Italy a Perfect Example of the Despotism of Democracy
Thursday, November 24, 2011 at 1:22PM [Editor's Note: We would like to introduce Alexander Jousse as our new TDV correspondent for Italy. Below is a short bio from Alexander and following is his first dispatch from northern Italy]
Alexander Jousse (alexander.jousse@gmail.com)
Bio: I have been an anarcho-capitalist for about seven or eight years. My introduction to the philosophy was probably through Lew Rockwell and from there I started to read Rothbard, Mises and to listen to Stefan Molyneux. But most importantly I have been thinking, observing and asking questions. I am starting to write about Italy because I am sick of reading about Italy from the mainstream media; they seem to get their information from the propaganda wing of the old communist party. Their solutions are always the same; tax, spend and regulate! Historically Italy is a perfect example of the despotism of democracy; before the nation state period, the cities, kingdoms and republics of Italy were wealthy and free.
Italy a Perfect Example of the Despotism of Democracy
Italy is receiving considerable press due to the newly installed technocratic dictatorship. This was a stunning coup d’etat. Berlusconi's government was on the brink of collapse for the second time in as many weeks and if the government collapsed Italy would have to hold new elections. The earliest these could have taken place is next spring and during this period there would be no government. There is nothing unusual about this, it happens every few years, but the timing would have been fatal!
Mario MontiInstead the president, Giorgio Napolitano invited Mario Monti to form a new government and become Prime Minister. Mario Monti is an insider of note. Previously he was a commissioner in the European Commission, he is chairman of the Trilateral Commission and a member of the Bilderberg Group, advisor to Goldman Sachs and president of Bocconi University in Milan. Then, Mario Monti announced the new government; not one politician was included, all of them are insiders, business leaders, bankers and university professors. The Minister of 'Economic growth, Infrastructure and Transport', is Corrado Passera, who was previously the CEO of Intesa Sanpaolo. This is an Italian bank that has serious 'liquidity' problems, due to it's dirty habit of buying sovereign debt despite increasing yields!
These new appointees will be trying to save the Italian bond market, Europe and the world; an impossible task by any means. To make Italian bonds more palatable for the markets, Italy will need to implement austerity measures, market 'liberalisation' and massive redistribution of wealth. Already they have increased the VAT from 20% to 21% and changed 'money laundering' laws to forbid cash withdrawals of sums greater than 2500 Euros. Rather than encouraging economic growth they are harassing small business owners , consultants and professionals; the only part of the economy where there is still some flexibility and growth. These laws are enforced by the Guardia di Finanza, which is a branch of the army. While this has been occurring, there has been large scale capital flight from Italian banks to Switzerland. The loss of capital has been so great that the banks are actively preventing customers from transferring money to Switzerland.
Eventually their target will be the so called 'Black Market'; an irresistible pot of money, probably in excess of 30% of GDP.
In the mainstream media (MSM) the 'black market' is portrayed as a mafia run organisation of human traffickers, drug pushers and mafiosi who enslave under-aged illegal immigrants and prostitutes to implement their nefarious plan of world damnation. Unfortunately for the MSM and Hollywood this is almost completely untrue. There is no one 'black market'; rather a collection of decentralised, loosely connected informal markets geographically bound and organised by familial relationships. Quite often these markets will overlap or integrate themselves into the regulated markets. Describing this interaction as 'black' is artificial; 'free market' would be a better term but for the sake of clarity we will refer to them as 'black markets'.
These markets spontaneously provide a host of socially beneficial services, without government intervention or central planning. Without these services Italy would have collapsed a long time ago.
Employment is a big problem in Italy, particularly for anyone under the age of forty. It is a country where the young have been marginalized. Regular, well paid employment is an out of reach dream for many. For those who have been kept out of the system; the only means of survival is to work in the 'black market'. They will work, but have no employment contract and will get paid in cash. The work may not be regular but the job conditions and pay are often better than those with a contract. They do not have regular jobs because the costs and risks of hiring them are too great. The advantage of this arrangement is mutual; the owner is able to reduce the cost of production and the worker receives money and more importantly job experience. With enough experience an informal worker can move to regular employment. If under 'social security' these people were paid by the government to not work, they would not get work experience and thus never find a job. Dooming them to perpetual poverty.
