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Policy: Economy

The inevitable and tragic decline of Italy

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Beltway Confidential,Opinion,Michael Barone,United Kingdom,Economy,Europe,Italy

Italy has very low birth rates and one of the world’s toughest laws limiting employers’ ability to fire employees. Those are goals of the environmental left and the social democratic left. So how well is that working out? Not well at all, says European journalist Edward Hugh in a blog post headlined “The Italian Runaway Train.” Italy’s working age population is declining and its government debt, currently 136 percent of gross domestic product, is increasing. The center-right and center-left governments over the last 20 years have passed budgets which balance if you don’t count debt service, but debt service is inexorably increasing.

The center-right Silvio Berlusconi, prime minister in 1994-95, 2001-06 and 2008-11, promised repeatedly to reform Italy’s employment law but failed to do so; the current prime minister, the center-left Matteo Renzi, who has crucial parliamentary support from Berlusconi, has promised the same thing but hasn’t done so and, Hugh argues, is unlikely to do so. People with jobs want to keep them, even if they don’t do any actual work.

Young voters have consistently been more likely than average to support Berlusconi, for they’re the ones left out: Unemployment among the young is very high and underemployment undoubtedly higher still. As Hugh points out, some 40,000 young Italians moved to the United Kingdom last year. When Margaret Thatcher was elected prime minister in 1979, the Italian economy was poised to surpass the U.K. economy (the two nations then had similar populations). Now it is far behind and looking to get farther. This is a tragedy. Italy has made great contributions to the world over the years, not just artistically but economically. The world will not be better off with fewer Italians and with a shrinking Italian economy. But that’s what the double whammy of far-below-replacement birth rates and overprotection of incumbent employees have given us.

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