Dear friends of Istituto Acton,
Surprise, surprise, it appears that Italy has taken its first significant steps towards economic health with the reform of the country’s onerous labor laws by revising Article 18 of its labor laws*. Prime Minister Mario Monti deserves much credit for pushing the reform through, in spite of stiff resistance from the trade unions. In Rome we can expect many strikes and protests throughout the spring as the parliament prepares to vote on the Article 18 revision, but perhaps the spectacle of Greek default on one side of the Mediterranean will carry more weight than the Spanish work stoppages on the other and the reform will be accepted and implemented quickly. This is indeed a time for the Italian government to show it can achieve serious reform; I, for one, would be more than pleased to eat my often-contemptuous words about the Italian political class if, and it’s a big IF, they can pull this off.
The trade unions and the government bureaucracy that benefit from the current system will not go away quietly, however. The Wall Street Journal spoke to a brother and sister who run a business their father started in Milan in 1936 and they describe the obstacles faced by an enterprise that desires to grow:
"Today, if you want to fire a person, he goes to court and the judge forces you to take him back," explains Ms. Novellone. Under Mr. Monti's reforms, the courts could still force employers to rehire fired workers if they don't agree with the cause for dismissal. But during hard times, businesses could in future lay off workers for the low price of up to 27 months' severance pay.
"This would be a big improvement," says Ms. Novellone. "If you can fire people, it means you can also hire people. Today, we can't do anything without agreement from the unions."
[…]
Mr. Novellone is sure to praise the Italian system that "protects workers—this is a good thing." But the "rigidity" of the labor laws is also "one of the reasons why Italian companies are so small. No one wants to grow too much at any single production facility, otherwise the unions will be too strong and start telling you what to do."
[…]
"In Italy, we get a new law every two months," Ms. Novellone says. "It just grows and grows, sometimes the laws change, sometimes they're new, sometimes they're retroactive—bureaucracy is killing us."
For instance, per government decree, "every year I have to sign 50 letters to give instructions to my employees on how to keep 'confidential information,'" Mr. Novellone says. "It's information nobody cares about! It's crazy."
"You need so many people just to push paper, to make these declarations," adds Ms. Novellone. Most recently, Amisco has had to conduct psychological stress studies on its work force. "You need consultants for everything, otherwise it's too difficult, you do one thing wrong and then the inspector comes."
"If you follow all the laws, you can go crazy," adds Mr. Novellone. "There are many people who don't. Unfortunately, we do. We care about following the laws."
The end result is not just less economic growth and wealth, but disrespect for the rule of law and a decline in public spiritedness. Visitors to Italy are often shocked to see all the graffiti on buildings and trains and all the trash Italians seem to throw carelessly on the streets. Contrary to all their rhetoric of caring for the common good, the unions have no answer to these blights other than to make the country even more disorderly. For all the blame directed towards the free market for the social disruptions brought about by creative destruction, they pale in comparison to the threats coming from the political left and its allies.
Why is political rhetoric so divorced from political reality? This is, of course, a long-standing problem not just in Italy but in all times and places, as Thucydides showed us with Pericles’ funeral oration, praising the public spiritedness of the Athenians, followed by vivid descriptions of societal breakdown during the plague. In our day, the contradiction comes in the language of “human rights” and the proliferation of laws which promise all sorts of good things to the people, but in reality come at the expense of liberty and self-government. Columnist Mark Steyn cites fellow Canadian George Jonas on this paradox:
“There seems to be an inverse relationship between written instruments of freedom, such as a Charter, and freedom itself,” mused George Jonas. “It’s as if freedom were too fragile to be put into words: If you write down your rights and freedoms, you lose them.” That was generally the view of the Britannic part of the English-speaking world until the late 20th century: What’s unwritten is as important as, if not more so than, what is. The constitution of Australia, for example, makes no mention of the office of prime minister. The job exists only through custom and convention understood from the United Kingdom, where likewise it existed only through custom and convention: “statutory recognition” in London didn’t come till 1937 — or over two centuries after dozens of blokes had been doing the job.
The same phenomenon is occurring when it comes to the “right to health” touted by the Obama administration in the United States or the “right to water” promoted by the Holy See, as I noted in a couple of blog posts. In order to save the cause of freedom and virtue, we need fewer, not more, laws; ones that are simple and easy for the average citizen to understand. It will take a wise and prudent politician to pull off the feat because it requires a leader who restricts his own power and sets an example for those who succeed him. Let’s hope Monti is one of these rare types, as George Washington was in the US.
It is hard for politicians and those working in public policy to realize that their role in society is limited. It’s tempting to think that the “little people” exist for the praise and glory of their leaders and to thereby disparage prosaic activities like business. So I am pleased to express a positive appraisal of the Pontifical Council for Justice and Peace note on the vocation of the business leader. As my colleague Samuel Gregg has commented, the note takes a “bottom-up” rather than a “top-down” approach to business and avoids making policy prescriptions, many of which in this context could have ended up hurting rather than helping business (see the previous PCJP support for the Tobin tax, for example). I happen to think note’s language is still too abstract to find much of a wide audience among practical-minded businesspeople, but it is certainly a step in the right direction.
Sam Gregg has been as prolific as ever, contributing two articles to this month’s newsletter, one on the American Left’s European Nightmare and the other on Pope Benedict’s untimely timeliness. In my feeble attempt to keep up, we’ve included my Zenit interview with Elizabeth Lev on the Italian government’s attempt to tax the Church for its commercial activities, which is related to the US government’s maneuver to define what is and what is not a religious institution. As the Archbishop of New York has noted, these are remarkable times when Church leaders are taking the pro-freedom, liberal side of a debate against nominally freedom-promoting but restrictive politicians.
None of this should be too surprising for those of us who are commemorating Holy Week and Easter over the next two weeks. The paradox of Christ’s supreme sacrifice for all the sins of humanity and our continual infidelity means that we don’t expect the world to behave as it says it does. I’ll never forget seeing a poster in the New York City subway, showing the bloody face of Christ wearing a crown of thorns with the caption “Live like a King today.” In Christ we find that the best ruler is one who serves and gives himself so that others may live. It’s a high bar, morally speaking, which many are bound to fail to live up to, but with God’s grace and our cooperation, all things are possible, even in Italian politics.
I wish you and your families a most blessed holiday and celebration of Our Lord’s Passion, Death and Resurrection.
Kishore Jayabalan
Director
* The original read "constitution" (changed to "labor laws"). We regret this error which was brought to our attention by one of our readers.