Italy has a crippling and despotic tax regime combined with insane levels of red tape. The result, all companies break the law and are liable for large fines. These costs are passed on to the consumer; that is if they can afford them. Often it is cheaper and safer not to do business. Here again if one goes to the 'black market' to buy a particular good or service, the price is greatly reduced. These discounts keep marginal companies in business and provide the poor access to heavily discounted goods.
Due to inflexible labor laws and militant unions the formal work place is an area of constant tension, subtle aggression and sometimes violence. This is strangely reflected by the adoption of some English words in Italian. The first, 'Lo Stress' , the second 'Mobbing'; 'Lo Stress' is generally caused by mobbing. In many cases it is not possible to fire someone, change their job or make them redundant; but they are free to resign. 'Mobbing' is institutionalised and systematic violence directed towards a person with the objective of forcing them to resign. In theory it is illegal but the practice is widespread. A predictable result is the marginalisation of the people least able to defend themselves. Usually these are older women close to retirement but too young to receive a pension. They are either forced onto semi-permanent sick leave (which the state pays) or forced to resign. If they are younger than sixty-five and need money to survive they will start working on the free market... er, sorry, 'black market'.
Italy does not have a functioning legal system. It is expensive and takes years to receive any form of legal resolution. The regulated markets are run by cartels and monopolies that can legally force people to use their services. Whereas the 'black markets' do not rely on state violence, but are the spontaneous result of mutually beneficial trade. Without intervention Italy has developed a social safety net that is more humane and fairer than any centrally planned system. The beauty of these markets is not just financial but also emotional; people will use existing social ties to find the services that they need, enriching everyone within the group.
Unfortunately the MSM in Italy has decided to wage a campaign against 'black market' activity; these people are being portrayed as greedy, selfish and the source of Italy's problems. The consensus view is that Italy can reduce government spending, increase tax revenues and grow its way out of debt. This is an impossible task. What they will try to do is criminalise black market activity and restrict access to cash, forcing everyone to use the banking system. This could momentarily increase tax revenues, but will inflict massive damage onto society.
Those working in these markets will either have less money or no jobs. Goods that are sold on these markets will become scarce as the costs of production goes up and the profit incentive decreases. The mafia will grow more powerful as the honest and hard working are forced out of these markets by government violence.
Finally, people will lose hope when they can no longer work and eat. After that the riots start for real.
Reader Comments (8)
By the way, "it's dirty". it's = it is.
This is how government interference & regulations distort markets, especially with a lack of transparency and timely information. Gold bullion producers in Vietnam created a lower “Black Market” price by selling their inventory less than the largest gold producer and trader SJC Saigon Jewellery Co. They were panic selling their products because they were unsure what the new Central Bank Decree on gold production & trading would entail or how it would affect their business and products. This lack of information and clarity by the CB, created panics and distortion in price at the “free market” level where small producers conducted trade.
With this new decree, it seems only 1 out of the 8 current producers qualify as an eligible gold bullion producer under the new regulations. SJC which holds 90% of the market share as a producer, seems to be the only company that qualifies under the new decree which states you must have 25% market share for over 3 years and a minimum amount of capital. If SJC has 90% market share, it seems that they will be given the only licence to produce bullion in Vietnam. The remaining 7 producers will most likely be forced out of the production industry, thus leading the way to a monopoly by the Central Bank and SJC on gold production and distribution.
Central banks are now cracking down on physical gold production and trade, only bank approved & licensed dealers are allowed to conduct business in the gold industry. They have effectively killed off the Black Market and Free Market in the gold trade. Unfortunately this may become a common theme in most countries which have central bankers, which is pretty much all countries around the world. Soon the central bankers will try and take control of the gold industry all together, I can see this becoming an ever growing emerging trend. Gold could be used to back stop currencies, but the bankers will make sure they have full control of the gold trade before we see that happen.
Vin
http://www.intellasia.net/news/articles/finance/111348596.shtml
The above cannot be supported or condoned by the elite, even if so desired. In any system migration , neither system can be allowed to crash. This is why PM monetization is a grass roots/market responsibility. If the elite were to overtly support PM's as currency, it would precipitate a USD crash, not good for anyone. Rate of change can only be properly governed by the marketplace. This beast must rise.
Thank you for a very cogent analysis. Very interesting. Great quote for my archives: >> "Without intervention Italy has developed a social safety net that is more humane and fairer than any centrally planned system."
In a time when demonizing the free market system has become a norm, thanks to the failure of the education monopolies to teach anything resembling economics, this kind of analysis is truly refreshing.
Ed Bugos