- The Washington Times - Wednesday, September 7, 2011

ANALYSIS/OPINION:

With the echo of post-World War II growth a distant memory and a generation of stagnation continuing, Italian leadership continues to avoid the root cause of the country’s economic malaise.

Italy’s drift into mediocrity dates - as does much of our time’s ills - to the denial of capitalism and surrender to the Marxist ideals that drove the thinking of a lost generation during the late 1960s and early 1970s. Without the strength of conviction, a surrender to these false deities has led to a steady growth of a useless public-sector workforce, rigid and intractable work rules and the tyranny of unions steeped in a militant doctrine that would make Stalin proud.

Initially, with a faux glamour and idiot’s utopia, this all seemed like the karma to quell the cold heart of industry. The result, however, has been a bankrupt, dysfunctional nation on the brink of further serious decay.

With simple market functions of supply and demand, the buyers of state debt are voting with their feet and suddenly the government is surprised. The political left in Italy is hanging on desperately to the corpse of its failed dogma and flails away, distracted by Prime Minister Silvio Berlusconi’s libido and myopic rejection of any change to the monstrosity the government has created.

Calls for austerity miss the point. Again, this is the symbolic gesture of illiberals who believe that marginal spending cuts and polemic calls to tax the rich (starting from the depth of the middle class) without questioning the governing structure will fail.

What is required is the embrace of the common-sense logic deemed heretical since those days of “peace and love” - and an unwinding of the system.

Mr. Berlusconi’s only measures that speak to this logic are the initial cuts to regional governments. This bloated, essentially useless charade of government is the classic, cynical “jobs for the boys,” a no-value-added, paper-shuffling bureaucracy that simply drains the taxpayers’ funds and patience.

With demographics shrinking, the future worker base makes the pension schemes unsustainable. They never were sustainable; the state simply borrowed to cover the lie. Furthermore, the key is to permanently reassure the Italian employers that reduced taxation and the removal of growth-killing - and indeed job-killing - “worker protections” will be the order of the day. Then, and only then, will Italy be able to unleash the enormous depth of dynamism and creativity that is a hallmark of the nation.

Believing you can default to once again raising the value-added tax to cover up the lie will no longer work. The time for courage is now. The alternative will be harsher than we can imagine.

ROBERT F. AGOSTINELLI

Milan, Italy

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