lunedì 23 febbraio 2009

Economic Crisis: Italy in better conditions than others?

The recent official declarations according to which Italy is coping with the current economic recession in better ways than other countries have been based upon the presumed better solidity of the italian financial system, less intoxicated by trash bonds and funds

Everyone knowns in Italy that actually the possibilities to better manage this crisis are not linked to banks but rather to the usual "italian paradox".

Everyone has noted in Italy that, while economic crisis is moving forward, the "informal hidden economy" and tax evasion are exploding as well. This moment of severe economic difficulties, is creating the favourable pre-conditions for the growth of those economic relations (above all connected to labour and fiscal issues) eluding institutional norms and regulations in order to avoid the related duties.

Economic crisis and recession are thus rooting informal economy in the italian productive structure exploiting those difficulties firms are facing and the increasing number of unemployed persons disposed to do anything to have a job.

The present trends are evidencing that in Italy there is not a parallel economy producing goods/services secretely introduced into the market at particularly cheap prices: now thereis the case of economic activities regularly and openly living together and interacting with market mechanisms which normally regulate the economic system's functioning. In the past moonlighting and informal economy were mainly linked to certain economic sectors such as agriculture, building or restaurant activities essentially in Southern Italy. Now the phenomenon is growing everywhere in any economic sector.

Paradoxically informal economy may generate some benefits in the short run. For firms these benefits are linked to the possibility to elude fiscal duties, pension contributions, wages' minimum levels, job safety, legal authorizations and permits, and everything is perceived and considered a "constrain". The compete on the market eliminating these costs. These entrepreneurs argue that today this is the sole possibility to keep their firms open.

For workers the only benefit is embedded in the possibility to have a job: it means the possibility to have an income. A job without pension contributions, unions' protections, security, safety and all those rights deriving from a regular job has the sole great value assigned by who has just lost a formal job being also sure about the impossibility to find another regular job. Informal irrugular jobs therefore become an urgent need.

Italy maybe is coping with the current crisis better than other just exploiting the advantages offered by this informal economic world rather than on the reliability of its bank system.

What's the price of it?

Surely great costs for the immediate future caused by severe distorsions in the economic systems, incapability to regularly compete in the international scenario, unbalances in the welfare system, vertical decreases in the quality and quantity of public services for the subtraction of financial resources from fiscal evasion, weakness in workers' rights, etc. It should be considered also that informal irregular economy is a high labour intensive economy with no interest in innovation and environmental protection.

Unfortunately in Italy the choice to support economy thanks to these subterfuges is clear enough: reductions of resources and professional expertises to the organizations devoted to controls, consequent reduction in the quantity and quality of controls implemented, weakening in the legal sanctions with the consequent diffusion of the idea to always get away, progressive weakening in the anti evasion policies, etc.

The issue completely disappeared from the political debate. Of course it is easier in political terms the strategy of "doing nothing" and let people alone in dealing with it rather than to solve problems. This lassez faire is also good in terms of political consesus. The idea is always the same: survive today and charge the costs for the future...

It is urgent to remove those fators acting as incentives for informal irregular economy: above all those factors rendering irregular jobs as a possible option or, in the worst cases, as the only option to survive. This weak surviving in the present surely will create very high costs not only in economic terms but also in terms of erosion of solidarity and social cohesion, the prevailing of the philosophy "think for yourself" and the lack of any scruple.

2 commenti:

Giordano ha detto...

That's just what is happening right now...
And as usual the clean population will pay the cost of this errors, while crazy politicans just think about the next election.
And so on and on...

Carmelo Cannarella ha detto...

Unfortunately when a democracy is particularly weak, as in the case of Italy, an economic recession and crisis make individuals more politically "vulnerable". When you have lost your job or fell the risk to lose it in the near future, you lose also the possibility to freely vote in the elections because your are exposed to some urgent "needs" to find the protection of "someone". In my opinion this is one of the reason according to which there is no opposition in Italy because opposition parties do not show the some power of distribute favours as the governmental party. So it is just a question of "favours' distribution". This means to be "clients" rather than "citizens".
So we have cray politicians because people are obliged to irrationally act as crazy voting corrupted incompetent individuals, sometime linked also with Mafia; and everyone knows it perfectly. And nothing happens...