When simplification does everything except simplify

The annual report on “Economic Freedom of the World”, compiled by the Fraser Institute, is now online. In 2024 – the latest data available – Italy ranked 47th out of 165. Not a great result, but still better than in 2022 or even immediately before the pandemic (the country was roughly 50th in both cases). However sceptical one may be about these rankings, it is hard to ignore the fact that being among the most economically free countries goes hand in hand with enjoying significantly higher levels of well-being (both economic and non-economic). It is therefore hard not to wonder what might help us climb further up the rankings.

To do this, the first step is to understand whether the substantial stability of Italy’s ranking over time stems from an equally substantial lack of progress in the country across all the dimensions in which – according to the Fraser Institute – economic freedom is measured: (i) the role of the public sector in the economy, as reflected in the volume of public spending and in the levels and methods of taxation, (ii) the rule of law and the protection of property rights, (iii) openness to international trade, (iv) the stability of the macroeconomic framework, and (v) the extent and pervasiveness of regulation across various markets.

Over time, there have been no particularly significant changes in Italy’s ranking with regard to the first three criteria considered, whilst also taking into account the changes that have taken place at international level which have, for example, led to a partly different structure of international trade that Italy has had no choice but to acknowledge. The significant changes relate to the fourth and fifth criteria. As regards the stability of the macroeconomic framework, we were 42nd in 2019 and 32nd in 2022. We are now sixth, ahead of France (17th), Germany (21st) and Spain (23rd). This is a leap forward that is impressive in many respects but which, over time, has unfortunately been accompanied only to a small extent by results on the regulatory front. Here, we were 79th in 2019, 99th in 2022 and are now 81st. An improvement, one might say. But it is, unfortunately, only partial – if not merely superficial – as it is entirely due to developments in the credit market. In fact, the burden of regulatory and bureaucratic obligations and the cost of tax compliance have worsened (even compared with 2019).

Now, we are well aware that the NRRP has only recently come to an end and, consequently, it is possible that the many (over 500) simplification measures envisaged in that framework have not yet produced the desired effects. That does not detract from the fact that one would have expected better results even just in the first two years of this parliamentary term, which is now drawing to a close. It cannot be ruled out that this has happened because of a word that has been haunting us for some thirty years now and which – repeated ad infinitum – has by now lost all concrete meaning: simplification. With the sole exception of the four-year period 2018–2021, for almost twenty years we have had a minister explicitly responsible for simplification. Rather than an objective, simplification has now become a function. In the Italian context, ‘simplification’ amounts to asking the very same body responsible for the complicated regulations that are meant to be replaced to draft simpler ones.

There are two consequences.

Firstly, households and businesses must constantly adapt to the new regulatory environments imposed upon them, bearing the associated costs. Secondly, simplification often amounts to replacing certain procedures with others that are different but not necessarily simpler. Quite a few of the simplification measures adopted during the current parliamentary term follow the pattern just described. Given this state of affairs, it is unlikely that any significant results will be seen. The reality is that simplification is based on a pipe dream (or, rather, a deliberate plan): that of seeing the public administration do better at the many things it currently does, often poorly. After thirty years of attempts that have been not only futile but often pathetic, perhaps we should try a different approach: doing less – much less – in order to do things better.