Corruption: 60 billion of “ballast” on Italy’s fragile economy
Incidences and coincidences, to borrow an expression from Leonardo Sciascia. Unintentional, but fortuitous lexical harmony between CGIL and Confindustria in reference to corruption and the need for greater lawfulness. In the title of an interesting conference, organised for 14 November by the Lombardy office of the trade union CGIL and by Bocconi University’s Department of Legal Studies to discuss the burden of corruption and organised crime on the Italian economy, we find reference to removing this “ballast” from the marketplace and to generating jobs and growth through lawfulness. Then on 17 December in Rome, the presentation of the economic report by the Confindustria Research Centre, the title of which describes corruption as “ballast” on development. Lawlessness as “ballast”. This is the operative word. An obstacle to a sound market culture, a hindrance to balanced economic and social growth, a rift in the world of business and in the improvement of society, and lawfulness seen as an asset to the competitiveness of a nation and, of course, as an essential condition to the ethics of a community and to civil coexistence.
This is an important coincidence for the sake of good culture of enterprise and one that should be a source of satisfaction, an acknowledgement that corruption is a burden on an Italian economy that is already far too fragile. How much of a burden? Sixty billion each year, half of the total for all of Europe, according to the first European Commission report on the issue, which was presented in early February 2014 in Brussels by the Interior Affairs Commissioner, Cecilia Malström. Some 75% of European citizens and a staggering 97% of Italians – basically everyone – feel that corruption is widespread in their home nation. It is a blight on politics and society that absolutely must be resolved by politicians, by society, and by the business world. Sixty billion was the estimate given in the report by Italy’s Court of Auditors at the start of the judicial year back in February 2012, nearly three years ago, and already the court was saying that lawlessness and corruption were still a significant presence in Italy, while Court of Auditors attorney general Maria Teresa Arganelli underscored that such a high level of corruption was a threat to the freedom of business and undermined the confidence of foreign investors. We can now say that these last three years have been essentially wasted given that the issue is being raised again and is now even more serious.
Confirmation of this crisis in lawfulness and of its impact on the economy has also come from Transparency International, which put Italy in 69th place in its 2014 ranking of 175 nations – one of the worst in Europe along side Romania, Bulgaria and Greece. It’s known as the “Corruption Perception Index”, so it shows how much the Italian people feel that corruption is pervasive and that recovery for the economy and for employment is unlikely.
It is a very serious issue, and not just in Italy, but here it is a greater burden than elsewhere, as documented by Transparency International. To better understand the problem, it would be worth reading Corruption – Economic Analysis and International Law, written by two Italian economists, Marco Arnone and Leonardo S. Borlini, and published by Edward Elgar, including forewords by Italy’s economics minister Pier Carlo Padoan and by Gabrio Forti, a professor of criminal law at Università Cattolica, Milan. In his foreword, Padoan writes that “where public and private corruption proliferates, markets are dominated by distortions and inefficiencies” and “the malfunctioning of markets generates advantages only for privileged lobbies”. Ballast, indeed, and a hindrance to growth.
A document recently published by Confindustria’s research centre (concerning a study by Loredana Scaperrotta), which we talked about here on 25 February, calls for less bureaucracy in Italy in order to return to growth, claiming that even a 1% increase in the efficiency of public administration would result in an increase in per capita GDP of 0.9% and to growth in international investment, which would have a positive impact on employment. The essence of the matter is clear. We must streamline bureaucracy because the complex web of too many rules, along with lengthy, uncertain response times and the unsustainable costs of the public and political machine, are holding back development particularly for the most dynamic of Italian businesses.
And how can we reduce corruption? Legal and social measures aside (for too long vast segments of the political world and of the general public have been indifferent toward, subtly inviting or even colluding with tax evaders, “friends of friends” of organised crime and the generally corrupt), what is needed is less public, political and administrative intermediation, along with an efficient, effective justice system and transparency (including through a strong commitment by the media), while also remembering the lessons of the past, such as those of Max Weber (“[…] bureaucracy is among those social structures which are the hardest to destroy”) and of Gaetano Salvemini (“The tree of death that is bureaucracy – slow, endlessly complex, and in no way meeting the needs of the people because it answers solely to its own”), warnings from the last century, but relevant to this day.
