Friday saw the long awaited and much leaked liberalisation decree. It is supposed to be the first step in the Crescitalia (“Grow Italy”) process that prime minister Mario Monti promised would follow his Salva Italia (“Save Italy”) austerity measures. He reckons that there are three obstacles to Italian economic growth: insufficient market competition, inadequate infrastructure and excessive bureaucracy. The decree was supposed to address the first two problems.
Probably the two most important elements, in my view, are the proposal to have a fast track court to deal with business disagreements and the possibility for under 35s to set up a business for €1. The glacial time scale for most Italian civil cases means that even if you win, there’s a good chance that your business will have closed in the meantime. The delay means that any damages will be paid heaven knows when which encourages bad practices. Anything that accelerates resolution can only encourage businesses to invest and act. This new measure means avoiding a wholescale reform of the justice system which would be neverending, hence the partial solution. Before having a disagreement to take to court, though, you have to actually have a business; if the €1 deal really works, it will revolutionise Italian practice; Italy will not become Hong Kong or Singapore overnight but it might at least get closer to some other Europeans.
Then there were the measures which have generated much heat both before and after they were passed. By their nature, taxi drivers are very visible and they work in cities which is where the media live so their protests get a lot of coverage. If the decree is confirmed, they will come under a new national transport authority which they are strongly against as it would cut their direct links with mayors and city councils. But even if the authority is set up, another toothless watchdog is unlikely to regulate Italy’s transport – the other authorities have a mostly ineffectual role. In any case, it is not by having another thousand cabs in Rome that Italy’s economy will magically become competitive.
Nor will having estimates from lawyers, notaries and accountants, more of them and no minimum fees, though of course the changes will help and establish the idea that the guilds and closed shops have lost their privileges. The message is more important than the substance. Ditto for chemists where there should be one for every 3,000 inhabitants.
More important for our collective pockets would be for petrol stations to buy their fuel from any distributor rather than be obliged to have one brand. As important will be breaking the monopoly of gas sale and distribution.
This week the minister of labour, Elsa Fornero, has started negotiations with employers and unions to produce a new agreement on the labour market. She has promised to conclude in a month.
The markets seem to approve of the measures and the difference between German and Italian 10 year bonds is down to around 400 points from a high of 550 (but a year ago it was 150). Even with yesterday’s report from the IMF warning that the world economy is in a “danger zone”, Milan closed a touch up and the spread did not increase.
The problem is in the future and whether Monti overcome the obstacles. These are the questions I have been asked over the last week and here are some tentative answers.
Challenges for Monti. Assuming that the measures proposed by Monti are the right ones to solve Italy’s problems and contribute to the solution of the European crisis, his main obstacles are:
• Parliamentary opposition. The decree has to be converted into law within 60 days. It is still not clear whether there will be a full debate and unlimited possibilities of amendment or if there will be a vote of confidence. Either way, despite much grumbling from the centre right and some from the centre-left, neither dare pull the house down because whoever does will be blamed for the catastrophe that follows. So it will pass, probably modified but not beyond recognition. Today there will be a motion approving the government’s overall action, a sort of supplementary vote of confidence which underlines the parties’ support.
• Social opposition and possible unrest. Role of unions and other pressure groups. Sicily was in revolt last week (the “pitchfork movement”), lorry drivers blocked motorways today and taxidrivers have been protesting for a week. They are minority movements even within the drivers associations and are very unpopular as there has been a run on both fuel and fresh produce. Paradoxically, the protests might actually increase the government’s popularity especially as the Minister of the Interior has ordered the dismantling of the roadblocks and the police are carrying it our effectively.
• Implementation. Ministries. There is perceptive and apposite remark of Bismarck’s à propos laws and implementation: “With bad laws and good civil servants, one can still govern, with bad civil servants the best laws cannot help” . This is the biggest obstacle because it is almost invisibile and will require all Monti’s skill and good will to overcome.
• Finally there are the international obstacles. None of these reforms can function without at least the cooperation and in practice the full scale support from European and international institutions: ECB, Commission, IMF, Germany. Monti needs this to implement the reforms but also to maintain the support of the majority of Italians and to keep anti-German and anti-European resentment under control. Once again, he is likely to make it, if only because it is in everyone’s interest despite chancellor Merkel hesitance. The problem might be that the pace is too slow both for the markets and Italian public opinion. But Monti has personal good credit in the European and international institutions so the prospects are good.
Does all this mean a major change in Italian society? Of course it does. The economic boom of the 1950s changed the whole of Italy radically – these changes will do the same and we’re still at the beginning. It will be a long and hard climb.
