Milton Friedman used to say that “for many years Italy did well because of the black market.” Italy grew rapidly over the 20th century, and its black market was part of an important economic recovery after World War II. Italians made everything from low- cost toys to high-quality cars, and from world-renowned coffee to thousands of movies. However, in 2018 Italy is one of only two European countries where GDP per capita has not recovered from the financial crisis. Italy has an unemployment rate of 11 percent and a youth unemployment rate of about 35 percent. In addition, Italians have the second largest government debt in the world relative to their GDP.
Italy’s problem, similar to many of its southern-European neighbors, is an oppressively high tax burden, irresponsible welfare programs that encourage high measured unemployment and increase the debt, and high levels of regulation.
Read the full op-ed in Economics 21 here.