some core functions of government, even in a libertarian world. The most prominent examples are national defense by the central government and public safety at the state/local level.

So how do we make sure those functions are handled competently? I’ve argued that we’ll get the best results if the public sector is streamlined and elected officials have more ability to focus on genuine “public goods.”

Not everyone shares my perspective. Fareed Zakaria asserts in today’s Washington Post that hurricanes and wildfires show the need for bigger government. I’m not joking. Here’s how he starts.

…one cannot help but think about the crucial role that government plays in our lives. But while we accept, even celebrate, the role of government in the wake of…disasters, we are largely blind to the need for government to mitigate these kinds of crises in the first place.

I would argue that natural disasters sometimes show competence and courage by state and local first responders (along with private volunteers), but I’m much less sanguine about the role of the federal government, which comes in after the danger is over and starts spreading around money in ways that increase the likelihood of future problems.

But let’s set that aside and consider Zakaria’s broader argument about whether the United States is suffering from inadequate government. I’m not sure what world he’s living in, but he seems to think that America is some sort of libertarian dystopia, with an anemic public sector.

Ever since President Ronald Reagan, much of the United States has embraced an ideological framework claiming that government is the source of our problems. …Reagan argued for a retreat from the vision of an activist state and advocated instead a strictly limited role for government, one dedicated to core functions such as national defense. …Reagan’s worldview…has stayed in place for decades as a rigid ideology, even though we have entered a new age in which America has faced a very different set of challenges, often desperately requiring an activist government.

I wish this was true. I’d be delighted if “Reagan’s worldview” was “in place for decades.”

In reality, government spending is much higher today than it was in the 1980s. Even after adjusting for inflation, the federal budget is twice as big today as it was during the Reagan years (and it’s huge compared to its size for much of America’s history).

Call me crazy, but that’s not my definition of a “strictly limited…government.”

What’s especially amazing is one of the examples Zakaria used to justify more government.

We watched as financial institutions took on more and more risk, with other people’s money, effectively gambling in a heads-I-win, tails-you-lose system. Any talk of regulation was seen as socialist. Even after the system blew up, causing the worst economic crisis since the Great Depression, the calls soon came to deregulate the financial sector once again.

Does he really not know that the financial services sector has been heavily regulated for decades?

Even more amazing, does he not know that government policies such as Fannie Mae/Freddie Mac subsidies and TARP bailouts are what creates the heads-I-win, tails-you-lose environment?

Does he really think a bigger federal government is the way to solve these problem when it was federal intervention that caused the financial crisis?

To be fair, he does raise some issues that are a challenge, such as how to have free trade with countries that use government intervention to distort trade. But he doesn’t offer any suggestions of how to solve such problems while avoiding the risk of 1930s-style tit-for-tat protectionism.

His closing comment basically argues that we need more government because of what is sometimes called creative destruction.

We are living in an age of revolutions, natural and human, that are buffeting individuals and communities. We need government to be more than a passive observer of these trends and forces. It needs to actively shape and manage them. Otherwise, the ordinary individual will be powerless.

I’m tempted to respond that we’ve always had creative destruction. And, yes, it is very disruptive. But it’s also why we’re much richer today that we were in the past.

And it’s very likely that we wouldn’t be nearly as rich today if people like Zakaria had power “to actively shape and manage” the economy in the 1800s and 1900s. Heck, the reason why places such as Greece and Venezuela are such a mess is that politicians did a steroid-fueled version of shaping and managing.

Let’s close by circling back to the issue of how to increase government effectiveness. The European Central Bank produced a very rigorous study back in 2003 that measured public sector performance and public sector efficiency in OECD nations.

What the economists found, unsurprisingly, is that smaller governments did a better job than medium governments. And, needless to say, medium governments did a better job than big governments.

And the ECB came up with equally strong results in a 2006 study that looked at a larger list of countries.

It’s also worth mentioning, given current debates over whether certain activities are better handled in Washington or at the state level, that the International Monetary Fund (yes, even the IMF) found that decentralized systems do a measurably better job in delivering public services.

These studies echo what I wrote, using the Ebola virus as an example, about how smaller government is naturally more competent. And Mark Steyn made the same point, albeit in a more entertaining fashion.

