I denne artikkelen retter Michele Napolitano fra Economist Intelligence Unit søkelyset mot Silvio Berlusconis økonomiske politikk – Er den liberal eller proteksjonistisk?

The recent vicissitudes of Italy’s national air carrier, Alitalia, have drawn international attention to the economic ideas of Italy’s centre-right coalition, led by Italy’s richest man, Silvio Berlusconi, who is the favourite to win next week’s elections. Mr Berlusconi has expressed opposition to the sale of Alitalia to French-Dutch airline, Air France-KLM, claiming that it is not possible for Italy to be without a flag-carrier. Moreover, he has made a “call to arms” to Italian entrepreneurs encouraging them to place a new bid in order to preserve the italianita’ of the ailing airline. He has even claimed that he was aware of an Italian counter-bid, but did not want to reveal the names of the businessmen involved to preserve their privacy. Trade-union leaders have been jubilant at the announcement but so far, no local businessmen have shown any interest and Air France has walked away from the negotiation table.

 

The unusual alliance between a media mogul, who claims to represent economic liberalism, and trade unionists, might shed some light on the intricate world of Italian politics and economics. The Wall Street Journal, commenting on Mr Berlusconi’s attitude in the Alitalia affair, recently pointed out that “Mr Berlusconi has turned out to be more of a corporatist averse to free-market competition than an economic liberal”. This would not have come as a surprise to an attentive observer of the Italian economy.

 

Mr Berlusconi is not new to Italian politics. He has led two governments since 1994, and during both spells as prime minister his economic policy record was quite dismal. During his most recent tenure in office, between 2001 and 2006, he managed to introduce only a few reforms that have shaped Italian social life and few of them were in the economic sphere, notably a labour market reform and a pension reform. During the election campaign Mr Berlusconi pledged to change Italy, just as Margaret Thatcher did with the UK in the 1980s. His government’s achievements did not live up to expectations. His supporters have always blamed the other members of Mr Berlusconi’s coalition for his poor record of liberal economic reforms, but the reality is in fact quite different. Simply, there was nothing liberal about Mr Berlusconi’s economic plans and that has not changed to the present day

 

It is worth considering some examples of economic liberalism to analyse Mr Berlusconi’s past attitude and future plans. Italy badly needs deregulation and increased competition in the services sector. There is no record of any action by Mr Berlusconi’s governments in this area. In Italy some professions are sheltered from competition by high barriers to entry. Solicitors, barristers, pharmacists, journalists and taxi-drivers are just some examples. The result is a cost to consumers who are charged artificially high prices (not driven by any dynamic of supply and demand). In addition, young Italians, who would like to start a career in these professions, face often insurmountable obstacles. An important negative effect is the increasing number of young people who are leaving the country looking for highly skilled jobs elsewhere. The need to tackle this brain drain has entered the political agenda only recently. However, Mr Berlusconi and his allies fail to realise the direct correlation between weak competition in the services sector and the brain drain. Unsurprisingly, they strenuously opposed all the attempts to open up these sheltered service sectors by the outgoing government, led by Romano Prodi. With just week to go before the elections, liberalisation and “defence of consumers” have been only vaguely mentioned in Mr Berlusconi’s Popolo della Libertà party programme, but no concrete measures have been underlined. However, sometimes facts speak much louder than words. One of the party’s candidates is Loreno Bittarelli, the leader of a protest by taxi drivers against the planned increase in the number of taxi licences that paralysed Rome in July 2006. His candidacy will ensure country-wide support for Mr Berlusconi by taxi drivers in the election, but is also a clear sign of his attitude towards deregulation and competition.

 

Mr Berlusconi’s likely minister of finance, Giulio Tremonti, has underlined plans to lobby the EU for more tariff barriers on Asian imports. This is hardly a liberal idea. Mr. Tremonti is also advocating the idea of a stronger state against globalisation and has vaguely talked about a “Banca del Sud” (Bank of the South) with the aim of supporting the struggling economy of the south of the country (the Mezzogiorno), without specifying whether the bank would be in public or private hands. Funnily enough, at the same time he is asking for a substantial reduction of the regulations coming from the EU.