Wednesday, January 25, 2012
Wednesday, January 18, 2012
Haywire History or Criminal Streets
Italy has a problem digesting its history. At the Epiphany fair in piazza Navona there was a stall which happily sold Mussolini memorabilia alongside 1950s advertisements with leggy filmstars, with even a Hitler mug and another with a star of David – not so much historical schizophrenia as a complete lack of concern about the historical significance of the objects.
It is not just the fascist past which is difficult to come to terms with; the recent and far less brutal past is equally indigestible. Or rather, the way a society treats its past tells us more about the present than the past so it will be very interesting to see if there is any change in how the anniversary of Bettino Craxi’s death is remembered this week.
He died 12 years ago, on 19 January 2000, the most controversial politician in post-war Italy. He was by far the most important victim of the Clean Hands investigations in Milan in the early ‘90s; in 1996 he was given a definitive five and half year sentence for corruption and in 1999, four and half for illegal party financing and taking kickbacks. When he died, he had four other gaol sentences pending from the courts of first instance or appeal. Unlike many others involved in the Milan corruption scandals, Craxi did not serve even a day of his sentences as he left the country for Tunisia in 1994 just before his parliamentary immunity was revoked. He died at his home in Hammamet honoured by Tunisian and Italian authorities.
Craxi’s protegé, closest supporter and political successor is Silvio Berlusconi, no longer prime minister but still the leader of the biggest party in Parliament and even a possible prime ministerial candidate. As he begins his long and slow final act, it is a good moment to look at the man who allowed Berlusconi to get where he did and who together with Berlusconi changed Italian politics and society.
There is a Fondazione Bettino Craxi founded by his daughter, Stefania a few months after his death. This weekend they have organised a trip to Hammamet to commemorate Craxi; they also keeps his archives and organises conferences on his work where scholars and politicians praise his achievements. It also, by the way, seeks public funding through taxpayers’ contributions.
When he died, the ex-Communist prime minister, Massimo D’Alema offered the family a state funeral but they refused because the felt that he had been treated badly by the Italian state and establishment. Since then most of that establishment has come round to the family’s way of thinking. It is hardly surprising that the Berlusconi family Il Giornale remembered the tenth anniversary with gushing hagiography, The irony of a right wing paper praising a man who early in his career was actually a socialist (rather than just a Socialist Party leader) was lost on the editor.
Nor was it surprising that the then director of RAI 1’s evening news, Augusto Minzolini, declared that Craxi was a scapegoat and that there was no need to “rehabilitate” him. It is more striking, though, when a leader of the centre-left like Piero Fassino, now mayor Turin, declared “I continue to think that picturing Craxi as a criminal is a foolish and unacceptable caricature… there’s no doubt that there was a reticent and ambiguous silence towards his speech to the Chamber” . In the months leading up to Craxi’s flight, he had written articles for the Socialist party daily using the pseudonym “Ghino di Tacco”, a mediæval bandit. The speech that Fassino referred to was an admission that he had taken kickbacks at the same time as saying that all the other parties were part of the same game. True enough but is an illegal action any more acceptable because it is brazen?
There are some towns which have honoured him with a street and in Aulla, there is even a statue dedicated to the “exile and martyr”. In both Milan and Rome, there were proposals by both left and right to give him a street but there were stopped by storms to protests.
No one doubts that Craxi was an important figure in post-war Italy and that he changed his party and the country. He was an innovative thinker and an effective doer and as such is certainly worthy of respect and considerable interest on the part of historians and political analysts. His family and party colleagues may obviously pay their respects. But he was also a criminal, declared as much by a court system which is certainly flawed but which is still the accepted administrator of justice in Italy. So for senior members of the political establishment to honour him is to explicitly condemn Italian justice and condone Craxi’s actions sending the message that politicians may steal from the taxpayer and that’s fine.
Condemning Craxi and those that want to rehabilitate him is not “moralism”, it is morality, legality and also the difference between good and bad government. The issues that Craxi was an example of are still with us and the way in which he is remembered reflects heavily on the present, not just the past.
There were no Craxi mugs on sale in piazza Navona which is just as well, but the reasons were neither moral nor legal which is a pity.
It is not just the fascist past which is difficult to come to terms with; the recent and far less brutal past is equally indigestible. Or rather, the way a society treats its past tells us more about the present than the past so it will be very interesting to see if there is any change in how the anniversary of Bettino Craxi’s death is remembered this week.
