Italy’s Debt Is Also About Patronage, Wasted Funds, Corruption And Low Ethical Standards – 952 National Italian Law Makers Collect Huge Salaries, Do Little – Can Monti Reform This?

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By Paolo von Schirach

December 20, 2011

WASHINGTON – Italy’s fiscal and debt crisis is not just about bad management and unfortunate policy choices. It is the most visible manifestation of a country in which the vested interests of groups, (often in open conflict with other factions), have always prevailed over any notion of the public interest. Everybody claims a piece of whatever wealth is within reach as their entitlement. Not because they earned it, but because this is the way the spoils system works.

In Italy widespread illegality and unethical behavior

Combine this deeply ingrained rent seeking attitude with corruption, widespread illegality, an inefficient judiciary, over paid public servants, fake disability pensions, public funds diverted, large development projects that have zero economic value and you see how the national debt accumulated. The debt is the sum total of unpaid bills left behind by those who used public resources for their own ends instead of governing.

It is not an accident that, just when professor Mario Monti was about to get started as Prime Minister, a new political scandal, all about bribery, state run companies and illicit financing of political parties broke out. And now there is a new chapter to be added to an old national scandal involving fixed soccer matches and illegal betting. The debt is the result of decades of waste, patronage creating bloated bureaucracies, absconded funds and plain bad management.

Law makers do well, for themselves

Last but not least, do consider how well the governing elites treat themselves. Exhibit one is the impressive array of salaries and benefits enjoyed by Italian law makers. First of all, have look at how many there are, happy to eat and prosper at tax payers expenses. In America, a country of 310 million, there are 535 federal law makers. In Italy, a country of 60 million, there are 630 in the Lower House and 322 in the Senate, for a grand total of 952. So, their numbers are absurdly large. On top of that, they do really well. Their pay ranges from $ 18,000 to $ 27,000 a month. Plus they get medical insurance, free domestic travel and sometimes a car and driver. And they also collect pensions, even if the served only for a few years.

Bad examples from the top encourage more illegal behavior

Clearly the money spent to keep this grandiose legislative power happy is not critically large. But the lavishness of the treatment is a clear indication that the Parliament first priority seems to be to legislate in the interest of its members. “First we take care of ourselves, then, time permitting, we shall deal with other business“. It is obvious that Italy could easily cut the number of its law makers by at least 50% without jeopardizing the survival of the republic. And it is obvious that the salaries collected, in some cases for doing almost nothing, while outrageous any day, look particularly offensive in these times in which people are told that they need to make huge sacrifices.

Can Monti reform this?

In many ways, this issue of tolerated absurd parliamentary privileges, akin to those of enjoyed by medieval aristocracies, explains the prevailing unethical behavior of so many Italians. “If the public servants openly use public funds to feather their nests, why should’t I try and use all possible means, legal and illegal, to stay ahead?” I am not sure that Professor Monti has legislation in store that will change any of this. And yet, until this changes, forget about modernizing Italy.

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