The battle lines in the war between Europe’s populists and its establishment couldn’t have been more sharply drawn than they were in Italy this week.
Two populist parties, Five Star Movement and League, captured close to half the country’s votes, created a coalition and proposed Giuseppe Conte as prime minister. But an establishment figure, the country’s president Sergio Mattarella, rejected Conte's choice for finance minister on the grounds that the minister favors Italy’s leaving the eurozone. The parties refused to back down, so did Mattarella, Conte stepped down and so the president appointed as caretaker prime minister a figure from establishment central casting whose resume includes a stint at the International Monetary Fund.
For now, the establishment has won. But it has done so at the cost of democracy and providing ammunition to the populists, who say with some justification that Europe’s political masters listen to the voice of the people only when they are saying things they like.
In rejecting Poala Savona, the author of a plan for Italy to exit the euro and the coalition’s pick for finance minister, the Italian president explained that Savona’s appointment would alarm financial markets and insisted he was only concerned about the future of ordinar Italians’ finances.. “It is my duty, in fulfilling the duty of nominating ministers, which the Constitution entrusts to me, to be careful to safeguard the savings of Italians,” he said.
What Mattarella was really saying was that whatever the voters want, the euro can never be touched. It’s not subject to the democratic process. More important is what another wing of the establishment says, namely the bond market, and it supports the euro.
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Saying sweet nothings
It would be pleasing to frame the struggle in Italy as one between plucky representatives of the people and a smug elite of the self-interested and democracy-challenged. But that would be only half true.
It’s clear from Brexit and the rise of populist parties in Europe that the EU and its institutions have failed to serve a substantial number of Europeans (though the election results also show that it still retains the loyalty of most Europeans).
But rather than grapple with the real grievances of many ordinary Europeans, the establishment class of politicians, academics, the mainstream media, and the bureaucracies in national capitals and Brussels have chosen to disparage them as a bunch of racist, economically illiterate Neanderthals bent on reversing progress.
It’s this kind of attitude that no doubt left Mattarella feeling he could in effect veto the results of a free and democratic vote.
The establishment does have one thing in its favor, which is that the populist movements haven’t offered any serious alternative to the EU project or to the international economic order that grew up after World War II. Take the joint platform of the Italian coalition partners, the Five Star Movement and The League. The League is a typical specimen of the European right: anti-EU, anti-immigrant and nationalist. Five Star is a strange hybrid of left and right, whose major innovation is its use of the internet as a tool for engaging in direct democracy. But it leaders have also been involved in bizarro causes like opposing vaccinations because they cause autism, which has been proven to be untrue.
Italy’s economy is in deep trouble. GDP per capita is lower than it was 20 years ago, its public debt is an unsustainable 130% of GDP and its banks are weighed down by bad loans.
But the two parties offered a program that could only have brought joy to an economic dunce.
It called for guaranteed income for every Italian, proposed new ways for the government to circumvent EU fiscal ceilings by issuing a new kind of quasi-money, and wanted to cancel scheduled tax hikes and roll back pension reforms. Rather than cut spending or taxes, its solution to debt is to spur economic growth, although there isn’t much in the plan that would accomplish that.
The coalition’s “contract,” as they called it, didn't call for leaving the EU. But there is enough anti-EU sentiment in both parties for any reasonable person to fear that’s what they would try to do.
Italy’s populists aren’t substantially different from their counterparts elsewhere in Europe.
In France, the National Front’s economic plan unveiled before the 2017 election also called on rolling back the EU and its rules, or France would conduct a Brexit-like referendum. It wanted to lower the retirement age, favor French companies for government contracts and, of course, crack down on immigration. It assumed high economic growth rates without suggesting any way of achieving them.
Likewise, Germany’s AfD, whose economic plan in last year’s election proposed higher defense spending, pulling out of the euro and a ban on EU bailouts. It wanted tax relief for the lower and middle classes but also a balanced budget.
European populists want to restrict immigration and in many cases send away people already in their countries. But Europe must either welcome immigrants or face shrinking labor markets and higher tax burdens as its population ages.
No one in Europe’s populist constellation has an answer for this fundamental demographic problem, or, for that matter, any of the other economic ills the continent faces.
Populism’s electoral successes are an expression on inchoate anger on the part of ordinary Europeans. The establishment would do well to take it seriously rather than try to disparage and silence it.