In the 1990's, Italy underwent massive privatization and economic reforms which boosted overall competitiveness, achieved monetary stability and massively reduced corruption following the Mani Pulite Scandal. Inefficient state-owned firms such as Telecom Italia were privatized.
These reforms were not the ingenious idea of some political party. They were pushed through by the European Union so as to ensure Italy met the criteria necessary to join the European Monetary Union. Reforms came to a halt and were in part reversed with Berlusconi because liberalization reforms were seen to undermine his personal business monopoly as well as eliminate a highy profitable source of rent-seeking. Cioffi and Hopner summarize this point exquistly when they claim that "the right-wing Berlusconi government appeared to embrace and embody the incestuous alliances and interrelationships between business and political elites". (http://pas.sagepub.com.gate2.library.lse.ac.uk/content/34/4/463.full.pdf+html)
As a result, Italy has sat stagnant for close to 20 years. Italian GDP growth has averaged around 0.3% over the last 10 years. And patronage, inefficient monopolies and unemployment have run rampant once again.
We now have a unique opportunity to push through much needed reforms because of the external influence of the EU and the bipartisan political climate which has developed in Italy as a result of the crises. This opportunity cannot go wasted and Mr Monti appears to understand this. Of course, even if these reforms are effective, they must be safeguarded against future bastardization. We cannot return to business as usual once the economic situation improves or when Mr Monti's mandate ends in 2013. If history has taught us anything, it is that vigilance on behalf of a citizenry cannot only take place in times of crises. Repeating the mistakes of the past is simply not an option
These reforms were not the ingenious idea of some political party. They were pushed through by the European Union so as to ensure Italy met the criteria necessary to join the European Monetary Union. Reforms came to a halt and were in part reversed with Berlusconi because liberalization reforms were seen to undermine his personal business monopoly as well as eliminate a highy profitable source of rent-seeking. Cioffi and Hopner summarize this point exquistly when they claim that "the right-wing Berlusconi government appeared to embrace and embody the incestuous alliances and interrelationships between business and political elites". (http://pas.sagepub.com.gate2.library.lse.ac.uk/content/34/4/463.full.pdf+html)
As a result, Italy has sat stagnant for close to 20 years. Italian GDP growth has averaged around 0.3% over the last 10 years. And patronage, inefficient monopolies and unemployment have run rampant once again.
We now have a unique opportunity to push through much needed reforms because of the external influence of the EU and the bipartisan political climate which has developed in Italy as a result of the crises. This opportunity cannot go wasted and Mr Monti appears to understand this. Of course, even if these reforms are effective, they must be safeguarded against future bastardization. We cannot return to business as usual once the economic situation improves or when Mr Monti's mandate ends in 2013. If history has taught us anything, it is that vigilance on behalf of a citizenry cannot only take place in times of crises. Repeating the mistakes of the past is simply not an option
To conclude, this article does not want to suggest that all the reforms that Monti has proposed will be effective. Some, like the ICI, are dubiously effective at best. But the general climate is moving in the right direction. There is a need to reform the deeply flawed economic system which has proven to not work in the interest of the Italian people. Monti can push forward unpopular pension, trade union and cost cutting reforms using scare tactics. This is obviously not an ideal situation, but in Italy sometimes its the best you can hope for.
