Italy’s “populists” appear finally ready to give the Country a new government 

If only to underline the novelty of it all and the fact that none of the old, cold war establishment and leaders are involved, I will allow use of the term “populists”, which in my book is not per sé derogatory, when referring to Italy’s two maverick, political parties. Indeed, those who voted for the two political upstarts, probably did so because they were fed up with the political ineptness and corruption that has brought Italians to their knees in less than thirty years.

The truth is past leaderships have worked hard to put Italians on their knees:   a  labor biased, poorly drafted Constitution full of checks with little or no balances, the results of which often spell, “deadlock”. An independent Judiciary recruited from law school graduates on the basis of national entrance exams with subsequent advancement based almost exclusively on seniority. The conflict of interest inherent in selecting State Prosecutors from among the same Corps of Judges rather than from outside of the Judiciary, say from Members of the Bar of Practicing Attorneys. The rigidity of the Italian labor market in general, including that of the professions, does not facilitate the making career change to and from civilian and public sector services.

Once a politician, always a politician; once a judge, always a judge or public prosecutor. State employees of all ranks are privileged compared to private sector employees. The first are under public law government contracts, whereas private sector employees are subject to contracts governed by the civil law. The system is heavily biased in favor of the working class except that state workers get most of the perks.

Private property and private enterprise while recognized, are nonetheless subject to expropriation for the public or collective good, naturally in accordance with the law and Constitution, as interpreted by Italy’s left-leaning Judiciary. Needless to say, for this and many other reasons, Italy is not a business friendly venue. The Country is first in a long list of negative achievements among EU Member States: lowest in growth, first in unemployment, last for inbound foreign investments, a dangerously high ratio of national debt to GDP makes Italy a veritable time bomb for the EU’s financial system because of its sheer size. The precariousness of the State’s finances are due to worsen in the face of rising US interest rates and the tapering off of QE by the ECB between now and 2019. For more than twenty-five years everyone from the IMF to the EU’s CB has insisted that Italy act now to structurally reduce its gigantic 2.3 Trillion Euro National Debt.

To date little has been done to reduce the National Debt because politicians have played deaf and dumb to any cuts in public spending for fear of loosing votes. However, now that the old establishment has been abandoned by Italian voters, despite the generosity in spending their tax euros, the question is how will the “populists” address the problem of national debt? Italian professionals from bookkeepers to accountants and economists will tell you that what matters most is not the national debt itself but the so-called, “avanzo primario” (or primary surplus), which is when tax revenues exceed programmed spending. But can “populists” be expected to go where none of their predecessors dared go before them? Do they even see indebtedness as a problem? Well, judging by the “Program” agreed to by and between the M5S and League, hardly. The major 10 points of the Program call for an increase in public spending (a form of unemployment benefits called, “reddito di cittadinanza” and the abolition or reform of the Fornero labor Law of 2012) against the hope of increased tax revenues thanks to the introduction of a “flat tax” comprised of two tax rates, not one, the application of which is still a tightly-guarded secret.

The problem is Italians have been weaned on big government and welfare and taught to be wary of private enterprise. They have been taught to mistrust il padrone (the, “boss”), unless of course, the boss is the Italian Government (or State). The Italian Dream lies in Government, not private enterprise. For many of the newly elected MPs, getting elected to Parliament amounts to their very first job experience, in this wannabe workers’ paradise.

Not surprisingly, the new “populist” government-elect, should it survive the gauntlet of anti-populist, politicians determined to do them in with the help of Mattarella, the 76-year old President of Italy, have not taken pains to put anything in their Program to reassure world financial markets and their many enemies within the EU. Worse of all, however, is the lack of plain and simple measures directed to attract inbound foreign investment. No strong message to international investors about the new government’s intentions to privatize and / or unload the many State-run Multinationals to foreign businesses and shift Italy’s accent from public to private. Why should they? These young men and women are not looking for work. Hell, they already have the best and highest paying jobs in all of Italy!

Still, in a Country that has been talking about revolution since WWI, anything is better than nothing, right? And, what about the satisfaction of seeing someone else get the chance to live high-on-the-hog at the expense of the Italian taxpayer? So let’s give these guys a chance. I mean what harm can they do? There is practically nothing left for them to nationalize. Nothing but the banks, that is. Bellissimo!