Italians Want Rules They Can Follow

Imagine a country with two sets of laws: one on the books, not unlike that of other Western democracies, and the other an unstated code of behavior that is the key to operating successfully. This one often involves breaking the first set of laws. Foreigners are amused, baffled, or frustrated when they try to fathom the bizarre reality that describes Italy, the world's fifth-richest economy. No one really tries to combat the country's huge underground economy, which makes up nearly 30% of gross domestic product, even though it is an oasis of tax evasion, it undermines Italy's social welfare system, and it breeds the abuse of illegal workers. Public officials are even known to cheer those who beat the system.

But for Italians, the duality is crippling. It promotes the debilitating forces of corruption among opportunists and resignation among honest hard workers. Italians have lived with a schizophrenic economy for decades, suffering a rapacious state that squanders the vast wealth produced by ingenious, hardworking entrepreneurs. And they have tolerated a political system saturated with greedy power brokers who care mainly for position and personal enrichment. Grappling with the duality between an ideal democracy and the disappointing reality comes with every Italian's genetic coding.

Italy can't tolerate that reality much longer without sliding dangerously backward, both economically and politically. True, a revolution started a decade ago, as crusading magistrates attacked a massive system of institutional corruption that left few unscathed, imploding the country's political system. Economic reforms followed, but they were driven by only half the energy with which they were being pursued elsewhere in Europe, leaving much unfinished business.

Enter Silvio Berlusconi, the incoming prime minister of the 59th Italian government since the end of World War II. If ever there was a moment for an Italian leader to break with the past, it is now. That won't be easy for media mogul Berlusconi, who grew up in the two worlds that define Italy and made his $14 billion fortune in the grey zone between them. Surely, Italy needs all the things Berlusconi is promising: more flexible labor markets, lower taxes, less bureaucracy, an effective public administration, 1.5 million new jobs, and stronger growth. But what it needs most is the belief that the set of laws on the books will finally be honored, and that the invisible laws of crony capitalism stop determining one's ability to succeed. In short, Italians want a real democracy, not a fake. It is that legacy that Italians would thank Berlusconi for most.

    Before it's here, it's on the Bloomberg Terminal.