CHICAGO — When Luigi Zingales first came to the United States in 1988, he felt fear.
Back in Italy, Zingales lived under a system that didn't reward merit and considered competition a sin. "I like to say I come from a country that invented nepotism and lives by it," Zingales says, "where even emergency room doctors are chosen by political affiliation, and where what is really important is who you know, not what you know. I think that distorts society at large because people invest in relationships rather than invest in knowledge."
And so, Zingales came to the United States to study economics at MIT.
And he was afraid. "There is a sense of protection in the system of relationships because if you fail, you can blame your failure on something else," he says. "Sometimes that is not true, but it makes you feel better to say, 'I didn't succeed because I didn't work hard enough, I failed because the system is corrupt.' I realized that this was not the case here. If you fail, it is mostly your own fault."
Years later, Zingales is a respected professor at the University of Chicago and an economics star. U.S. Congressman Paul Ryan, R-Wis. — the leading Republican voice on the U.S. Budget and a possible Mitt Romney running-mate — quotes Zingales often on fiscal policy and budget decisions (Ryan once answered a financial regulations question from the Washington Post by saying, "I’d do the Luigi Zingales stuff.")
But despite his success in his chosen field and his chosen country, Zingales is again fearful.
To him, the Tea Party movement and the Occupy Wall Street movement are reactions to the rise of the same thing he saw in Italy. And as the economy becomes the central debate in the presidential campaign, how America chooses to respond to its challenges will determine if it becomes more like the system he left behind.
Missing the point
Zingales thinks most people, however, are missing the central point behind dissatisfaction in the United States. People sensed an increasing income inequality, with a large portion of the population losing, both in relative and even absolute terms, their status. There was a growing feeling that the elites played by different rules.
To Zingales, it seemed normal that people would become disaffected. And different segments of society expressed their revolt in different ways. "The Tea Party movement focuses more on what is wrong with the government," he says. "And the Occupy movement focuses more on what is wrong with large corporations. And what I am saying is those are two sides of the same coin, to some extent, because part of the problem of government is it is too much in the pockets of large corporations, and part of the problem of large corporations is they are subsidized by the government. So, unless you see this common element you are only bound to not get the full picture."
And what frightened Zingales is the connection between government and business — the rise of crony capitalism, didn't seem to be a part of the conversation. It was like watching the creation of the Italian systems that he had left behind.
"Part of the reason I wrote 'A Capitalism for the People' was I felt this populism was getting more and more widespread," Zingales says. "And I want to make sure it is channeled in a direction that does not destroy the goose that lays the golden eggs — the system that has created so much wealth for America and the rest of the world. On the other hand, this spirit of disaffection or revolt, if properly channeled, can be very good in cleaning up the system."
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