He died 12 years ago, on 19 January 2000, the most controversial politician in post-war Italy. He was by far the most important victim of the Clean Hands investigations in Milan in the early ‘90s; in 1996 he was given a definitive five and half year sentence for corruption and in 1999, four and half for illegal party financing and taking kickbacks. When he died, he had four other gaol sentences pending from the courts of first instance or appeal. Unlike many others involved in the Milan corruption scandals, Craxi did not serve even a day of his sentences as he left the country for Tunisia in 1994 just before his parliamentary immunity was revoked. He died at his home in Hammamet honoured by Tunisian and Italian authorities.
Craxi’s protegé, closest supporter and political successor is Silvio Berlusconi, no longer prime minister but still the leader of the biggest party in Parliament and even a possible prime ministerial candidate. As he begins his long and slow final act, it is a good moment to look at the man who allowed Berlusconi to get where he did and who together with Berlusconi changed Italian politics and society.
There is a Fondazione Bettino Craxi founded by his daughter, Stefania a few months after his death. This weekend they have organised a trip to Hammamet to commemorate Craxi; they also keeps his archives and organises conferences on his work where scholars and politicians praise his achievements. It also, by the way, seeks public funding through taxpayers’ contributions.
When he died, the ex-Communist prime minister, Massimo D’Alema offered the family a state funeral but they refused because the felt that he had been treated badly by the Italian state and establishment. Since then most of that establishment has come round to the family’s way of thinking. It is hardly surprising that the Berlusconi family Il Giornale remembered the tenth anniversary with gushing hagiography, The irony of a right wing paper praising a man who early in his career was actually a socialist (rather than just a Socialist Party leader) was lost on the editor.
Nor was it surprising that the then director of RAI 1’s evening news, Augusto Minzolini, declared that Craxi was a scapegoat and that there was no need to “rehabilitate” him. It is more striking, though, when a leader of the centre-left like Piero Fassino, now mayor Turin, declared “I continue to think that picturing Craxi as a criminal is a foolish and unacceptable caricature… there’s no doubt that there was a reticent and ambiguous silence towards his speech to the Chamber” . In the months leading up to Craxi’s flight, he had written articles for the Socialist party daily using the pseudonym “Ghino di Tacco”, a mediæval bandit. The speech that Fassino referred to was an admission that he had taken kickbacks at the same time as saying that all the other parties were part of the same game. True enough but is an illegal action any more acceptable because it is brazen?
There are some towns which have honoured him with a street and in Aulla, there is even a statue dedicated to the “exile and martyr”. In both Milan and Rome, there were proposals by both left and right to give him a street but there were stopped by storms to protests.
No one doubts that Craxi was an important figure in post-war Italy and that he changed his party and the country. He was an innovative thinker and an effective doer and as such is certainly worthy of respect and considerable interest on the part of historians and political analysts. His family and party colleagues may obviously pay their respects. But he was also a criminal, declared as much by a court system which is certainly flawed but which is still the accepted administrator of justice in Italy. So for senior members of the political establishment to honour him is to explicitly condemn Italian justice and condone Craxi’s actions sending the message that politicians may steal from the taxpayer and that’s fine.
Condemning Craxi and those that want to rehabilitate him is not “moralism”, it is morality, legality and also the difference between good and bad government. The issues that Craxi was an example of are still with us and the way in which he is remembered reflects heavily on the present, not just the past.
There were no Craxi mugs on sale in piazza Navona which is just as well, but the reasons were neither moral nor legal which is a pity.
Monday, January 16, 2012
How to Find a Job or a House in Italy. Merit, Friends and the Free Market
“Liberalisation” is the buzzword today but it is not always clear exactly what it means.
One example: an American television journalist, Wolf Achtner, is doing something revolutionary – he is applying for the job of editor of the RAI’s flagship evening news programme, a post which is vacant at the moment. He is qualified and should be a plausible candidate so his application should not be news; what makes it extraordinary is that senior jobs in the public sector are rarely advertised on the open market and even more rarely given to qualified outsiders. Political loyalty is the first requisite for any of these jobs and if the chosen candidate happens to be good, then that is an unexpected bonus.
It’s not only high profile media jobs which are handed out for political loyalty rather than professional qualifications. A recent Eurostat survey found that more than three out of four young people (77%) look for work through friends and relations. Less than a third (31.9%) use the employment exchange, the lowest in the EU apart from Cyprus (in Germany the figure is 82.8%, EU27 56.1%). This means that it is certainly not just the public sector where loyalty often trumps merit and ability. There are more small and medium sized Italian companies than in most of the rest of Europe which is a partial explanation for the use of private connections but the downside is that merit is often irrelevant.
