Vito Gamberale, The future republic - A second reconstruction

The future Republic - A second reconstruction Vito Gamberale

“The future Republic – A second reconstruction”

Vito Gamberale

Looking at Italy’s new economic and industrial structure, the 70 years that passed since 1946 show a

clear basic evolution profile despite the various oscillations and the confusion which typically

accompany such long periods. After the establishment of the Republic, Italy was a country based on

farming and craft activities, weakened by a long-lasted, demeaning war, showing the scars of

destruction in its major cities, and where primary infrastructures (roads and railways) were

underdeveloped, insufficient, and run-down. There were only few major industrial entities: Fiat – in

Turin – and the country’s first steel production base in Northwest Italy. From a social standpoint,

illiteracy was still high (13%) and schooling poorly spread. Today, when we look back, we can picture

the new-born Republic as a little girl that had to grow up quickly. She had to fix many problems in

order to re-align the country’s economic and industrial framework to other nations, which Italy was

now starting to compete with – 70 years after the Unification of the country. Italy’s evolution can be

clearly divided in three periods. In the first three decades, Italy was reborn and could rely on a

modern and cutting-edge infrastructure system (the best highways in the world), a solid and strong

industrial framework – although mainly concentrated in the country’s northern and central regions,

and an advanced energy system (Eni unexpectedly became one of the leading oil powers worldwide,

and the nuclear power put Italy at the forefront compared to the other European countries). At the

same time, a new ruling class was growing and a consolidated and widespread class of manual

workers as well as white collars was established. Although in the first phase of the recovery it was

mainly about fulfilling obligations, in the second phase new rights consolidated, supported by

governments that were able to combine development with social respect. Those were years and

decades during which the whole nation felt committed to express something exceptional: this was

reflected both in the economy and the industry, as well as in the various art forms (ranging from

music to cinema), in science (the Nobel Prize awarded to Natta), and in sports. Italy was able to rise

again after its total collapse and to assert itself, anticipating the future to come: this is how the

country became a true and admired major player in a new emerging Europe.

The following decade – the ’80s – was a time of contrasts: terrorism, extreme social differences, and

a political approach that was showing initial signs of inadequacy. Three decades of progressive

confusion throughout followed (from the ’90s to the present times): the disruption of historical

political parties (whose epilogue was written by the winning party, whereas the losing side never

had the chance to tell their side of the story, although they would have proved more obvious and

reliable narrators), a relentless growth of public debt that put Italy in a very risky and precarious

situation – never properly addressed, an industrial structure unable to keep up the momentum and

without any strategic point of reference, a political scenario staging unsuitable performers rather

than responsible, informed, and brave leaders (at least almost to date), and a continuous fight

among institutions, resulting in a very dangerous overrunning.

Today, Italy appears to be in the very same diffuse, critical situation as it was at the beginning of the

Republic.

What ideas can drive a new reconstruction? First of all, a new institutional set-up is required that can

provide for appropriate ruling. It is also necessary to stop downward negotiations,


consociationalism, and the fragmentation of responsibilities and duties. A constitutional review is

therefore welcome. The vast majority of the Italian citizens – as can be expected – never read the

Constitution. However, all of us must acknowledge the simple idea that a country’s constitution is

just the same as a company statute. And just like a company statute, the constitution is open to the

continuous adjustments that new circumstances and modern times require. The content of the

constitution cannot be immutable over time; this would otherwise stick Italy to a set-up that times

have inevitably proven to be obsolete. It is therefore necessary to start disapproving, opposing, and

denigrating that conservative assumption according to which Italy has “the best constitution in the

world”.

Streamlined, centralised governance is paramount. To this extent, the bicameralism reform is a

welcomed change. The reform could have included the dismissal of the Senate. But, since this was

not put in place, such change must be postponed to a future date. It is also necessary to take a

critical look at the regions. Were they a driver for the growth of Italy or a source of confusion,

increased political corruption, and dangerous decentralisation of powers? The answer to this

question supports further consent to recent reforms, which tend to recentralise those specific

powers that are typical of a central government. Looking at these necessary, urgent reforms – which

have now been launched – a true, deep reform of “social parties” should be advocated, ranging from

the unions to industrial organisations, to the millions of entities that are still surviving without

offering anything in return, to certain financial and para-banking institutions characterised by

obsolete roles and non-transparent management.