P.S. My all-time favorite example of the disconnect between big government and competent government is Belgium, where the public sector consumes more than 50 percent of the economy’s output, yet a bureaucrat said it was hard to fight terrorism “due to the small size of the Belgian government.”

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I wrote last week about evil of totalitarian ideologies such as communism and fascism and pointed out that both antifa and Nazis should be treated with complete disdain and ostracism.

And that led me to find common ground with my left-of-center friends, even though I don’t like many of their policies.

I don’t like redistribution…programs are financed with taxes and that the internal revenue code is enforced by coercion…if you catch me in a cranky mood, I’ll be like the stereotypical libertarian at Thanksgiving dinner and wax poetic about what’s wrong with the system. That being said, I much prefer the coercion found in western democracies compared to the totalitarian versions of coercion found in many other parts of the world. At least we have the rule of law, which limits (however imperfectly) capricious abuse by government officials. …our Constitution still protects many personal liberties, things that can’t be taken for granted in some places. Moreover, there is only a trivially small risk of getting abused by the state in western nations because you have unpopular views. And there’s little danger of persecution by government (at least nowadays) based on factors such as race and religion. This is what makes liberal democracy a good form of government (with “liberal” in this case being a reference to classical liberalism rather than the modern version). Unfortunately, there are some people in America that don’t believe in these principles.

Now let’s look at an aspect of this issue from a left-of-center perspective.

Writing for the New Republic, John Judis analyzes the different types of socialism. He starts with some personal history of his time as a socialist activist.

In the early 1970s, I was a founding member of the New American Movement, a socialist group… Five years later, I was finished with…socialist organizing. …nobody seemed to know how socialism—which meant, to me, democratic ownership and control of the “means of production”—would actually work… Would it mean total nationalization of the economy? …wouldn’t that put too much political power in the state? The realization that a nationalized economy might also be profoundly inefficient, and disastrously slow to keep up with global markets, only surfaced later with the Soviet Union’s collapse. But even then, by the mid-1970s, I was wondering what being a socialist really meant in the United States.

He then notes that socialism has made a comeback, at least if some opinion polls (but not others) and the campaign of Bernie Sanders are any indication.

…much to my surprise, socialism is making a comeback. The key event has been the campaign of self-identified democratic socialist Bernie Sanders, who almost won the Democratic nomination and is now reputedly the most popular politician in America. Several opinion polls have also found that young people now think favorably of socialism and ill of capitalism… For the first time since the ‘60s, socialism looks like a politics with a future in the United States.

But Judis notes that it’s unclear what socialism means.

The old nostrums about ownership and control of the means of production simply don’t resonate in 2017. …In the 2016 campaign, however, Sanders began to define a socialism that could grow… I think there is an important place for the kind of democratic socialism that Sanders espoused.

He says there are many flavors of socialism, but ultimately puts them in two camps.

There is no scientific definition of socialism… It’s a political tradition with many different flavors—Marxist, Christian, social-democratic, Fabian, Owenite, Leninist, Maoist. In looking at the choices facing American socialists now, …a choice between a socialism rooted in Marx’s apocalyptical promise of revolution, or the abolition of capitalism and a socialism that works more gradually toward the incorporation of public power and economic equality within capitalism. One could be called “Marxist socialism” and the other “social democratic”—or, to borrow from John Maynard Keynes, “liberal socialism.”

And “liberal socialism” basically means capitalism combined with European-style redistributionism.

In Western Europe, …socialists were forced to define their objectives more clearly. And what has emerged is a liberal conception of socialism. …social democracy has probably reached its acme in the Nordic countries, where the left has ruled governments for most of last half-century. …That’s not Marx’s vision of socialism, or even Debs’s. In Europe, workers have significant say in what companies do. They don’t control or own them. Private property endures. …private capital is given leave to gain profits through higher productivity, even if that results in layoffs and bankruptcies. But the government is able to extract a large share of the economic surplus that these firms create in order to fund a full-blown welfare state.

Which means “liberal socialism” is, well, liberalism (the modern version, i.e., statism, though Thomas Sowell has a more unflattering term to describe it).