Of course Italy is not the only country where jobs come through connections and apparently open search procedures are a cover to legitimise an insider candidate but it is striking how even the form of a level playing field is not respected.
Public sector jobs, from ministries to universities to the magistrature, are normally awarded by competitive exams and procedures which often mask the stringpulling and clientelistic practices but either way, connections are essential.
Another ongoing story illustrates the importance of connections over more universal principles. The Minister for the Public Administration, the magistrate, Filippo Patroni Griffi is in the spotlight after having paid €177,000 in 2008 for a three bedroom flat close to the Coliseum, a property with a market value of around €800,000 today. He bought the flat from INPS, the national pension fund, when he was a sitting tenant and after having won a case against INPS to lower the price. No one suggests anything illegal, the resentment is in the knowledge that first of all one needs friends in order to become an INPS tenant (or in any other public institution) and friends in the magistrature are certainly a help in any legal action. When INPS and other public bodies sell property, the prices are far from the free market. The minister’s good fortune is paid for by the people who receive their pensions from INPS, as well as with a good measure of social resentment.
Then there are the measures which the government is preparing and and should be made public on Wednesday or Thursday and passed as a decree law on Friday. Whatever the law says in detail, it will affect a wide range of services and categories from taxi to lawyers to petrol stations and public services. Even if only half are implemented, it will mean a revolution in both the Italian economy and consumer habits, one which today’s opinion polls say that most Italians strongly favour. They think, not unreasonably, that they will save money. Who will pay is not very clear yet.
The number of taxi and pharmacy licences is likely to be increased; lawyers accountants and notaries are also likely to have to open their doors as well as giving clients estimates for the job to do. Fuel distribution is going to be eased allowing petrol stations to sell a wide variety of goods as in most other European countries and to buy their fuel from other distributors rather than be tied to a single brand. The railways too are likely to see other companies using the tracks, a reform which has already begun in a small way. Also on the public side there is a good chance that local transport service will be opened to competition along with some other services.
There are ongoing rumblings to make the labour market more flexible, possibly introducing the Danish model which makes hiring and firing relatively easy but also provides sufficient support for laid off workers.
It all sounds wonderful if you don’t belong to one of the “liberalised” fields, most of which have been threatening action. Taxi drivers are already on the warpath and have already had some dress rehearsals for what is more a lockout than a strike. Lawyers are very represented in parliament and have already said that they will boycott the ceremony of the opening of the new judicial year. There’s a transport strike planned for 27th and a seven day petrol station strike. The unions have repeatedly said they will not accept any reduction of job security.
There is a potential for serious social unrest; and yet the political parties all pay lip service to the need to liberalise, but they too are looking to their constituencies and saying “open up everything but don’t touch our supporters’ interests”.
This is the real test for Monti – his austerity budget was child’s play. Now he will have to navigate between very, very divergent interest groups with very different game plans to look after those interests, plus political parties which are increasingly disconnected from society.
His strongest weapon is the depth of the crisis which does allow procrastination. He could set the ball rolling by offering jobs in the public broadcaster to the most qualified and sell publically owned housing to the highest bidder on the open market.
One example: an American television journalist, Wolf Achtner, is doing something revolutionary – he is applying for the job of editor of the RAI’s flagship evening news programme, a post which is vacant at the moment. He is qualified and should be a plausible candidate so his application should not be news; what makes it extraordinary is that senior jobs in the public sector are rarely advertised on the open market and even more rarely given to qualified outsiders. Political loyalty is the first requisite for any of these jobs and if the chosen candidate happens to be good, then that is an unexpected bonus.
It’s not only high profile media jobs which are handed out for political loyalty rather than professional qualifications. A recent Eurostat survey found that more than three out of four young people (77%) look for work through friends and relations. Less than a third (31.9%) use the employment exchange, the lowest in the EU apart from Cyprus (in Germany the figure is 82.8%, EU27 56.1%). This means that it is certainly not just the public sector where loyalty often trumps merit and ability. There are more small and medium sized Italian companies than in most of the rest of Europe which is a partial explanation for the use of private connections but the downside is that merit is often irrelevant.
Of course Italy is not the only country where jobs come through connections and apparently open search procedures are a cover to legitimise an insider candidate but it is striking how even the form of a level playing field is not respected.
Public sector jobs, from ministries to universities to the magistrature, are normally awarded by competitive exams and procedures which often mask the stringpulling and clientelistic practices but either way, connections are essential.