It is also necessary (and quite urgent) to bravely address public debt. Reducing the debt through GDP

growth and inflation is an absurd and reckless approach. Despite what many think, there is no

indication that these two factors will virtuously increase (3% growth and 2% inflation). It’s an

unrealistic dream. And even in the event that this was possible (which is not the case), it would take

mathematically 15 years at such unattainable levels of growth in order to cut by half the current

debt-GDP ratio, which still accounts for 132%, i.e. 15 years to bring the ratio to 60%, which accounts

for the safety level of an advanced country.

We need to understand that such level of debt weakens Italy in terms of international reliability,

social cohesion, and credibility. It is as if the country was built on a stilt house with very thin and high

pillars: a simple gust of wind would weaken the structure and destroy the house. A strong and

authoritative government must be brave enough to disclose and address this problem. There is not

just one recipe to solve it. A mix of brave and mild initiatives is necessary, which should be able to

support and drive the economy system towards the desired goals without weakening its core

structure. Italy is not comparable to the USA – the world third most powerful economic and military

entity, which can afford an abnormal level of debt without risking serious consequences. Italy is at

risk to face the same fate as Greece: we need to keep this in mind in order to avoid such event.

It is necessary to eradicate the institutions’ tolerance and complicity towards tax evasion.

A severe and aggressive fight against tax evasion is undoubtedly the first and strong action required

to cut public debt. What is presented today as a cure against tax evasion is a mere homoeopathic –

i.e. slow and natural – treatment. It is necessary to consolidate the acknowledgement that evading

taxes is like robbing the entire Italian society. Tax evaders must be put in jail and kept there. Those

shops that do not issue a proper tax slip or receipt (and issue instead a mere replacement


document) must be definitely shut down. It is necessary to uncover the bottom of the iceberg of tax

evasion, starting from the most wide-spread and minor forms of evasions (e.g. small single amounts

for big quantities, that account to bigger and bigger total figures), moving on to the most

concentrated and largest violations, including for example unclear headquarters of company

holdings registered abroad but fully economically operating in Italy.

This is certainly a huge challenge to face, that needs to be addressed with appropriate laws strictly

applied by magistrates along with fair and motivated security forces. It is necessary to eradicate the

implied complicity and institutional tolerance towards tax evasion. Tax evasion must be depicted as

an utmost serious violation. Effective actions against tax evasion could – alone – ensure the

government tens of billions of income increase, as much as 100 billion per year – a figure that

accounts for 6-7 GDP points. This measure would effectively cut down public debt and grant the

government that introducing such actions the authority necessary to take further actions that will

necessarily require a stronger commitment in function of the level of the resources.

The subject of tax evasion is closely interconnected with the corruption issue – a much more widely

spread scourge than people think or are willing to acknowledge. Corruption is not perpetrated by

politicians alone – who are subject to daily humiliation through more or less fair initiatives.

Corruption is widespread in public offices and is not limited to one person illegally punching multiple

timecards. Today, corruption – just as tax evasion – is considered as an act of cunningness, almost at

the same level of an appreciated talent. The establishment of the Anac (the Italian national authority

against corruption) is not a sufficient measure. The authority was launched to operate – and is in fact

operating – only in specific sectors. Corruption must be recognised and prosecuted wherever it

hides: in economic transactions, in professional occupations, in bureaucracy, as well as in often

tolerated cover institutions (let’s just think of the countless non-profit associations operating in

Italy). Tax evasion and corruption lead to a further line of thoughts: the need to restore the

responsibility of obligations, which shall have priority over rights. People need to acknowledge that

Italy is not lagging behind in terms of rights. On the contrary, Italy has a huge deficit in

acknowledging obligations. In this area, we should learn from the Northern European countries,

some of which can be considered as Europe’s best practices – such as Denmark, Finland, and

Norway. In a country where people are not required to fulfil obligations, claiming rights will

inevitably prevail and lead to injustice if not combined with obligations. Italy needs to prepare to

imminent and progressive new epic revolutions. Moreover, the country needs a “plan B” in case

Europe fell through. Europe too has become frail and vulnerable – and was never able to become a

real nation. The illuminated vision of the founding European political leaders (Adenauer, De Gasperi,

de Gaulle) and of those who fostered Europe’s development (Schmidt, Mitterrand, Craxi) are no

longer represented by adequate interpreters. Certainly, many issues were caused by Brussels’

so-called bureaucrats, who introduced rules and restraints in countries that are too numerous and

have too different histories to be lumped together. The recent crisis – the economic crisis, the

immigrant crisis, and terrorism – created much stronger barriers and contrasts than the walls that

certain countries erected or threaten to build. In a few months, we went from Grexit (because of the

debt) to Brexit (because of restraints and demands). How many more “exits” will we face? Will

Europe withstand such recurrent threats? Sooner or later someone will exit the European Union.

