* Any views expressed in this opinion piece are those of the author and not of Thomson Reuters Foundation.
To say that the citizens of Italy and Greece have been through the ringer this year is a gross understatement. Being on the precipice of default for much of the year has resulted in frayed nerves in the government and financial sector and has resulted in violence and injury in the streets as greater austerity measures take hold. Governments in both Rome and Athens have fallen as voter ire mounts ever upward.
But even with rising debt that rockets past their GDP and ever-worsening bond ratings Italians and Greeks have even more to lament: epidemic levels of government corruption. According to the latest Transparency International Corruption Perception Index the two neighbors on the south side Europe rank near the bottom of their regional counterparts with Italy listed at 27th and Greece at 29th out of 30 countries. On a global scale Italy ranks 69th (equivalent to Ghana) and Greece 80th (neck-and-neck with El Salvador) in their levels of government deceit.
No doubt this “news” was received with a shrug by people in both nations.
Indeed, just two weeks ago the head of Greece’s statistics agency was being investigated for corruption, and recent news reports note that estimates of public corruption in Italy amounted to €60bn in 2010. Further, the Bank of Italy believes that “as much as €150bn in dirty money is laundered every year.” “Stunning” may be too weak a word to describe the severity of the situation.
It is no wonder that both Italy and Greece have some of the lowest tax compliance in Europe which, of course, exacerbates the budget deficit. It is not difficult to see the linkage between high levels of government corruption and low levels of tax payments. Why would citizens pay their taxes if they believe the system is rigged against them? As an article on Greece’s tax problem in the New Yorker magazine pointed out last summer, the social contract has been shattered. It is unclear if it can be repaired.
But whether the social contract can be mended in Italy and Greece should be of concern to all of us. If politicians in those nations do not understand that dishonesty in government leads to dishonesty among the citizenry the budget crisis will not likely improve. This will eventually lead to default and a failure of the Euro. And if the Euro fails it’s hard to predict that the global economy will not follow in a similar fashion. All of this is eerily reminiscent of an old proverb which begins “For want of a nail. . . . “
