The Real Story Of The Italian Elections Is That Monti Is Now Irrelevant – There Is No Real Pro-Growth Political Force – Populists in Charge

By Paolo von Schirach

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February 26, 2013

LUSAKA, Zambia – Regarding the incredibly disappointing outcome of the Italian political elections, allow me to say “I told you so”. (See links above to related stories). I predicted that the elections would decide nothing; and I also predicted that Monti’s improvised coalition of serious reformers would do very badly at the polls. A Monti victory, or at least a strong showing, would have signalled that the Italians are finally getting serious about fixing their country. Hid defeat means that there is little chance of any serious improvement.

Monti is the big loser

Professor Mario Monti, technocratic Prime Minister in a moment of crisis, is the voice of reason, of western-style good governance, of sensible pro-growth policies. His government imposed new taxes and spending cuts as a way to shore Italy’s finances and regain credibility in international bond markets. The hard part of course is still to come and this is about relaunching the economy. Continuing with Monti, this time endorsed by a popular vote, would have represented progress, moving forward. 

But no, forget about reason. The Italians do not like austerity, and so they voted for “anything but austerity”. As for new badly needed economic growth, who knows, they may believe “it will just happen”, by some Divine intervention. The victory (although not decisive) of Beppe Grillo and his “let’s throw all the rascals out” 5 Stelle Party is the expression of deep frustration. Frustration with taxes, with the EU, with Angela Merkel, with the entrenched professional politicians, their privileges and their corruption. But just venting frustration will get Italy nowhere. Grillo is essentially a populist. Do not expect him to lead on anything. Governing is hard. Putting together the right actors who will plan and implement sensible pro-growth policies –a must have for a country in economic decline– is even harder.

Who will lead?

After this vote, stalemate in Parliament. The hardly promising center-left coalition, (the grandchildren of the old Communist Party), with all its stale pro-welfare, pro-unions baggage, has a majority in the House. No majority in the Senate. Former Prime Minister Silvio Berlusconi has re-emerged from yet another near death experience and now leads a diminished but hardly irrelevant number of MPs. Grillo is triumphant, even though not able to govern by himself; andMario Monti –the only credible reformer– is marginalized.

And you expect this national leadership to coalesce around modern, pro-growth, pro-education, pro-employment policies?

Dream on.

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