By Paolo von Schirach
December 9, 2012
WASHINGTON – It was expected that Mario Monti would not have a long tenure as Italy’s care taker Prime Minister. The distinguished economist is an outsider, the non political technocrat called upon a year ago by President Giorgio Napolitano to fix Italy’s finances and restore a modicum of international credibility. And Monti delivered. He had the mandate to raise taxes and enact a few reforms aimed at containing public spending; and his government did so.
End of Monti
But now his time is up. Berlusconi’s party withdrew support from the government. And Monti indicated that he will leave office after the approval of his latest budget. That is to say that Italy’s scheduled national elections may take place as early as February 2013. And, looking at the politically fragmented scenario, with no solid center, this is probably bad news. At the moment, the left, headed by Pier Luigi Bersani, leader of the Democratic Party, (the reformed former Communist party), is favored to win a plurality of the votes. This means that, in order to govern, Bersani will need to form a coalition, most likely with a variety of groups to the left of the former Communists.
The center-right forces led by ultra-discredited former Prime Minister Silvio Berlusconi have no chance to win. Then there is a loud protest movement led by Beppe Grillo, a comedian turned politician, and finally the also discredited Northern League. Sadly enough, there is no real and vibrant political force that embodies the sound reformist approach of the Monti government.
Democrats still believe in welfare policies
Look, if Bersani and the Democratic Party win this is not going to be another Bolshevik Revolution. This party of former communists, leftists of various persuasions and other “progressives” is not plotting to nationalize all assets. However, they are still ideologically committed to a watered down socialist ideology. And this is bad enough.
Denying facts and historic experience, they still believe in the soundness of statist policies and in the desirability and affordability of clearly unsustainable social programs. They simply do not understand that a society with more and more seniors no longer supported by a large number of active workers cannot generate the revenue to sustain costly benefits for retirees.
Center-left will be unable to produce pro-growth policies
While Mr. Bersani himself seems a reasonable man, a future coalition government led by him that will have to include several ultra-leftists will have little chance to continue the austerity course set by the Monti government.
True enough, austerity alone will not help relaunch a weak economy. Italy needs growth. Still, I have serious doubts that a (most likely fractious) center-left coalition will be able to soften austerity, meet deficit targets, encourage new investments, raise more revenue and achieve sustainable growth. This is just too difficult.
Professor Monti for a moment gave the impression that Italy under his non ideological and sober stewardship had a real chance to become modern and credible. But now it is back to the pros and their outmoded ideas –ideas that prevent them from understanding that they are dealing with a country with too much spending, too much debt and no growth. In other words, a country in decline. Less austerity and a bigger tax burden for the rich eventually will translate into larger deficits and less growth. Exactly the opposite of what Italy needs.