Italy’s Great Experiment

By J.D. ALT

Italy is experimenting with giving tax-cuts to its citizens in exchange for public services―such as pulling weeds and cutting grass. Wow. What an amazing idea! The government issues a tax credit, and uses it to pay a citizen in exchange for the citizen’s services to the government. The government could even make this arrangement more formal by printing the tax credits on pieces of paper called “LIRIES” (or something like that) and paying for the weed-whacking services with this “cash.” That way the citizen who’s earned the “LIRIES” has the option of using them as payment to another citizen (who’d also like a tax-cut) for, say, a bag of potatoes. So, the first citizen pulls some weeds, gets paid in “cash” and then uses the “cash” to buy her dinner. If you thought about it, you could possibly run an entire economy in this fashion. The only thing you’d have to worry about, of course, is that the government might run out of the tax-credits it needs to pay the citizens to do the work! If that happened, where could the government possibly get more tax-credits? Could it collect tax-credits as “taxes”? Could it borrow them from all the street-sweepers and weed-whackers who’ve earned them? (In which case it would have to pay “tax-credit interest”―which just seems to exacerbate the problem!)  Hmmm. I’m going to have to think about that one. But in the meantime, doesn’t this mean that any Eurozone country has the option to stay IN the Eurozone while at the same time operating its own local economy using its own local “sovereign” currency?

 

11 Responses to Italy’s Great Experiment

  1. aldo Matteucci

    Citizens carry out public services voluntarily. As soon as the government puts a price on it, the voluntary performance ceases (tested experimentally in behavioural economics). Given that only a minority of the citizens will be enticed, the loss is greater than the gain.

  2. seems unlikely that unionized governmental workers will consider this as friendly to socialism, as in what happens to people earning an income as state grounds keepers. If this was applied to otherwise public spaces such as median strips it would foster friction as well as hazards for the uninsured. A link would be helpful.

  3. Like California, as the Civil sector increases it’s cost of living wages the private sector , pulling weeds, will quickly see the inequality and quit.

  4. David Harold Chester

    In effect the government is using the taxes to directly pay for community work. This is a shorter way for the money to flow, since less of it has to change hands. The rest of the taxes would find use in other kinds of government spending which does not include what the community can do for itself. I believe that the increases in the number of tax officials to make this work will exceed the numbers no longer needed to cover certain other kinds of taxation, but the effect is to make this scheme less efficient than before.

    • aldo Matteucci

      Italy has introduced “intermediaries” in about every context that brings citizen and the bureaucracy together. By withdrawing, the government avoids citizens’ complaints about its absurdities. It also pretends it does not increase staff.

      The amusing thing is that trade unions, now transformed into NGO for pensioners, are deeply involved. This bureaucracy washed the other’s hand.

  5. For what it’s worth, the plural of “lira” is “lire,” which non-Italian speakers can easily discover from a 5 sec google search.

  6. LOL
    Good on you for the effort. Maybe needed a sarc tag.
    For those who missed the point, he just described the current system of gov. jobs.

    • Thank you ilporcupine!
      Is a “sarc tag” something that is available off the shelf?

      • Actually, I wasn’t being sarcastic, but ironic. Researching the topic, I discovered my proposal is, in fact, illegal: Nations entering the EU, once they meet the stage two requirements, are required to go to stage three–which is the elimination of their own sovereign fiat currency. I still wonder, however, what would happen if a nation, such as Italy or Greece, claimed they were not technically (legally) creating a sovereign fiat currency but were merely, instead, issuing paper tax-credits? To find them in violation would be to implicitly agree that money is–and only is–sovereign tax credits. That logically be an uncomfortable position to take, would it not?

  7. But in the meantime, doesn’t this mean that any Eurozone country has the option to stay IN the Eurozone while at the same time operating its own local economy using its own local “sovereign” currency?

    Yes, it equates to the half-way house of a country with its own currency (Liries), that has foreign denominated debt (in Euro). The problem is of course that the latter can (but not necessarily will) go to infinity and beyond in terms of the former. It is better than the Euro alone, and the more Liries become the sole domestic currency, the less Euro debt outstanding there is, the better.

    The only thing you’d have to worry about, of course, is that the government might run out of the tax-credits it needs to pay the citizens to do the work!
    Those newer to MMT might not get the joking. For them, all the government needs to do to keep from running out of LIRIES tax credits is to make them the old-fashioned way – by issuing them. The earning is what those who want the tax credits do.