In the United States, where the birth rate is less of a problem, women have an average of 2.1 children. But Italy’s Northern League, an influential member of Berlusconi’s center-right coalition, is anti-immigrant. In extreme moments, party leaders called for police to shoot at boats carrying illegal immigrants.
These dynamics have economic costs. As Steven Malanga said in Forbes last year, Italy’s fertility rate, which has been falling since the 1970s, has produced labor shortages and a social security crisis. “Retirement not only robs the workforce of needed laborers but also depresses household consumption because retirees almost invariably spend less than workers do,’’ he said.
The youth jobless rate in Italy is around 30 percent, and Nick Squires of the Telegraph newspaper said a jobs market built on patronage and an “institutionalized gerontocracy’’ may be partly to blame. “While millions of older Italians have jobs for life,’’ he notes, “their children scrabble from one short-term contract to another and often work for free.’’ He adds that young people are “locked out of work by a closed shop system which affects dozens of trades and professions,’’ and afflicting Italy with brain drain by emigrating abroad.
The root of Italy’s problems, the Wall Street Journal said, is that the country “financed generous entitlements with high taxes and towering piles of debt,’’ and now finds the money running out as the economy sputters. Indeed, Italy has more pensioners than workers and spends about 14 percent of GDP on pensions.
Silvio Berlusconi pledged to raise the retirement age in Italy to 67, but it is controversial. In late October, two Italian lawmakers exchanged blows in Parliament during a debate about whether to revamp the country’s pension system.
Then there are taxes. An Associated Press report found that “easygoing Italians, expecting little from the state, rarely think twice about paying under the table for home improvements, dental work, or even a frothy cappuccino.’’ The numbers back this claim up. In 2007, the Austrian economist Friedrich Schneider estimated that Italy’s shadow economy accounted for more than 22 percent of GDP.