Incidences and coincidences, to borrow an expression from Leonardo Sciascia. Unintentional, but fortuitous lexical harmony between CGIL and Confindustria in reference to corruption and the need for greater lawfulness. In the title of an interesting conference, organised for 14 November by the Lombardy office of the trade union CGIL and by Bocconi University’s Department of Legal Studies to discuss the burden of corruption and organised crime on the Italian economy, we find reference to removing this “ballast” from the marketplace and to generating jobs and growth through lawfulness. Then on 17 December in Rome, the presentation of the economic report by the Confindustria Research Centre, the title of which describes corruption as “ballast” on development. Lawlessness as “ballast”. This is the operative word. An obstacle to a sound market culture, a hindrance to balanced economic and social growth, a rift in the world of business and in the improvement of society, and lawfulness seen as an asset to the competitiveness of a nation and, of course, as an essential condition to the ethics of a community and to civil coexistence.
This is an important coincidence for the sake of good culture of enterprise and one that should be a source of satisfaction, an acknowledgement that corruption is a burden on an Italian economy that is already far too fragile. How much of a burden? Sixty billion each year, half of the total for all of Europe, according to the first European Commission report on the issue, which was presented in early February 2014 in Brussels by the Interior Affairs Commissioner, Cecilia Malström. Some 75% of European citizens and a staggering 97% of Italians – basically everyone – feel that corruption is widespread in their home nation. It is a blight on politics and society that absolutely must be resolved by politicians, by society, and by the business world. Sixty billion was the estimate given in the report by Italy’s Court of Auditors at the start of the judicial year back in February 2012, nearly three years ago, and already the court was saying that lawlessness and corruption were still a significant presence in Italy, while Court of Auditors attorney general Maria Teresa Arganelli underscored that such a high level of corruption was a threat to the freedom of business and undermined the confidence of foreign investors. We can now say that these last three years have been essentially wasted given that the issue is being raised again and is now even more serious.
Confirmation of this crisis in lawfulness and of its impact on the economy has also come from Transparency International, which put Italy in 69th place in its 2014 ranking of 175 nations – one of the worst in Europe along side Romania, Bulgaria and Greece. It’s known as the “Corruption Perception Index”, so it shows how much the Italian people feel that corruption is pervasive and that recovery for the economy and for employment is unlikely.
It is a very serious issue, and not just in Italy, but here it is a greater burden than elsewhere, as documented by Transparency International. To better understand the problem, it would be worth reading Corruption – Economic Analysis and International Law, written by two Italian economists, Marco Arnone and Leonardo S. Borlini, and published by Edward Elgar, including forewords by Italy’s economics minister Pier Carlo Padoan and by Gabrio Forti, a professor of criminal law at Università Cattolica, Milan. In his foreword, Padoan writes that “where public and private corruption proliferates, markets are dominated by distortions and inefficiencies” and “the malfunctioning of markets generates advantages only for privileged lobbies”. Ballast, indeed, and a hindrance to growth.
A document recently published by Confindustria’s research centre (concerning a study by Loredana Scaperrotta), which we talked about here on 25 February, calls for less bureaucracy in Italy in order to return to growth, claiming that even a 1% increase in the efficiency of public administration would result in an increase in per capita GDP of 0.9% and to growth in international investment, which would have a positive impact on employment. The essence of the matter is clear. We must streamline bureaucracy because the complex web of too many rules, along with lengthy, uncertain response times and the unsustainable costs of the public and political machine, are holding back development particularly for the most dynamic of Italian businesses.
And how can we reduce corruption? Legal and social measures aside (for too long vast segments of the political world and of the general public have been indifferent toward, subtly inviting or even colluding with tax evaders, “friends of friends” of organised crime and the generally corrupt), what is needed is less public, political and administrative intermediation, along with an efficient, effective justice system and transparency (including through a strong commitment by the media), while also remembering the lessons of the past, such as those of Max Weber (“[…] bureaucracy is among those social structures which are the hardest to destroy”) and of Gaetano Salvemini (“The tree of death that is bureaucracy – slow, endlessly complex, and in no way meeting the needs of the people because it answers solely to its own”), warnings from the last century, but relevant to this day.