By the standards of Marxist socialism, this kind of social democracy appears to be nothing more than an attenuated form of capitalism. …But…As the Soviet experiment with blanket nationalization showed, it can’t adjust to the rapid changes in industry created by the introduction of automation and information technology. …the market is a better indicator of prices than government planning. …the older Marxist model of socialism may not even be compatible with popular democracy. …What’s the difference between this kind of socialist politics and garden-variety liberalism? Not much. …American socialists need to do what the Europeans did after World War II and bid goodbye to the Marxist vision of democratic control and ownership of the means of production. They need to recognize that what is necessary now—and also conceivable—is not to abolish capitalism, but to create socialism within it.

For what it’s worth, the leftists I know are believers in “liberal democracy,” which is good, and they also are believers in “liberal socialism,” which is good, at least when compared to “Marxist socialism.” Sort of like comparing Barack Obama and Hillary Clinton to Nicolás Maduro and Kim Jong Un.

I disagree with Obama and Clinton, of course, and I would argue that what they want is bad compared to small-government capitalism.

But I utterly despise the totalitarian regimes in Venezuela and North Korea.

Let’s conclude by highlighting a key difference between “liberal socialists” and supporters of small government. My leftist friends are content to allow capitalism so long as they can impose high taxes on “economic surplus” to finance lots of redistribution.

They think that such policies don’t cause significant economic harm. I try to explain to them that punishing success and subsidizing dependency is not a good recipe for long-run prosperity. And I also tell them that demographic changes make their policies very unsustainable.

But at least these decent people on the left are not totalitarians. So when I look at this amusing image from Reddit‘s libertarian page, I agree that everyone who supports big government is a collectivist of sorts. But “Social Democracy” (assuming that’s akin to “liberal socialism”) is not really the same creature as the other forms of collectivism (assuming “social justice” is akin to antifa).

Which is why this image is more accurate.

The bottom line is that Nordic-style big government is misguided, but state-über-alles totalitarianism is irredeemably horrible.

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Back in June, I wrote about the bizarre allure of socialism and said that advocates (who generally don’t even know what socialism really means) were some of the most anti-empirical people in the world.

…even though the real-world evidence against big government is so strong, it’s rather baffling that many young people are drawn to that coercive ideology and disturbing that a non-trivial number of voters favor this failed form of statism. …Socialism has a technical definition involving government ownership of the means of production and central planning of the economy. But most people today think socialism is big government, with business still privately owned but with lots of redistribution and intervention (I’ve argued, for instance, that even Bernie Sanders isn’t a real socialist, and that there are big differences between countries like Sweden, China, and North Korea). For what it’s worth, that’s actually closer to the technical definition of fascism.

Now let’s update that column.

It seems that the cancer of socialism is spreading, at least if this story in The Week is any indication.

Things are looking up for the Democratic Socialists of America. With a membership of 25,000, it is now the largest socialist group in America since the Second World War. And last weekend in Chicago, it held its largest convention, by a considerable margin, in its history. …Membership has more than tripled in a year, gaining a large boost from the candidacy of Bernie Sanders… That sharp surge in new recruits — most of whom are fairly young — has created a fairly stark age bifurcation among members. Somewhat akin to Sanders campaign, there is an old guard of people who have been carrying the left-wing torch for years, and a recent surge of new members…most of the major proposals were adopted with large majorities. Among other things, delegates voted to…endorse the Boycott, Divestment, and Sanctions movement (directed at ending the Israeli occupation of the West Bank and Gaza), …and to endorse Medicare for all as a major priority.

I’m guessing that the bifurcated conference meant a handful of old people who are genuine socialists and a bunch of young people who think socialism is just a bunch of government-coerced redistribution and intervention.

Both groups, however, deserve scorn for favoring a system that elevates the state over individuals. That approach is grossly immoral.

Not to mention that it’s never worked. Nobody has ever provided a good answer to my two-part challenge.

There is no example of a successful socialist nation anywhere in the world. Cuba? No. North Korea? No. The Soviet Empire? Don’t make me laugh. Venezuela? You must be joking.

Denmark or Sweden? Umm…, they’re not socialist, though their economies have been hurt by excessive redistribution. Greece? Give me a break.

I could continue, but no sense beating a dead horse.

Let’s close with a bit of humor. A friend in Australia sent me this clever image. I gather it’s a parody of an actual left-wing gathering Down Under. Regardless, I found it rather amusing.

P.S. If you like visuals mocking socialism, I’ve amassed a very nice collection. Click here, here, here, here, here, here, here, here, here, here, here, and here for examples.

