Italy Shouts Back

The anti-austerity backlash in Europe has claimed another victim:  Italy's leader of a technocratic government, Mario Monti.  Installed as a caretaker prime minister in November 2011, after the Italian government under Silvio Berlusconi failed to meet European Central Bank (ECB) demands, Monti embarked on a program of reforms to put Italy's fiscal house in order and restore Italy's fiscal credibility.  Such reforms included a much-hated tax on primary residences, a higher VAT rate, higher taxes on luxury goods, raising the retirement age, cuts in pension benefits for future retirees, very modest changes in labor laws regarding the ability of firms to downsize, and some cuts in public spending.

The markets seemed reasonably satisfied, with Italian borrowing rates on 10-year bonds having dropped from over seven percent, when Monti took office, to under five percent when the elections took place on 24-24 February this year.

If those elections were a referendum on "austerity," the Italians have delivered a clear verdict:  thumbs down.  Monti garnered just 10.6 percent of the vote in the lower house, and 9.1 percent in the Senate.

It was not supposed to be that way.  Nearly all analysts and pundits had been predicting that Social Democrat Pier Luigi Bersani would win the elections and lead a center-left coalition that would include Monti's centrist party, and continue the "reforms" that the Monti government had enacted during his thirteen months in office.

Those expectations were upended by two surprising developments.  Silvio Berlusconi, dismissed by nearly everyone as politically dead, made a near-miraculous comeback, coming within a whisker of winning the premiership for the fourth time.  His coalition polled 29.2 percent in the lower house, and 30.7 percent in the Senate.  Due to Italy's unusual voting rules, the center-right will control the Senate, which is decided on a regional basis, unlike the House of Deputies, which is elected on a proportional basis.

The other surprise was the astonishing phenomenon of a shouting, ranting, blogging comedian Beppe Grillo.  Grillo leads a party known as the Five-Star Movement.  Gillo's political routines are featured prominently on Italian media, which show him in front of huge crowds, whipping up their anger with vituperative speeches denouncing the corruption of the political class, and the evils of corporations, banks, Jews, Israel, and the euro itself.  He is similar to Michael Moore in high dudgeon, only even more irate.  With 25.6 percent of the vote in the lower house, and 23.8 percent in the Senate, Grillo's party appears to be the key to forming a coalition in what can now only be called a hung election, with no clear winner.

How can one account for the continuing popularity of Silvio Berlusconi, and the surprising strength of what was once considered merely a protest movement against corruption in government, the Five-Star Movement?

A colorful, scandal-plagued billionaire, Berlusconi (nicknamed "Il Caviliere") has made comebacks before.  He served as prime minister in 1994-95, 2001-2006, and 2008-2011, and his countless controversies made him one of Italy's highest-profile leaders.  Reviled in the press (except in those press outlets controlled by his media empire), in EU circles in Brussels, and in Germany, the mere mention of his name causes many Italians to become immediately unhinged.  The British magazine The Economist calls him "The Man Who Screwed an Entire Country."  The German weekly Der Spiegel's view of him is even more hostile.  His name is evoked with scorn and fury on virtually every Italian political talk show.

So how did a politician with such spectacularly bad press manage to come back yet again?

On 6 December 2012, Berlusconi's center-right party withdrew its support for Monti's government, and Berlusconi announced that he would seek the premiership on 8 December.  Monti announced his decision to resign the following day.  Over the course of the next two months, Berlusconi took to the airwaves and pounded home a clear message that resonated with many Italians:  he would abolish the hated new property tax (the "l'IMU"); Monti's austerity program has not worked; and Italians are tired of being dictated to by Germany's Angela Merkel. 

He appeared on countless talk shows, both friendly and hostile, and whenever he appeared, the shows reaped a ratings bonanza.  His wit and forceful arguments dominated the news the next day, and provided a remarkable contrast to the colorless Bersani and the sober Monti.  Many viewers came away impressed with his performance, and would do anything to get rid of the IMU tax, in any case.     

Grillo, on the other hand, addressed a deep-seated grievance that is almost universally held among Italians -- corruption among the political class.  His message was simple: send them home.  He has been cultivating this shtick ever since he took to the stage on September 8, 2007, which he christened "V Day."  The V stands for Vaffanculo, which, in Italian, is an expression that does not come close to being appropriate for a respected, family website, such as The American Thinker.  Grillo's extreme vulgarity, which would be highly off-putting to most Americans, is nevertheless accepted by a great number of Italians, and may even be a plus -- it express the intensity of Italian frustration and contempt for the political class, whom most feel is robbing them blind.

