November 12, 2011

Italy Struggles with Austerity, Growth, Debt and New Leadership

http://www.nytimes.com/2011/11/13/world/europe/silvio-berlusconi-resign-italy-austerity-measures.html

Italy's politics are far more complicated than ours. This brief summary of the austerity and stimulus measures shows how deeply ingrained is patronage and spending. Italy would benefit enormously if people just paid their legitimate taxes. It's estimated that tax avoidance/evasion in the 'shadow economy' is 22.3% of Italy's GDP.( From this link"According to a 2007 paper by Austrian economist Friedrich Schneider, the shadow economy in Italy accounted for 22.3% of gross domestic product (GDP), that of Spain 19.3%; Portugal 19.2% and Greece a staggering 25.1%. By comparison, the U.S. shadow economy was 7.2% of GDP. A recent European Union report came up with similar figures.")

"...The measures are aimed at reducing Italy’s $2.6 trillion public debt and increasing growth by selling $21 billion worth of state assets and increasing the retirement age to 67 from 65 by 2026. It also would loosen the power of professional guilds, liberalize municipal services and offer tax breaks for infrastructure and companies that hire young workers..."

Click here for more details of the various changes that are being voted by the Italian parliament.


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