Another ongoing story illustrates the importance of connections over more universal principles. The Minister for the Public Administration, the magistrate, Filippo Patroni Griffi is in the spotlight after having paid €177,000 in 2008 for a three bedroom flat close to the Coliseum, a property with a market value of around €800,000 today. He bought the flat from INPS, the national pension fund, when he was a sitting tenant and after having won a case against INPS to lower the price. No one suggests anything illegal, the resentment is in the knowledge that first of all one needs friends in order to become an INPS tenant (or in any other public institution) and friends in the magistrature are certainly a help in any legal action. When INPS and other public bodies sell property, the prices are far from the free market. The minister’s good fortune is paid for by the people who receive their pensions from INPS, as well as with a good measure of social resentment.
Then there are the measures which the government is preparing and and should be made public on Wednesday or Thursday and passed as a decree law on Friday. Whatever the law says in detail, it will affect a wide range of services and categories from taxi to lawyers to petrol stations and public services. Even if only half are implemented, it will mean a revolution in both the Italian economy and consumer habits, one which today’s opinion polls say that most Italians strongly favour. They think, not unreasonably, that they will save money. Who will pay is not very clear yet.
The number of taxi and pharmacy licences is likely to be increased; lawyers accountants and notaries are also likely to have to open their doors as well as giving clients estimates for the job to do. Fuel distribution is going to be eased allowing petrol stations to sell a wide variety of goods as in most other European countries and to buy their fuel from other distributors rather than be tied to a single brand. The railways too are likely to see other companies using the tracks, a reform which has already begun in a small way. Also on the public side there is a good chance that local transport service will be opened to competition along with some other services.
There are ongoing rumblings to make the labour market more flexible, possibly introducing the Danish model which makes hiring and firing relatively easy but also provides sufficient support for laid off workers.
It all sounds wonderful if you don’t belong to one of the “liberalised” fields, most of which have been threatening action. Taxi drivers are already on the warpath and have already had some dress rehearsals for what is more a lockout than a strike. Lawyers are very represented in parliament and have already said that they will boycott the ceremony of the opening of the new judicial year. There’s a transport strike planned for 27th and a seven day petrol station strike. The unions have repeatedly said they will not accept any reduction of job security.
There is a potential for serious social unrest; and yet the political parties all pay lip service to the need to liberalise, but they too are looking to their constituencies and saying “open up everything but don’t touch our supporters’ interests”.
This is the real test for Monti – his austerity budget was child’s play. Now he will have to navigate between very, very divergent interest groups with very different game plans to look after those interests, plus political parties which are increasingly disconnected from society.
His strongest weapon is the depth of the crisis which does allow procrastination. He could set the ball rolling by offering jobs in the public broadcaster to the most qualified and sell publically owned housing to the highest bidder on the open market.
Saturday, January 14, 2012
Ratings and the Lexicographer’s Quandary
Those who compose dictionaries tell us that they just reflect the reality of the language and do not impose it – they are descriptive not normative; they argue that they do not tell us how to use a word, we use it and they record our use. In practice, we know that is not true; when we disagree on the meaning of a word, we rush to the OED or Websters to resolve the question and Scrabble players must decide which is to be the judge before they start.
Ratings agencies have the same equivocal function only the stakes are a mite higher than in Scrabble.
Whenever a country is downgraded, like now, the markets and the country’s authorities go into overdrive to justify their own policies and downplay the move as if the agencies’ opinions were somehow the absolute truth. But it is worthwhile to go back to the source to see what the agencies’ ratings actually claim. This is Standard & Poor’s account of what ratings mean:
Ratings should not be viewed as assurances of credit quality or exact measures of the likelihood of default. Rather, ratings denote a relative level of credit risk that reflects a rating agency’s carefully considered and analytically informed opinion as to the creditworthiness of an issuer or the credit quality of a particular debt issue.
This is the sort of obfuscation worthy of Sir Humphrey Appleby or the much more direct Italian “qui lo dico e qui lo nego”. Like the lexicographers, they say that they do not impose a value; theirs is only a considered opinion. Except of course, the markets act and react on changes in ratings. Standard & Poor’s downgrading of most of the euro zone sovereign debt yesterday will certainly have effects on the cost of servicing those countries’ debts after the timid signs of recovery over the last few days. We will see on Monday when the markets reopen.
On Thursday and Friday, the difference between Italian and German bonds stayed below the psychologically sensitive figure of 500 points. Italian three-year bonds sold well and at lower interest rates than before. And Milan seemed to be regaining some of the ground it had lost. The Monti medicine, austerity now and promises of growth, seemed to be working.
