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Italy is not broke, the country has loads of money

New figures from the Bank of Italy put paid to all the nonsense that Italy is broke. They show that Euros 9.5 trillion is tied up in household wealth. That’s a vast resource that if tapped would solve the country’s public finances overnight and provide plenty of resources for growth, jobs and high quality public services for all.

Equal to almost Euros 400,000 a family on average, the figures show Italy is considerably richer than other leading developed economies, including the UK, France and the US. Household wealth is also more than five times the country’s Euros 1.9 trillion debt, the size of which has been the excuse for a mad austerity drive that is hitting the poorest hardest and sending the economy into a downward spiral.

So how to mobilise all that wealth, two thirds of which is tied up in property, for the good of all Italian citizens? To answer that question first we need to understand how that wealth is distributed. Fortunately the country’s central bank answered that question too.

The Bank of Italy calculated the so-called Gini coefficient, a measure of inequality, for Italian household wealth, finding it rose to 0.624 in 2010 from 0.613 in 2009. 0 expresses perfect equality where everyone has equal shares of income and a value of 1 expresses maximal inequality where only one person has all the income. So Italian society is not only very unequal, the wealth gap is becoming even wider.

Translating this into a share of the nation’s household wealth, this means the poorest half of the population owns only 10% of the Euros 9.5 trillion in assets. And the richest 50% of families own 90% of the wealth, and that figure does not express how a large proportion of that is held by a tiny group of super-rich families.

So going back to that question: how to utilise that mountain of wealth in the country for the good of all, the answer is simple. Stop squeezing the working and middle classes, whose spending, research shows, helps sustains the local economy. Instead, soak the m/billionaires’ club.

Of course, such a move would require a radical departure from the past.

Italy’s rich, like elsewhere, have benefited over decades from the state relying hard pressed salaried workers for taxes which are deducted at source. And as elsewhere, businesses and high net worth individuals, with their expensive accountants and political contacts, have proved adept at shirking the taxman.

But in Italy, more than anywhere else in the West, they have been actively aided and abetted by the public authorities, because of the low priority given to collection and a series of tax amnesties that encourage evasion, which robs the Treasury of at least Euros 120bn a year.

Sadly there’s no sign that the so-called new “technocratic” Government in Rome will depart from previous “political” administrations. Apart from a few token measures such as a tax on some luxury goods and fine words about a new campaign against tax dodgers, Italy’s new PM has refused to contemplate genuinely progressive fiscal reforms, demanded most vociferously by the unions.

Instead Mario Monti is busily making the majority, who already shoulder too much of the burden of financing the state, pay even more, by cuts to pensions, welfare, public services and, via tax rises, the living standards.

As a member of the secretive Bilderberg club of plutocrats, Mario Monti is simply batting for his people, the ruling class, and in that he is every bit as political as his predecessors. While he’s running the show, you can bet it will continue to be the misery for most, and unlimited luxury for the lucky few.

So if anybody asks, isn’t the country broke? The answer is no. Italy is rich. But until that wealth is spread, for most Italians it will never feel like it.

About revoltingeurope

Writer on Europe's Left, trade union and social movements @tomgilltweets or @revoltingeurope


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