Italy Does the Free Market MamboJuly 19th, 2011
As Europe continues its downward spiral into financial ruin, thanks in large part to the debts of nations like Greece, Spain, Ireland, and Portugal, it’s easy for an outside observer to look at Europe as a den of fiscal incompetence. Yet, amidst the wreckage, there is some some signs of fiscal sanity coming from Italy, and not a moment too soon either.
Last week, the Italian Senate passed an austerity budget to deal with the country’s growing debt problem, which has grown to 118% of the nation’s GDP. The bill will cut government spending by $67 billion, mainly by selling stakes in state-owned companies and tax breaks. This bill is almost pure spending cuts, as well as a push for a more privatized, deregulated economy over the next four years, which should yield a balanced budget by 2014, a rare glimmer of hope for a continent that is teetering on the brink of financial armageddon. President Giorgio Napolitano called it a “miracle” that it was able to pass as quick as it did, given the historically dog-eat-dog nature of the Italian legislature.
It’s a bit demoralizing to think that this nation’s government, famous for its corruption and greed, is able to pass a sensible, market-driven budget quicker than Washington can. Rome is embracing the concept of balancing the budget, while too many in our government consider anything close to that extreme and economically ruinous. For a nation that is supposed to lead by example when it comes to responsible democratic governing, we seem to be turning into nations like Greece and Spain more and more, while Italy becomes an example of responsible crisis management.