Against crony capitalism, Italian style
By Alberto Mingardi
The Italian Post service is joining the shareholders of Alitalia, the “national” air carrier. I’ve written on this odd move of the Italian government here. Today I co-signed an appeal to the Italian government, to resist this protectionist temptation. The signatories were mobilized by Il Foglio, a “boutique newspaper” (as of boutique hotels) in Rome. It is a small testimony of resistance to crony capitalism. I am afraid we have very little chance to succeed. Italy is suffering from the consequences of fifty years of too much interventionism (I would dare to say: “too much” by any standard). Even more interventionism is the very wise remedy that our political class has chosen for this illness.
“Industrial protectionism is back in vogue in Rome. It is not a pretty sight.” So wrote the Financial Times just a few days ago. The Letta administration, supported by the Democratic Party (PD), the People of Liberty (PDL) and Civic Choice (Scelta Civica) parties, is sending a treacherous message to international investors and an inappropriate one to the domestic, as evidenced by the recent developments in the cases of Ansaldo Energia, Telecom Italia and Alitalia.
In the last few weeks, as the Italian Premier Enrico Letta was on Wall Street to illustrate the bright investment opportunities in Italy, the Strategic Fund of Cassa Depositi & Prestiti (CDP, a largely government-owned bank that manages–among other things–the financing of infrastructural investments for the provision of public services) moved to take over 85% of Ansaldo Energia. This “systemic operation” of CDP (80% owned by the Italian Ministry of Economic Affairs) has undoubtedly scared off, at least momentarily, any prospective foreign investor, some of whom had shown interest in Ansaldo. As for Telecom Italia – privatized in the ’90s without the necessary liberalization of the relevant market and safeguarded in the following years by similar “systemic operations” – in the last few weeks an overdue showdown on the marketplace seemed to be unavoidable. However, in this case, too, the Cabinet decided to involve itself, to the bafflement of international observers. On the one hand, some are arguing that in view of the new situation the legislation on takeover bids ought to be amended, hindering any takeover attempt by foreign investors (and making it more lucrative for the current shareholders of the company). On the other hand, the executive is hurriedly dusting off “national security reasons” to wield its interdiction powers in the use of the telephone network. All this, however, happened in the course of the natural replacement process of previous, unsuccessful shareholders with new investors. Last, but not least, Alitalia. After the errors of the past, with the emphasis on domestic routes demanded by politicians, unions and investors themselves, today’s Alitalia–were it a “normal” company–would go into receivership. Instead, with the intervention of Poste Italiane (100%-owned by the Italian government) in support of Alitalia, the notion is accepted without the slightest debate–and without arranging the industrial plans and establishing the provisional nature that characterized the ad hoc bailout by the U.S. government of a number of American corporations–that Alitalia is a company more equal than the others. This would purportedly make it worthy of being bailed out and, most importantly, of being immune to all challenges to its shareholding structure, as is apparently the case for Ansaldo Energia and Telecom Italia.
After years during which the idea was upheld–at least rhetorically–that the country needed to advance on the road of privatizations and liberalizations, we are now witnessing a drastic U-turn. Behind the blatant demand by a number of government officials for a return to an “industrial policy,” we can recognize a hazardous statist backlash, not least in the public debate. Such a return to the past would be detrimental for Italian businesses, even the most inefficient ones, distasteful to potential national and international investors, more and more fearful to being exposed to the vagaries of interventionist and unpredictable policies, and calamitous to taxpayers, increasingly burdened and gloomy about the fate of the country.
The undersigned are pleading the government to refrain from intruding in the operations of the market, absent specific and motivated reasons to be detailed ex ante. Competition implies the mobility of the factors of production, and cannot be forfeited whenever the vested interests of politicians, crony capitalists, and unions are threatened by it.
Francesco Giavazzi (Bocconi University), Salvatore Rebecchini (Italian Competition Authority), Carlo Stagnaro (Istituto Bruno Leoni), Giorgio Arfaras (Centro Einaudi), Ugo Arrigo (Milano-Bicocca University), Alberto Bisin (New York University), Enrico Colombatto (University of Turin), Francesco Daveri (University of Parma), Franco Debenedetti (Istituto Bruno Leoni), Ernesto Felli (Roma Tre University), Dino Fenzi (Entrepreneur, President of Confindustria Federvarie), Corrado Sforza Fogliani (Confedlizia), Alberto Forchielli (Mandarin Capital Partners), Francesco Forte (La Sapienza University, Rome), Riccardo Gallo (La Sapienza University, Rome), Andrea Giuricin (Milano-Bicocca University), Giorgio Gori (entrepreneur), Fiorella Kostoris (La Sapienza University, Rome), Mauro Marè (Tuscia University), Alberto Mingardi (Istituto Bruno Leoni), Fulvio Ortu (Imperial College Business School), Giuseppe Pennisi (Cnel), Alessandro Petretto (University of Florence), Riccardo Puglisi (Pavia University), Riccardo Ruggeri (Entrepreneur), Fabio Scacciavillani (Economist), Mario Seminerio (Economist), Chicco Testa (Manager, Presidente of Assoelettrica-Confindustria), Francesco Trebbi (University of British Coiumbia), Francesco Venier (Trieste University)