Cooking the Numbers

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The European Union has adopted fiscal rules that require those who are in the eurozone to limit deficit spending to no more than three percent of any member nation’s gross domestic product (GDP). Unfortunately, the present Italian budget does not comply with these goals. However, there is no problem that is too great for Italian bureaucrats. To increase deficit spending, the simple solution is to change the GDP numbers.

The National Institute for Statistics (Istat), Italy’s national statistics office, has announced that it will now include the estimated value of dealings from drugs, arms trafficking and prostitution in its GDP figures. The revised figures will also include revenues from contraband tobacco and alcohol. In addition, prior-year figures will be adjusted to reflect this change. The new statistics should add at least 1.3 percent to GDP and aid in Italy’s compliance to EU rules.

Not only do the present rules solve the present problem, but it seems there is plenty of room for expansion. The Bank of Italy estimated all criminal economy in the country to be valued at 10.9 percent of GDP in 2012.

The present GDP figures already reflect Italy’s “grey economy” of businesses that do not pay taxes and which are estimated to be worth between 16.3 percent and 17.5 percent of the economy in 2008, the last year for which figures are available.

Not to be outdone by the Italians, Eurostat, the statistical office for the European Union, is looking into the possibility of making all member nations’ illegal activities part of their GDP figures. If this is done, European economies would have an average growth rate closer to 2.4 percent. In some countries like Sweden and Finland, the rise could be as high as five percent.

While the number cooking seems like an almost comic solution to a real problem, the maneuver is actually quite tragic. Instead of looking for ways to resolve the problem, these cynical bureaucrats seek instead to trick the system by using dishonest means. In this case, society will always be the loser. Counting criminal and illegal activities as legitimate business practices destroys the moral foundation of society and the economy. Nothing less than a real return to a moral order is needed.

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