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As a former Connecticut resident, I’m ashamed that my home state, which used to be a success story with no income tax, has now morphed into a high-tax welfare state that is now increasingly infamous for the outflow of productive people and taxable income.

And even though I left several decades ago, I also feel vaguely guilty that my former state produces politicians such as Senator Chris Murphy.

Most people have never heard of him since he’s never accomplished anything in Washington. Though I would argue that’s a good thing since he’s a knee-jerk statist.

But I gather that Senator Murphy no longer wants to be in the shadows. Here’s a tweet he issued yesterday that has received a lot of publicity.

Wow, this is an astounding display of statolatry. The kind of statement one might expect from a functionary from a totalitarian regime.

Or maybe a line from George Orwell’s 1984. Just think of the implications:

  • Are you afraid of spiders? Hey, government can help!
  • Are there dandelions in your yard? Don’t worry, Big Brother to the rescue!
  • Did McDonald’s forget to include a toy in your Happy Meal? Time for political action!

While his views are reprehensible, I’m actually glad Senator Murphy inadvertently revealed his statism.

If nothing else, it’s produced some clever humor. The folks at Twitchy have been sharing this tweet, which came from a parody account for a North Korean news service.

By the way, if you’re like me and are not familiar with “Juche,” it’s apparently a North Korean twist on Marxism.

In other words, take the traditional horror of communism and then add a layer of autarky to ensure even greater misery.

And here’s another amusing take, juxtaposing Murphy’s statolatry with Reagan’s wisdom (see last video from this collection). And they even demoted him to Representative rather than Senator.

But we shouldn’t merely mock Murphy.

His views truly are reprehensible because they imply there is no element of human existence that is independent of government. The state is everything.

And if that sounds familiar, it’s probably because you know something about economics, philosophy, and history. The most evil people in world history have expressed the same sentiment.

Such as the leader of Germany’s National Socialist Workers Party.

And the first dictator of the Soviet Union.

Though if I had to pick the quote that is closest to Murphy’s, it would be this awful statement from Mussolini.

Senator Murphy obviously doesn’t share the horrid ideology of either national socialism or international socialism, so his version of statolatry is far more benign.

Sort of like this cartoon instead of gulags and concentration camps.

But I still think his views are reprehensible. We’re not children and the government is not our parents. America’s Founding Fathers strictly limited the powers of the federal government because they understood the risks of a coercive state dictating our lives. Even if it’s benign statism rather than totalitarian statism.

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I’m rather pessimistic about Italy.

Simply stated, it’s economy is moribund. If you peruse the OECD’s economic database, you’ll see that both inflation-adjusted GDP and inflation-adjusted private consumption expenditure (in some ways a more accurate measure of actual quality of life) have grown by an average of just slightly over one percent annually this century.

And even though Italy’s population growth has been anemic, there are more people. And when you add a larger population to the equation, you get per-capita changes in output and living standards that are even less impressive.

But not everyone shares my dour outlook. I recently exchanged views with someone who said that Italy hasn’t increased the burden of government in recent years.

And that person is right. Sort of.

Here’s a chart showing Italy’s score from Economic Freedom of the World since the start of the 21st century. As you can see, it’s been remarkably stable.

But I have two reasons why I think policy stability is a recipe for economic decline.

First, you don’t win a race by standing still if others are moving forward. If you look closely at the above chart, you will see that Italy used to be ranked #36 in the world for economic freedom but it now ranks #69. In other words, Italy’s absolute level of economic freedom barely changed over the period, but its relative position declined significantly because other nations engaged in reforms and leapfrogged Italy in the rankings.

Second, Italy is in the middle of dramatic demographic changes that will have a huge impact on fiscal policy. People are living longer and having fewer children, but Italy’s welfare state was set up on the assumption that there would be lots of working-age taxpayers to finance old-age beneficiaries. In other words, policy stability will lead to fiscal crisis thanks to changes in the composition of the population. Think Greece, but on a bigger scale.

And when I refer to Greece on a bigger scale, I’m thinking another fiscal crisis.

Demond Lachman of the American Enterprise Institute is pessimistic about Italy and warns that high levels of red ink could cause a big mess.