Ratings agencies have another quality in common with dictionaries at least when they are being descriptive rather than prescriptive – they reflect changes that have already taken place; S & P gave a warning that they might downgrade Italy and the others early in December. And so they did, without taking into account latest developments. This might just mean that on Monday the markets will stay relatively calm.
S&P’s hammerblow arrived at almost exactly the same time yesterday evening as the huge Italian cruise liner “Costa Concordia” went aground and then keeled over. It would be tempting to use the ship as a metaphor for the Italian economy: grand, immobile, half-sunk, a wrecked fun palace with some casualties (thankfully relatively few) and thousands shivering in the winter night. Even the ship’s name has ironic resonance in a country known for discord.
The disaster is indeed a blow to Italian pride but it is not even a distorted reflection of the reality. S&P’s call for more growth is a valid one (but hardly original). The downgrade will certainly act as a prod to Monti and an instrument he can use to persuade unwilling sectors of the Italian economy to liberalise. It will also push the European authorities to move quickly to introduce real powers of monetary control if they want to save the euro. And it will no doubt accelerate moves to limit the ratings agencies possibilities of publishing sensitive opinions at difficult times. They are, after all, even more guilty of the newspapers proprietors’ aim of “power without responsibility, the prerogative of the harlot through the ages”.
The only meagre consolation for Italians (and particularly Berlusconi supporters) is to see that France and Sarkozy got their comeuppance. In real politics, though, it does mean that European leaders will have to work together with less of a heirarchy. As ever, Corriere’s Giannelli got it right again; Monti visited the pope today and Giannelli has the prime minister saying “Holiness, we need a miracle” and Ratzinger replies “I will pray in German”.
Ratings agencies have the same equivocal function only the stakes are a mite higher than in Scrabble.
Whenever a country is downgraded, like now, the markets and the country’s authorities go into overdrive to justify their own policies and downplay the move as if the agencies’ opinions were somehow the absolute truth. But it is worthwhile to go back to the source to see what the agencies’ ratings actually claim. This is Standard & Poor’s account of what ratings mean:
Ratings should not be viewed as assurances of credit quality or exact measures of the likelihood of default. Rather, ratings denote a relative level of credit risk that reflects a rating agency’s carefully considered and analytically informed opinion as to the creditworthiness of an issuer or the credit quality of a particular debt issue.
This is the sort of obfuscation worthy of Sir Humphrey Appleby or the much more direct Italian “qui lo dico e qui lo nego”. Like the lexicographers, they say that they do not impose a value; theirs is only a considered opinion. Except of course, the markets act and react on changes in ratings. Standard & Poor’s downgrading of most of the euro zone sovereign debt yesterday will certainly have effects on the cost of servicing those countries’ debts after the timid signs of recovery over the last few days. We will see on Monday when the markets reopen.
On Thursday and Friday, the difference between Italian and German bonds stayed below the psychologically sensitive figure of 500 points. Italian three-year bonds sold well and at lower interest rates than before. And Milan seemed to be regaining some of the ground it had lost. The Monti medicine, austerity now and promises of growth, seemed to be working.
Ratings agencies have another quality in common with dictionaries at least when they are being descriptive rather than prescriptive – they reflect changes that have already taken place; S & P gave a warning that they might downgrade Italy and the others early in December. And so they did, without taking into account latest developments. This might just mean that on Monday the markets will stay relatively calm.
S&P’s hammerblow arrived at almost exactly the same time yesterday evening as the huge Italian cruise liner “Costa Concordia” went aground and then keeled over. It would be tempting to use the ship as a metaphor for the Italian economy: grand, immobile, half-sunk, a wrecked fun palace with some casualties (thankfully relatively few) and thousands shivering in the winter night. Even the ship’s name has ironic resonance in a country known for discord.
The disaster is indeed a blow to Italian pride but it is not even a distorted reflection of the reality. S&P’s call for more growth is a valid one (but hardly original). The downgrade will certainly act as a prod to Monti and an instrument he can use to persuade unwilling sectors of the Italian economy to liberalise. It will also push the European authorities to move quickly to introduce real powers of monetary control if they want to save the euro. And it will no doubt accelerate moves to limit the ratings agencies possibilities of publishing sensitive opinions at difficult times. They are, after all, even more guilty of the newspapers proprietors’ aim of “power without responsibility, the prerogative of the harlot through the ages”.
The only meagre consolation for Italians (and particularly Berlusconi supporters) is to see that France and Sarkozy got their comeuppance. In real politics, though, it does mean that European leaders will have to work together with less of a heirarchy. As ever, Corriere’s Giannelli got it right again; Monti visited the pope today and Giannelli has the prime minister saying “Holiness, we need a miracle” and Ratzinger replies “I will pray in German”.
