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Corriere della Sera - Italy | Monday, October 15, 2012

Italy must revolutionise welfare state

The Italian government led by Mario Monti last week presented its proposed budget for 2013. Unfortunately it plans to fix the budget by increasing taxes rather than making sensible cuts in government spending, the two economists Alberto Alesina and Francesco Giavazzi complain in the liberal-conservative daily Corriere della Sera: "We are aware that under pressure from the financial markets the Monti government must balance the budget and tax increases are (unfortunately) the quickest and easiest way to do this. … But this first phase should have been followed by a second: a massive decrease in spending. … The Monti government can go down in history in two ways. Either - significantly and modestly - as a government that saved the country from financial disaster through traditional budget discipline. Or as the government that introduced the revolution of liberalisation: through a reform of the welfare state, which must be made less expensive and more efficient."

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