That will very likely mark the beginning of the end. Let’s be clear: Europe as it is today is for Italy

both a duty and an objective need. However, we must also think of an emergency plan. Life


necessarily demands to design emergency plans to face catastrophes of various kinds. The same

goes for Eurexit.

Italy must prepare for imminent and progressive new epic revolutions.

Biotechnologies, nanotechnologies, robotics, IT invasiveness will lead to a much more massive social

and industrial restructuring than the revolutionary evolution from crafts to industry introduced in

the past. Production methods will radically change, as will also the way of working in factories (if still

necessary at all…) and in companies, as well as in the features of workers, employees, and managers.

This is a revolution that all governments should recognise and potentially expect to come along in

the future of their country. It would be very useful if the technical experts of those governments

kept regularly current and updated on the changes ahead in the future. To this extent, the major

global consulting companies represent a precious and useful source of information.

Let’s not forget the school issue. Italy should be aware that the education system too needs to

undergo a fundamental change in order to prepare young people to live up to the future ahead (and

to face present times, as well). If someone from the second half of the nineteenth century was

plunged in our time, they would certainly be shocked by the profound changes in everyday life, in

the household, in work life, in the office environment, in mobility. The only place they would feel at

home is school. Entering the classrooms, they would find more or less the same equipment and the

same set up as in the past: the teacher’s desk, school desks, a board, books, workbooks, papers

hanging on the walls, geographical maps.

Italy needs a school that is not necessarily based on daily attendance or gathering young people

from the same neighbourhood speaking the same language. Teaching subjects will also change:

more awareness and a closer interconnection with the outside world will be necessary. The various

conservative approaches that for long time have curbed the development of education will have to

be superseded by contemporary needs. To this extent, the “good school” reform actually did some

good. Unfortunately, the reform was poorly appreciated by the general public, also because it was

accompanied and smothered by averted opposing visions unable to recognize the challenges that

future generations will face.

The banking system is another fundamental area that needs to be updated to present times.

Globalisation brings institutions in daily contact with national and international banks. Today, Italy is

facing a huge risk due to the great extent of its outstanding claims. This is a critical issue whose size

cannot be accurately estimated, also because the banks apply unrealistic measurement scales to

evaluate the “temperature” of the various debts, i.e. the probability to realistically recover the

money from the (individual or corporate) entities that they previously entrusted with the debt.

It should be borne in mind that bad debts result in an equal risk for those who have deposited

money in the involved banks. Banks merely represent a pass-through from savers to debt

beneficiaries. The actions that are being taken to address this important issue are fundamental – an

issue that appears to be more and more similar to an iceberg, rather than to a platform (the biggest

part of the iceberg being not visible). Banks must be required again to apply credit rating systems,

which cannot be based by default on estimated indexes derived from not always solid financial

statements, which are almost never verified on site. Before assigning a credit, the conditions

necessary to enter the debt must be verified.


Moreover, Italy should protect its citizens’ savings from the serious issues that have affected foreign

banks. Banking derivatives are like cancers of the financial system, and represent a bubble that

might make everybody poorer. Just as they must account for their public debt at international level,

governments also must demand answers and appropriate actions from those countries where the

cancerous banks are based.

Finally, the idea that outlining all the issues to be addressed is enough to prepare for the next

seventy years of the Italian Republic is presumptuous. We must gain awareness that the current

critical and dangerous situation does not differ much from the conditions of the country in 1946,

when the Italian Republic was borne. Today, political leaders must show the same level of awareness

and the same bravery showed by those leaders that took the responsibility to rebuild a country

shattered by war, characterised by a weaken economy, and needing hope for the future. We must

develop a new collective awareness and commit to more participation and cooperation, as well as to

the necessary efforts in order to take over an active role and create a less uncertain future.

VITO GAMBERALE

Business

Vito Gamberale, The future republic - A second reconstruction