Out with the Old

Italy has long been Europe’s political laboratory, having invented fascism, incubated eurocommunism, launched the postwar economic miracle, and brought the social democratic nanny state to ruin. Most Italians are very unhappy, as well they might be. Unemployment is at record highs (13 percent overall, the highest in the history of the measurement, while for 15-24-year-olds, it’s 42 percent). The cost of living, as anyone who has visited recently will know, is outrageously high, and more and more parents are telling their children to learn German or English and emigrate. Few believe in a new miracle. They think their country is rotten to the core, profoundly corrupt in all key institutions, from politics to business, and banking to soccer. Even the old bit of folk wisdom “things were better when they were worse” (because people were more honest and worked harder) has proven wrong. Things are worse, and they haven’t gotten at all better.

This explains the country’s latest political experiment: Throw the old bums out, let a new generation give it a try. The broom is wielded by a 39-year-old Tuscan named Matteo Renzi who has been prime minister for a month and a half. I’m obliged to tell you that I’ve known him for about 10 years, and he has always seemed to me the creation of central casting: handsome, well spoken, a lovely and talented wife who teaches school, three terrific kids. He’s a lot more fun than the usual geriatric crowd that Italians are accustomed to, including 88-year-old president Giorgio Napolitano and the man who governed the country for most of the past 20 years, Silvio Berlusconi, now pushing 78. Renzi’s presence in the official residence (Rome’s Palazzo Chigi) has produced at least some hope of positive change. He’s energetic, an avid tweeter, gives lively press conferences, and is calling for real reform of the country’s sclerotic institutions and practices. 

Renzi’s spectacular career is an extended revolt against various political establishments and flies in the face of conventional political wisdom. In a very few years he’s gone from political unknown (mayor of the Florence Province) to mayor of the city of Florence, to head of the center-left Democratic party (PD), to prime minister. The last three advances were widely written off in advance by the pundits as quixotic adventures. But there he is, having swept aside the Florentine leftist establishment, the elders of the PD in a national primary he won by a landslide, and then a sitting government. Many now ask whether he has the skills and the stomach to govern a major country in crisis.

As in the past, his current agenda is very ambitious. He sums it up as “cut up Italy.” Cut taxes, cut the bureaucracy, cut government programs and agencies, and effectively reduce parliament to a single house (he wants an unelected senate with no budget, no role in selecting the prime minister, no vote on budgetary matters). He’s created a panel to choose the first batch of “useless organisms” to eliminate, and he says that’s only “the antipasto,” with many more to come. He’s starting well. Last week parliament approved his budget, including tax cuts.

Among the likely projects: eliminate the requirement that all companies sign up with their local Chamber of Commerce, and find a way to encourage banks to lend more money to families and businesses. The IMF says that credit restrictions over the last 18 months have cost the country roughly 2.5 percent of GDP. But the biggest challenge will be the reform of labor laws, which means resolving the longstanding impasse between the trade unions, who want job security for their members, and the business community, which insists on greater flexibility in hiring and firing. Right now, there are long-term (think lifetime) contracts, and short-term agreements for brief periods, after which the former employees get thrown back on the unemployment rolls. Some of those who counsel Renzi think it would be best to have a much freer labor market, providing greater hope to those now working beneath a ticking clock as their short contract expires, and greater freedom to employers to expand and contract their employment numbers in response to market conditions.

While Renzi is the head of a center-left party that is the most recent version of what used to be the Communist party, he is certainly no doctrinaire leftist, and in many ways is no leftist at all, as demonstrated by his unlikely political alliance with Berlusconi’s center-right Forza Italia. Berlusconi himself remains a major force, and has just dodged imprisonment for fraud, which is a lucky break for Renzi since Berlusconi provides the prime minister with a majority.

Those trying to evaluate Renzi’s chances for success invariably stress his youth, but in so doing they often underplay his interest in the world outside Italy. He has spent considerable time visiting America, including universities from MIT to Stanford, Berkeley, and Texas, and is said to consult with American and British economists about his future strategies. 

Obama recently visited Rome, and pronounced himself well pleased with the new prime minister. Odd to say, Renzi is probably more of an Atlanticist than Obama. Still, he’s got plenty of things to do before tackling the daunting labor issues in the fall. If he succeeds in streamlining Italy in the next two to three months, his chances for success in the fall will improve, and his prospects will be further strengthened by his role as six-month head of the European Commission.

Michael Ledeen is Freedom Scholar at the Foundation for Defense of Democracies.