Grillo made a particular appeal to younger voters, who hear nothing else, day after day, that they are a lost generation, and that the financial ruin of Italy awaits them.  On top of that, hardly a day passes without news of some new scandal among banks, businesses, and politicians.  The scandals involving Monte dei Paschi bank, and then Finmeccanica, broke just before the elections, and reinforced the public perception of political and corporate knavery, adding to voter disgust.  Grillo seemed to be the only one telling young people:  "I hear you!  I will send them all packing!  And I will tell EU bureaucrats what they can do with their austerity!"

But what is the alternative to austerity?  Continue spending money that you do not have.  That is the choice that voters across Europe are making in country after country -- Greece, France, Portugal, the Netherlands, Lithuania, and, in just the past week, Bulgaria and now Italy.

But what is meant by "austerity"?  It is a strange, inaccurate word for balancing the budget and avoiding insolvency.  Who could be against that?  But there are two ways of reducing budget deficits:  raising taxes -- not popular; and cutting spending -- unthinkable.

In 1994 and in 2003, Berlusconi proposed raising the retirement age and reforming the pension system, where people on average retired at age 57.  Mass street protests and strikes ensued, and he was forced to back down.  In December 2011, Monti's government raised the retirement age for women from 60 to 62, and for men from 65 to 66.  The same measures for which Berlusconi was vilified were met with widespread praise in Brussels and among the pundit class. 

In April 2003, Berlusconi proposed amending Article 18 (famous, in Italy) of Italy's labor laws, which makes it almost impossible for firms of greater than fifteen employees to lay off workers.  This proposal was greeted with mass street protests and strikes, and once again, Berlusconi had to abandon this reform effort.  In March 2012, the Monti government proposed an almost identical reform to this labor law, and in June, a watered-down version (and now counter-productive) version was passed.  Once again, a reform proposed by Berlusconi is now vigorously defended by all those who are eager to protect the Monti "reforms."

All these reforms, and especially the tax increases, fall under the rubric of "austerity."  But the Italians who went to the polls last week have seen no evidence that this type of austerity has worked, and they overwhelmingly voiced their opposition by shouting "No!"

Michael Nyilis lives in Rome, Italy.

The anti-austerity backlash in Europe has claimed another victim:  Italy's leader of a technocratic government, Mario Monti.  Installed as a caretaker prime minister in November 2011, after the Italian government under Silvio Berlusconi failed to meet European Central Bank (ECB) demands, Monti embarked on a program of reforms to put Italy's fiscal house in order and restore Italy's fiscal credibility.  Such reforms included a much-hated tax on primary residences, a higher VAT rate, higher taxes on luxury goods, raising the retirement age, cuts in pension benefits for future retirees, very modest changes in labor laws regarding the ability of firms to downsize, and some cuts in public spending.

The markets seemed reasonably satisfied, with Italian borrowing rates on 10-year bonds having dropped from over seven percent, when Monti took office, to under five percent when the elections took place on 24-24 February this year.

If those elections were a referendum on "austerity," the Italians have delivered a clear verdict:  thumbs down.  Monti garnered just 10.6 percent of the vote in the lower house, and 9.1 percent in the Senate.

It was not supposed to be that way.  Nearly all analysts and pundits had been predicting that Social Democrat Pier Luigi Bersani would win the elections and lead a center-left coalition that would include Monti's centrist party, and continue the "reforms" that the Monti government had enacted during his thirteen months in office.

Those expectations were upended by two surprising developments.  Silvio Berlusconi, dismissed by nearly everyone as politically dead, made a near-miraculous comeback, coming within a whisker of winning the premiership for the fourth time.  His coalition polled 29.2 percent in the lower house, and 30.7 percent in the Senate.  Due to Italy's unusual voting rules, the center-right will control the Senate, which is decided on a regional basis, unlike the House of Deputies, which is elected on a proportional basis.

The other surprise was the astonishing phenomenon of a shouting, ranting, blogging comedian Beppe Grillo.  Grillo leads a party known as the Five-Star Movement.  Gillo's political routines are featured prominently on Italian media, which show him in front of huge crowds, whipping up their anger with vituperative speeches denouncing the corruption of the political class, and the evils of corporations, banks, Jews, Israel, and the euro itself.  He is similar to Michael Moore in high dudgeon, only even more irate.  With 25.6 percent of the vote in the lower house, and 23.8 percent in the Senate, Grillo's party appears to be the key to forming a coalition in what can now only be called a hung election, with no clear winner.

