Wonder Why Italy Has To Reform Its Economy – The Government Subsidizes Newspapers

Something That Doesn’t Belong in Politics or Economics

The drive to fix Europe is two pronged.  One prong is the attempt to fix fiscal matters, namely that budget deficits and debt levels of many countries like Spain, Italy, Greece, Portugal etc are driving away private financing of the governments.  The second requirement is that the countries reform their economies, make them more pro-growth and reduce excessive government interference in the economy (the problem conservatives think we have in the U. S, but don’t).

Emblematic of the problem is the fact that Italy provides government support for newspapers.  Now this is about as great a violation of democratic principles as one can find, a free and independent press being essential to the operation of a democracy.  So by ending the subsidies Italy would move towards strengthening democratic institutions in the country and positively impacting its budget problems, albeit by a small amount.

The cuts in newspaper subsidies, from €170m in total to €53m budgeted for next year, were ordered by the previous government of Silvio Berlusconi – the billionaire TV magnate with no great love for the print media he does not own – and confirmed by Mr Monti’s administration, which took office last month.

Of course, like all businesses who receive government subsidies, they justify it as for the good of the nation,

“We are defending democratic pluralism,” says Guido Caldiron, a reporter with Liberazione, also in conflict with its owners, the Communist Refoundation party, which argues that it can no longer afford to finance its loss-making mouthpiece without government help.

And just in case anyone thinks the government’s policy is done for the right reasons,

The government is also aware that it is only the smaller papers – left and rightwing – that are voicing any serious opposition to its tough reforms and spending cuts and does not want to be seen to be silencing them.

The smaller titles point out that the mainstream newspapers – such as Corriere della Sera and La Repubblica – continue to benefit from indirect subsidies, such as VAT waivers on copies sold by subscription and reduced postal delivery costs. They also complain that the advertising market is dominated by two companies, one of them owned by Mr Berlusconi.

Italy is trying to curb the subsidies.  But it is nice to know that even when a government does something good, it does it for the wrong reasons.