 

The idea of promoting tariff barriers is not only far from liberal, but it also betrays the current reality of Italy’s small and medium-sized enterprises (SMEs). It is true that many of them have suffered as a result of competition from China, especially Italy’s traditionally export-oriented textiles and clothing sector, but the majority has managed to survive and, after a period of restructuring, many SMEs have increased their market shares, often at the expenses of their Asian competitors. This means that Italy’s industrial sector is still vibrant and, more importantly, has adapted well to the new challenges of globalisation Some sectors such as leather goods and footwear have not recovered fully yet, but being the promoter of new tariffs barriers against China can be counterproductive and end up causing more harm than good to Italian entrepreneurs; rarely are trade barriers imposed without there being some form of retaliation and Italy’s export-oriented industries might pay a price for this.

 

It is hard to see the benefits of a state or private development bank for the Mezzogiorno. Italy has already experimented three times with this approach (Cassa del Mezzogiorno, Banco di Sicilia and Banco di Napoli). None of them benefited the economies of Italy’s southern regions and they just resulted in huge losses of tax payers’ money. The main economic problem of the Mezzogiorno lies in poor rule of law and the regions’ inability to attract any kind of foreign direct investment (FDI). There is no evidence that Mr Tremonti’s idea will change this.

 

Finally, Mr. Tremonti’s desire for less EU regulation should not come as a surprise. The main liberal economic force in the EU is the European Commission and the areas in which European consumers are enjoying most benefits are those in which EU regulations have been extensively applied. A recent example of this is the reduction of roaming costs on international mobile-phone calls.

 

As a liberal, it is possible to agree with Mr Tremonti that a country like Italy needs a stronger state to face the challenges of globalisation. However, I strongly disagree with his idea of the role that the state should play. Italy suffers from too much national (not EU!) regulation. This has been put in place to defend the vested interests of a few categories of workers. A stronger state is needed to scrap this form of regulation and to create more competition. Once competition is there and the rules of the game are fair, more regulation (and therefore more state intervention) will be needed to monitor the correct functioning of the market.

 

The centre-right coalition position on Europe is just a consequence of their anti-liberal attitude. Not only does Mr Tremonti dislike EU regulation, he has also often argued against the euro as a currency. He has blamed the European currency for the impoverishment of Italian consumers and for the losses in trade competitiveness. He forgets to mention, however, the positive effect that the euro has had on Italy’s energy import bill and the cost of servicing its huge public debt. In this sense Mr Tremonti, his boss Mr Berlusconi and their coalition’s anti-EU attitude is just a consequence of their economic ideas.

 

Regarding the Mezzogiorno, a more liberal way to address its problems would be to give real fiscal incentives to those entrepreneurs who are willing to invest there.

 

The Alitalia affair is just the most recent reflection of the economic illiberalism that has always prevailed in Mr. Berlusconi’s coalition. It is worth noting that Mr Berlusconi has a big personal (private) stake in the market of television broadcasting. Private television in Italy is dominated by his media group and the European Court of Justice recently ruled that Italy should increase competition in that sector. It is difficult to see Mr Berlusconi voluntarily abiding by the ruling. His mindset is simply not that of a liberal because the sectors in which he has been successful as a businessman are hardly competitive. He has never been used to the impartial rules of the free market and competition, as was the case for many other major Italian businessmen in the past. Therefore, it should not come as a surprise that, as a politician, he has never shown any interest in reforming the Italian economy. It has been largely because of the lack of real competition that he has become rich and powerful. Unfortunately for Italians, his allies seem too weak and uninterested in any kind of liberal reform, and the centre-right’s programme merely pays lip service to current liberal ideas.

 

Next week Italians know who they are voting for. The achievements of Mr Berlusconi’s previous government and his current electoral programme leave no room for doubt. Alitalia is technically bankrupt and Italian tax payers are footing the bill. There is no economic rationale behind Mr Berlusconi’s decision to disrupt the talks between Air France-KLM and Alitalia but, probably, just political calculation. Italians need to decide if they want to keep paying bills to preserve Italy’s vested interests untouched. By voting for Mr Berlusconi, they should now know exactly how their money will be used.