A point I touch on from time to time is that gaming the system isn’t just a fun way to get free travel and money; it’s practically a requirement just to maintain yourself on an even footing with The Powers That Be.
Case in point: Italy. Check out what that nation’s government is up to in an attempt to circumvent EU fiscal requirements:
Drugs, prostitution and smuggling (ie Hookers & Blow) will be part of Italy’s GDP as of 2014, and prior-year figures will be adjusted to reflect the change in methodology, the Istat national statistics office said today. The revision was made to comply with European Union rules, it said.
Prime Minister Matteo Renzi, 39, is committed to narrowing Italy’s deficit to 2.6 percent of GDP this year, a task that’s easier if output is boosted by portions of the underground economy that previously went uncounted. Four recessions in the last 13 years left Italy’s GDP at 1.56 trillion euros ($2.13 trillion) last year, 2 percent lower than in 2001 after adjusting for inflation.
The punch line: “Even if the impact is hard to quantify, it’s obvious it will have a positive impact on GDP,” said Giuseppe Di Taranto, economist and professor of financial history at Rome’s Luiss University. “Therefore Renzi will have a greater margin this year to spend” without breaching the deficit limit, he said.
Numerator too big? No worries, just boost the denominator a bit! Problem solved, right?