How can one account for the continuing popularity of Silvio Berlusconi, and the surprising strength of what was once considered merely a protest movement against corruption in government, the Five-Star Movement?

A colorful, scandal-plagued billionaire, Berlusconi (nicknamed "Il Caviliere") has made comebacks before.  He served as prime minister in 1994-95, 2001-2006, and 2008-2011, and his countless controversies made him one of Italy's highest-profile leaders.  Reviled in the press (except in those press outlets controlled by his media empire), in EU circles in Brussels, and in Germany, the mere mention of his name causes many Italians to become immediately unhinged.  The British magazine The Economist calls him "The Man Who Screwed an Entire Country."  The German weekly Der Spiegel's view of him is even more hostile.  His name is evoked with scorn and fury on virtually every Italian political talk show.

So how did a politician with such spectacularly bad press manage to come back yet again?

On 6 December 2012, Berlusconi's center-right party withdrew its support for Monti's government, and Berlusconi announced that he would seek the premiership on 8 December.  Monti announced his decision to resign the following day.  Over the course of the next two months, Berlusconi took to the airwaves and pounded home a clear message that resonated with many Italians:  he would abolish the hated new property tax (the "l'IMU"); Monti's austerity program has not worked; and Italians are tired of being dictated to by Germany's Angela Merkel. 

He appeared on countless talk shows, both friendly and hostile, and whenever he appeared, the shows reaped a ratings bonanza.  His wit and forceful arguments dominated the news the next day, and provided a remarkable contrast to the colorless Bersani and the sober Monti.  Many viewers came away impressed with his performance, and would do anything to get rid of the IMU tax, in any case.     

Grillo, on the other hand, addressed a deep-seated grievance that is almost universally held among Italians -- corruption among the political class.  His message was simple: send them home.  He has been cultivating this shtick ever since he took to the stage on September 8, 2007, which he christened "V Day."  The V stands for Vaffanculo, which, in Italian, is an expression that does not come close to being appropriate for a respected, family website, such as The American Thinker.  Grillo's extreme vulgarity, which would be highly off-putting to most Americans, is nevertheless accepted by a great number of Italians, and may even be a plus -- it express the intensity of Italian frustration and contempt for the political class, whom most feel is robbing them blind.

Grillo made a particular appeal to younger voters, who hear nothing else, day after day, that they are a lost generation, and that the financial ruin of Italy awaits them.  On top of that, hardly a day passes without news of some new scandal among banks, businesses, and politicians.  The scandals involving Monte dei Paschi bank, and then Finmeccanica, broke just before the elections, and reinforced the public perception of political and corporate knavery, adding to voter disgust.  Grillo seemed to be the only one telling young people:  "I hear you!  I will send them all packing!  And I will tell EU bureaucrats what they can do with their austerity!"

But what is the alternative to austerity?  Continue spending money that you do not have.  That is the choice that voters across Europe are making in country after country -- Greece, France, Portugal, the Netherlands, Lithuania, and, in just the past week, Bulgaria and now Italy.

But what is meant by "austerity"?  It is a strange, inaccurate word for balancing the budget and avoiding insolvency.  Who could be against that?  But there are two ways of reducing budget deficits:  raising taxes -- not popular; and cutting spending -- unthinkable.

In 1994 and in 2003, Berlusconi proposed raising the retirement age and reforming the pension system, where people on average retired at age 57.  Mass street protests and strikes ensued, and he was forced to back down.  In December 2011, Monti's government raised the retirement age for women from 60 to 62, and for men from 65 to 66.  The same measures for which Berlusconi was vilified were met with widespread praise in Brussels and among the pundit class. 

In April 2003, Berlusconi proposed amending Article 18 (famous, in Italy) of Italy's labor laws, which makes it almost impossible for firms of greater than fifteen employees to lay off workers.  This proposal was greeted with mass street protests and strikes, and once again, Berlusconi had to abandon this reform effort.  In March 2012, the Monti government proposed an almost identical reform to this labor law, and in June, a watered-down version (and now counter-productive) version was passed.  Once again, a reform proposed by Berlusconi is now vigorously defended by all those who are eager to protect the Monti "reforms."

All these reforms, and especially the tax increases, fall under the rubric of "austerity."  But the Italians who went to the polls last week have seen no evidence that this type of austerity has worked, and they overwhelmingly voiced their opposition by shouting "No!"

Michael Nyilis lives in Rome, Italy.