Italy's economy hurt by 'medieval-like' bureaucracy
Supports of the former Italian Prime Minister Silvio Berlusconi wave flags outside his residence the day after his resignation.
STEVE CHIOTAKIS: Italy's appointed Prime Minister, Economist Mario Monti, began talks today of forming a new government. Italy is wracked, of course, with debt. Almost as bad as its next door neighbor, Greece, which has had to pass many reforms over the past few months.
Reporter Megan Williams is with us now from Rome. Hey Megan.
MEGAN WILLIAMS: Hi there.
CHIOTAKIS: What are the problems with the Italian economy? What's going on there?
MEGAN WILLIAMS: Well, the main problesm is that for the past fifteen years, the Italian economy has not grown at all, and this is largely due to the fact that there are so many hurdles and hoops and entrenched interests that make growth very hard. You know, I’m thinking of course of the incredibly complicated bureaucracy where if you want to do something like open a pizzeria, you have to get, you know, twenty different permits. Or the professions, such as lawyers or accountants or even journalists, who are protected by these medieval-like guilds where members regulate access to the professions and they make competition next to impossible, and of course the consumers are paying for that. But all of these entrenched interests make growth and flexibility next to impossible.
CHIOTAKIS: How does Mario Monti propose to fix these issues, Megan?
MEGAN WILLIAMS: Obviously, the first thing he has to do is come up with a policy framework that will drastically reduce Italy’s two and a half trillion dollar debt. And he’s going to do things like sell state assets, privatize public companies, but he’ll also have to go after all these sacred cows, like the professional guilds. He’ll also likely have to tinker with pensions, crack down on tax evasion (about twenty percent of the Italian economy is still under the table), and I think also the big one is he’s probably going to be forced to implement some sort of a wealth tax.
CHIOTAKIS: Megan Williams in Rome. Megan, thank you so much.
MEGAN WILLIAMS: Thank you.