December 17, 2011
It is easy for Europe’s political leaders to glibly prescribe fiscal austerity as an all-purpose cure for the debt crisis. Having convinced themselves that all countries facing financial catastrophe brought the problems on with profligate spending, their one-size-fits-all antidote is simply to raise taxes and slash benefits and services they say can no longer be sustained. But it is a lot harder for ordinary people across the euro zone to cut back already strained household budgets to pay those higher taxes and accept the higher unemployment that austerity measures guarantee.
Here in Italy, where I live, people are bracing for the coming pain. The worst case — a lost decade of shrinking real incomes, jobless young people and tottering banks — is all too plausible here and elsewhere in Europe. The arcane details of Italy’s extraordinarily complex tax, pension and regulatory systems have suddenly become the subject of everyday conversation, as the new government of Prime Minister Mario Monti pushes its emergency economic plan toward parliamentary approval.
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