We’ve got an Italian economy that is categorized by extremely high public debt. Their public debt level is now something like 132% of GDP, they’ve got a banking system that is bust, that banks have something like 18% of their loans non-performing, that is a huge amount, the economy is completely sclerotic, that the level of Italian GDP today is pretty much the same as it was some fifteen years ago. There’s been practically no growth, declining living standards… What also makes Italy very important from a global point of view is that we’re now not talking about a small country like Greece which doesn’t have that much systemic significance. We’re talking about the third largest country in the Eurozone. We’re talking about a country that has the world’s third largest sovereign bond market with something like two and a half trillion dollars of debt.

And don’t forget that these grim fiscal numbers probably mean even higher taxes on Italy’s young workers.

But those taxpayers aren’t captives. Cristina Odone, in a column for CapX, points out that young people are getting the short end of the stick.

Gerontocracy, stifling regulations and huge unemployment have hindered Italy’s prosperity for decades now. The country hailed for its economic miracle and famed for its creative and industrious entrepreneurs (at the helm, usually, of family-run businesses such as Gucci, Prada, and Ferrero) today comes second only to Greece (among EU countries) for the size of its national debt. …Italy’s unemployed youngsters, who constitute 40 per cent of under-24-year-olds, gnash their teeth at the unfairness of national life, where fossils control the levers of power while flouting their sinecures. A quarter of under-30-year-olds classify as NEETS, young people who are not in education, work or training. Contrast this with the UK, where only one in 10 under the age of 30 is in the same position. …Labour laws continue to blight young people’s prospects. …This sclerosis risks turning Italy into the sick man of Europe.

No wonder many young Italians are migrating to nations with more economic opportunity. AFP has a story on the dour outlook in Italy.

With the country struggling to kick an economic slump, some 40,000 Italians between 18 and 34 years old set out to seek greener pastures elsewhere in 2015, according to the Migrantes Foundation. “Just talking with people (in Italy) it’s clear going away might be the only solution,” said D’Elia, 26, who has spent the last five years in London, where he currently works as a barman, and intends to stay for now despite high living costs. …most of Italy’s youths are unwilling to return — and the country is seen as offering little to attract foreign graduates. …GDP is forecast to inch up just 1.3 percent this year. The jobless rate hovers at over 11 percent, well above the euro area average of 9.3 percent. Among 15 to 24-year olds it leaps to 37 percent, compared with a European average of 18.7 percent. …Sergio Mello, who set up a start-up in Hong Kong before moving to San Francisco, said Italy “does not offer a fertile environment to develop a competitive business”. …Mello says there are other problems: “The bureaucracy wastes a lot of time”, the red tape “drives you crazy”.

Unfortunately, rather than ease up on government burdens so that young people will have some hope for the future, some Italian politicians want new mandates, new spending, new taxes, and new restrictions.

I’ve previously written about new destructive tax policies that shrink the tax base. And I’ve written about wasteful new spending schemes, like a €500 “culture bonus.”

And now there’s something equally silly on the regulatory front being proposed by politicians. Here are excerpts from a report by Heat Street on the initiative.

Italy could soon become the first Western country to offer paid “menstrual leave” to female workers. …If passed, it would mandate that companies enforce a “menstrual leave” policy and offer three paid days off each month to working women who experience painful periods. …The Italian version of Marie Claire described it as “a standard-bearer of progress and social sustainability.” But the bill also has critics, including women who fear this sort of measure could backfire and end up stigmatizing them. Writing in Donna Moderna, another women’s magazine, Lorenza Pleuteri argued that if women were granted extra paid leave, employers would be even more reluctant to hire women, in a country where women already struggle to integrate the workforce. …Miriam Goi, a feminist writer, …fears that rather than breaking taboos about women’s menstrual cycle, the measure could end up perpetuating the idea that women are more emotional than men and require special treatment.

It’s unclear if this policy was actually enacted, but it’s a bad sign that it was even considered. Simply stated, making workers more expensive is not a good way to encourage more job creation. Even a columnist for the New York Times acknowledged that feminist-driven economic policies backfire against women.

The bottom line is that Italy needs sweeping reductions in the burden of the public sector. Yet the nation’s politicians are more interested in expanding the size and scope of government. Perhaps now it’s easy to understand why I fear the country may have passed the tipping point. You can be in a downward spiral even if policy doesn’t change.

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