Why Italy matters to you
The Italians vote their leader out and this affects all of us. Prime Minister Renzi in Italy recently resigned as promised after losing a plebiscite on whether or not to amend the Constitution so Italy could move forward. His proposal was designed to shore up faltering banks and to start economic growth. The people said no.
And why should we care about Italy? Because PM Renzi took a bold step, even though it failed. He actually laid out a specific reform plan to get Italy out of its economic doldrums while many national leaders simply scapegoat others for their misfortunes. PM Renzi proposed a forward-looking policy for Italy instead of blaming globalization, technology, Germany or the European Union for Italy’s problems.
The sentiment in Italy today is anger and despair: banks are wobbly, youth unemployment is over 40 percent, economic stagnation and unemployment have dragged on for eight long years, and the North and South are deeply divided. The vote on Dec. 3 went heavily against the reformist PM by 60 percent no to 40 percent yes. Regions where unemployment is high the people voted a resounding no to Renzi. They voted their anger. The people said we want our country back from the bureaucrats in Brussels where the European Union resides. “We want change and our failed politicians and government elites tossed out.”
The no vote came heavily from the newly formed populist party led by the comedian Peppe Gillo who declared that their party would fix Italy’s problems by pulling out of the European Union which was stifling their economy. He would give Italians control of their future once again.
Yet the causes of Italy’s misery do not all reside in Italy. The larger European picture also shapes the choices, opportunities and economic conditions in Italy. Similar to Greece, there is no doubt that the Italians have dawdled, playing political parlor games while their economy idled, helping to bring about their current political and economic malaise. Nevertheless major blame also rests on the colossus to the north, namely Germany, which is now the economic headmaster of Europe. Since the ’08 financial crisis, income in Germany is up 11 percent, while in Italy income has fallen 11 percent. Germany has very low unemployment while Italy has high unemployment, and youth unemployment as high as 40 percent. The German government says this difference is because the Italians are like the Greeks, incompetent. This is not the whole truth.
Europe has tried to simultaneously carry out economic integration of their countries and nationalism at the same time. It has not worked. Germany is the economic powerhouse of Europe and has gained immensely from the creation of the common currency, the Euro. They therefore have an obligation to conduct their economic policy so all European Union states are economically healthy.
But Germany has not done so. Rather, they have insisted on imposing economic austerity on faltering economies in the European south, thereby stifling their growth. Furthermore, Germany has been unwilling to expand their imports from Europe so other countries could export more to Germany. Germany has used its powerful position in the EU to further its own interests while blocking recovery of weaker states. That is nationalism in a world requiring cooperation.
The EU officials in Brussels are often seen as arrogant and unfeeling in meeting the needs and desires of the member countries. This is one reason Britain voted to leave the EU.
Why should we in Illinois care what happens in Italy or how the Germans behave? The answer is, as Benjamin Franklin once said, because we will either all hang together or else hang separately. The PM of Italy, Renzi, was passionate about keeping Italy in the EU and strongly for taking rational policy steps to shape up Italy’s economy. This is counter to the populist mood now moving through the Western world where there is an insipid politics of negativity: “They are to blame, I will fix it, don’t ask me how. Just trust me.”
Renzi stood against this, but the people said no. Given this negative vote, it will be difficult for Italy to attract major inflows of capital to fortify their tottering big banks. New elections will probably take place early next year, perhaps creating political uncertainty and economic torpor. If Italian banks must be bailed out, Germany and other countries will probably say no as this would take hefty financing. This could plunge Europe back into a Greek-like malaise just when the EU countries are starting to do better economically. This in turn will hurt our U.S. economy.
Why should we care? Countries around the world are now moving away from cooperation and toward nationalism, looking out for themselves, just when the world needs cooperation among countries to solve international economic, climate, environmental and terrorist problems. Renzi tried to take a positive step forward for Italy. And the people said no.
Roy Wehrle of Springfield is an emeritus professor teaching in the international area of studies.