Deregulation, or “liberalizzazioni” of services is championed by Italy’s political and business elite and their international cheerleaders as an essential element in any strategy to boost the zombie economy.
The theory is that removing barriers to competition, particularly in the protected professions such as the law, will lower prices. This in turn will put money back into the pockets of consumers and businesses who use the services and so they will invest and spend more in a virtuous circle of growth.
New research casts some serious doubt on this, however.
The Association of Artisans and Small Businesses of Mestre (CGIA) looked at the tariffs and prices of 11 goods/services that had been “liberalised” in the past 20 years.
It found that:
- transport insurance has increased by 184% since 1994, against inflation of 43% meaning that prices had gone up by 4.2 times faster than the cost of living.
- banking and financial services, including the cost of having a current account and using the hole in the wall cash dispenser, went up 109%, that is, 2.5 times faster than rate of inflation.
- train fares have gone up 53% since 2000, compared to 27.1% inflation over the period, ie twice as fast.
- postal services just kept up with the rate of inflation
- electricity went up 1.8% between 2007-2011, lower than the 8.4% inflation for those years
Only medicines and telephone services have delivered savings to consumers since they were deregulated – respectively down 11% since 1995, against a 43% inflation over the period, and down 16% over the 1998-2011 period compared to 33% inflation.
Such data shouldn’t be necessary is as far as success should have presumably shown up in the growth figures but instead the economy has barely expanded over the past decade.
But these new figures just demonstrate that in many cases far from being a solution to the country’s economic ills, deregulation may be part of the problem.
And it is a real rip off for many hard pressed Italians to boot.