Fun questions about stereotypical Italian corruption and how it affects the consumer

Factual Questions
1

Two questions:

  1. When I buy something from Italy, roughtly what percentage of the price is going to the Mafia (or a similar criminal organisation)?

  2. When I buy something from Italy, roughly what percentage of the price am I saving (or conceivably although I doubt it, paying extra) because of tax evasion?

Of course the answers will in practice be very different depending upon both whatever it is I am buying, who/where I am buying it from and (because this is probably not covered in official statistics) the assumptions made.

And of course feel free to cover other countries or regions to “Italy” (as I hinted at above it is not especially reasonable to cover even just Italy as one country) - I just pick it as an example because everyone knows about its ludicrous governance.

2

Why would tax evasion lead to lower prices for the consumer? Do you feel Italian businessmen have a policy of “we break the law and risk prison and pass the savings on to you”? If they’re evading taxes, I’m assuming they’re simply pocketing the extra money.

3

A good businessman will use whatever price advantages he has to gain competitive advantage. He’ll pocket some extra money, of course, but increasing market share or driving a competitor out of business comes first.

4

Is it really true that Italy has more criminal gangs stealing money from business deals that other countries? I would offhand guess that Russia has the most powerful criminal gangs. Here’s the results of one poll that is sort of what you’re asking about. It’s a listing of the countries of the world by the perceived amount of corruption in them. Note that Italy is not at the bottom but in the middle:

http://cpi.transparency.org/cpi2012/results/

Here’s a list of criminal gangs all over the world, where you can see how widespread such things are:

I can’t offhand find a ranking of the size of organized criminal gangs in various countries, and perhaps it’s just too difficult to make such a ranking.

5

What nametag says basically. Lower costs of doing business. Certainly from a microeconomics perspective there’s basically no doubt that lower taxes will make whatever I am buying cheaper. Tax is horrendous for driving up prices.

But of course if the lack of tax being paid leads to say… mafia extortion at twice the rate of tax… or perhaps more plausible having to pay staff much higher wages, then it could certainly conceivably make things more expensive. I do doubt it but I haven’t the knowledge to quantify the effect, hence this thread.

P.S. Have you never paid a handyman cash in hand?

6

I’m glad you think it’s a “fun question” to slander an entire country.

7

OP was not slandering a country, but thought he might be, so added the word “stereotypical”–thus implying that the grounds for his question were, well, questionable, and not in a good GQ way but implying social animus, which is a no-no here.

zoid accepts the self-deprecatory gambit and invalidates it, further validating it in a way.

Neither is necessary.

The question is valid and in itself has as much merit as any, in that it answerable, has been answered, and worth repeatedly asking.

A similar “thread” question, without hemming or hawing by poster and accusations of animus–and with weightier attention given to it by weightier people than most net readers and even GQ posters–is asked and monitored regularly in Sicily. The Italian national government no doubt is interested, and presumably is not interested in slandering itself. Even paragons on international virtue among US national agencies promoting public interaction assume someone is “posting threads” on that.

The situation differs were an ostensibly similar, “rational” question were to be posed in a post entitled:

“Fun questions about stereotypical Jewish/Zionist control of the Federal Reserve and how it affects the consumer”

Of course the hedge (and actually the second hedge of “fun”) implies that the following noun-group may be not true.

But the number of people who would post that question with such wording and intent as OP, is, as we and I assume GQ moderators are aware, minuscule. In fact, the opposite is true, and, for unique reasons, will continue to be true. A zoid-like response here would then be in order, to say the least.

8

Anecdotally yes (at least in some parts of the country), I was in southern Sicily earlier this year with friends who lived there. Most businesses pay a Mafia tax. This arrangement is in many ways pretty formal and just like paying a regular tax. There is, I was told, a small, but growing, number of anti-Mafia businesses that refuse to pay this levy. These businesses are not necessary big businesses either.

9

If some of the taxpayers in a country evade taxes, don’t the rest of the taxpayers make up the difference? The government sets rates to get a certain amount of revenue that (over sufficient time) matches its spending, so if some evade, it increases the tax rate to make up the loss.

If you buy products from that country, you might be dealing with a company evading taxes, or one with a tax bill higher than it would be if not for the tax evaders. But on average, there should be little benefit to outsiders.

Suppose every taxpayer in the country pays only half of what an honest accounting would say they owed. Then the government just sets the rate to 40% instead of 20%. Zero effect on product prices.

(Yes, “matches its spending” ignores deficit spending and defaulting on loans. There may well be an advantage to buying from a company, or a government, with an unsustainable budget, heading for a default.)

10

The OP’s question arguably limits consideration to countries from which a western consumer is likely to buy retail exports. Russia and a lot of the other high-corruption states are less likely to fit that criterion.

11

Asympotically fat, you’ve done everything except answered my question. Your link only talks about crime in Italy and how it adds to the cost of business there. (Incidentally, $14 billion out of how much GNP?) I was asking for a comparison with other countries. The news stories I’ve read seem to indicate that the monetary damage caused by criminal gangs in Russia is greater than the amount done in Italy. Can anyone compare all the countries of the world on this issue in a chart or something?

12

The last time I was in Italia, the reality of business corruption came home to me. We finished our dinner at a small restaurant, and paid the bill. When we left, a man with a badge came forward (finance police) and asked to see our receipt- many times a merchant will charge the VAT, and pocket the money.Does corruption affect retail pricing? I would say there must be some effect , but overall? Probably small compared to the government’s take.