Thursday, January 12, 2012
Pigs’ Dinners and Rolling Pins – the Constitutional Court Verdict on the Electoral System Referendum
Over the last week there was a crescendo of rumour and counter-rumour on the Constitutional Court’s likely verdict on whether to allow two referendums to change the Italian electoral system. The referendums were to be another moment in process of changing the whole political system. Now the Court has spoken and the answer is No. We will know the precise legal reasoning in a fortnight when they publish the sentence but in the meantime the political consequences are already being faced.
Supporters of the referendum like Antonio Di Pietro have already cried foul accusing the Court of killing Italian democracy and suggesting that the verdict was a favour to President Napolitano. Napolitano responded rapidly and curtly saying that any connection between the Court and the President was “a vulgar insinuation”. The debate on whether and how to change the present law will start now.
Electoral systems are normally less than controversial but the way the Italians elect their Parliament has generated much heat since it was passed in 2005. As the second Berlusconi government moved towards the end of its mandate due in spring 2006, it changed the existing mixed system (three quarters single member constituencies, one quarter fixed party lists) to one which was all fixed party lists and with a premium for the majority party or coalition. It was a thinly veiled attempt to hold onto power and it almost worked.
The old law was nicknamed “Mattarellum” after its proposer, Sergio Mattarella (and mattarello means rolling pin). The new one was dubbed “porcata” or pigs’ mess by its proposer, Roberto Calderoli, giving an idea of how much its own supporters supported it. This was immediately rendered into dog-Latin by Giovanni Sartori as “Porcellum”.
In practice, the Porcellum allows party leaders to decide who will be elected and who will not. Election depends on a candidate’s rank on the list not on any link with electors. As a voter, I have no say in who is elected – I might prefer Party A but not like their candidate X but I cannot vote for candidate Y. When there is a well running party organisation, then the party debates and bickers over the order and the system works tolerably well as in Israel though even there, there are complaints. In Italy where most of the parties have a weak organisation and are heavily dependent on the single leader (not just Berlusconi), the Porcellum means that each deputy is responsible to and dependent on the leader rather than the voters.
Then there is the premium. To give a winning party a premium (a higher proportion of seats than votes polled) is not such a bad idea if all accept the way the premium is given out. It allows the winner to actually govern without having to worry about a single missing deputies. All but the Lib.Dems in Britain accept that 40-45% of the vote will normally give a party 60% of the seats in the Commons – not mathematically fair but legitimated by habit. In Italy there had been half a century of proportional representation and the only attempt to change it, in 1953 was called the “swindle law” or legge truffa. So Italians are less happy about premiums.
Hence the campaign last year to gather half a million signatures to repeal the Porcellum. Instead of the minimum 500,000 Di Pietro and the organisers took 1.2 million, a very strong signal that a lot of Italians were fed up with politicians.
Those signatures were verified by the High Court and then it was up to the Constitutional Court to decide whether the referendums are legitimate. We will know for certain in two weeks but it is likely that they turned down the referendum because of the risk of having a legislative vacuum if the Porcellum was repealed. Ie there would be no law instead of reverting to the old one. They did not accept that the Mattarellum would come back into force.
Politically this is a relief for some and infuriating for others. All parties say that there must be a new law and the Constitutional Court is likely to recommend that the law be changed, but no one agrees on what exactly should replace the Porcellum. And we know that it is always easier to do nothing than to do something, especially when we can’t agree on what something to do.
No one will admit it, but of course a system which gives all power to political leaders and none to candidates and voters is attractive to the leaders, the so-called casta or caste.
We have already some fiery statements from Di Pietro and will have many more. From the other politicians and parties, there are earnest calls for dialogue and everyone will put forward worthy proposals but without the risk of having to fight a referendum campaign next spring, the heat is off. Prime Minister Monti has made it very clear that electoral reform is definitely not on his agenda so that there is even a chance that Italians will once again have a pigs’ dinner once again for their 2013 general election unless popular pressure can persuade the politicians to act quickly.
Supporters of the referendum like Antonio Di Pietro have already cried foul accusing the Court of killing Italian democracy and suggesting that the verdict was a favour to President Napolitano. Napolitano responded rapidly and curtly saying that any connection between the Court and the President was “a vulgar insinuation”. The debate on whether and how to change the present law will start now.
Electoral systems are normally less than controversial but the way the Italians elect their Parliament has generated much heat since it was passed in 2005. As the second Berlusconi government moved towards the end of its mandate due in spring 2006, it changed the existing mixed system (three quarters single member constituencies, one quarter fixed party lists) to one which was all fixed party lists and with a premium for the majority party or coalition. It was a thinly veiled attempt to hold onto power and it almost worked.
