It is political impasse in Italy. In the fourth quarter the economy shrank by 2.8 per cent compared with a year earlier; it has been in recession for the best part of two years and shows no sign of improving.
Pier Luigi Bersani is trying to form a government, but no Italian can say with conviction that the left offers a way out of Italy’s morass. It is a pipedream to think the country can pursue a ‘left-wing’ economic strategy that requires a high level of social trust and professional conduct among the population.
Trust and professionalism barely exist in Italy. This is not Germany, or one of the Scandinavian countries. It is a nation where lawyers and accountants lead the way in cheating their taxes. There is no foundation on which to build a socially advanced economy.
To construct such a foundation, Italy has to turn right if it wants to arrive on the left. The labour market must be deregulated so that older people do not retain jobs at the expense of mass unemployment for the young. The structure of the judiciary must be turned upside down and the professional classes held to account so they begin to provide some basic moral leadership for the country. Stuff like not taking cash payments for legal work or reflexively advising clients how to dodge their taxes.
The era when Italy needed bureaucracy in order to guide its economic take-off is long gone. Now Italy needs meritocracy and responsbility — from its professional classes and from its organised labour. The country is simply too backward to progress by moving left. First it has to go right. Which is why Beppe Grillo was correct on Monday to threaten to leave politics if M5S forms a government with Bersani.
The real problem is that Italy does not have an economic ‘right’. Berlusconi did almost nothing to restructure the economy in four terms of power. He is mainly right-wing in the sense that he is crass, racist and contemptuous of ordinary people. Monti is also not of the economic right. He is patrician, a veteran of the old Italian developmental state and the new, more northern European politics of Brussels.
Fitch downgraded Italy again on Friday (FT sub needed).