The old law was nicknamed “Mattarellum” after its proposer, Sergio Mattarella (and mattarello means rolling pin). The new one was dubbed “porcata” or pigs’ mess by its proposer, Roberto Calderoli, giving an idea of how much its own supporters supported it. This was immediately rendered into dog-Latin by Giovanni Sartori as “Porcellum”.
In practice, the Porcellum allows party leaders to decide who will be elected and who will not. Election depends on a candidate’s rank on the list not on any link with electors. As a voter, I have no say in who is elected – I might prefer Party A but not like their candidate X but I cannot vote for candidate Y. When there is a well running party organisation, then the party debates and bickers over the order and the system works tolerably well as in Israel though even there, there are complaints. In Italy where most of the parties have a weak organisation and are heavily dependent on the single leader (not just Berlusconi), the Porcellum means that each deputy is responsible to and dependent on the leader rather than the voters.
Then there is the premium. To give a winning party a premium (a higher proportion of seats than votes polled) is not such a bad idea if all accept the way the premium is given out. It allows the winner to actually govern without having to worry about a single missing deputies. All but the Lib.Dems in Britain accept that 40-45% of the vote will normally give a party 60% of the seats in the Commons – not mathematically fair but legitimated by habit. In Italy there had been half a century of proportional representation and the only attempt to change it, in 1953 was called the “swindle law” or legge truffa. So Italians are less happy about premiums.
Hence the campaign last year to gather half a million signatures to repeal the Porcellum. Instead of the minimum 500,000 Di Pietro and the organisers took 1.2 million, a very strong signal that a lot of Italians were fed up with politicians.
Those signatures were verified by the High Court and then it was up to the Constitutional Court to decide whether the referendums are legitimate. We will know for certain in two weeks but it is likely that they turned down the referendum because of the risk of having a legislative vacuum if the Porcellum was repealed. Ie there would be no law instead of reverting to the old one. They did not accept that the Mattarellum would come back into force.
Politically this is a relief for some and infuriating for others. All parties say that there must be a new law and the Constitutional Court is likely to recommend that the law be changed, but no one agrees on what exactly should replace the Porcellum. And we know that it is always easier to do nothing than to do something, especially when we can’t agree on what something to do.
No one will admit it, but of course a system which gives all power to political leaders and none to candidates and voters is attractive to the leaders, the so-called casta or caste.
We have already some fiery statements from Di Pietro and will have many more. From the other politicians and parties, there are earnest calls for dialogue and everyone will put forward worthy proposals but without the risk of having to fight a referendum campaign next spring, the heat is off. Prime Minister Monti has made it very clear that electoral reform is definitely not on his agenda so that there is even a chance that Italians will once again have a pigs’ dinner once again for their 2013 general election unless popular pressure can persuade the politicians to act quickly.
Friday, January 06, 2012
“New Italians”. The Paradox of Immigration and Crime in Italy.
Almost four years ago, the centre-right candidate for mayor of Rome, Gianni Alemanno played the law and order card and implicitly blamed immigrants for crime in Rome after a Romanian murdered an Italian woman. He won the elections but has not reduced violent crime. On Saturday, a young Chinese man, Zhou Zeng, and his 9 month old daughter were murdered apparently by two Italians in Tor Pignattara, an immigrant quarter.
Soon after his victory, he told John Follain of The Sunday Times "In the south of Italy the problem is the mafia. In Rome the problem is immigration: there's a large group of desperate people who survive in dodgy ways."
It is so easy to dump on immigrants and blame them for a host of social problems starting with crime. Populism and xenophobia rarely lose votes, especially on the right. Intuitively, too, the idea of poor immigrants as criminals has an initial ring of plausibility. Often there are numbers published which show the higher proportion of foreigners in prison than locals and sometimes the crime statistics for petty crime do genuinely show a higher level of foreign offenders than their overall presence would warrant. But these figures are equally often misleading – immigrants tend to be male, poor and young, precisely the class where most offenders come from. Many of the foreigners are in gaol precisely because they are foreign and are presumed to be liable to leave the country if granted bail or parole as natives often are.
These are pretty normal explanations for immigrant “crime”. In Italy, though, there is a paradox: in many areas, the foreigners are not only not more delinquent than Italians, or even as delinquent – no, they are actually more law abiding and contribute positively to crime reduction.
The paradox occurred to me at a conference in Denmark a year and a half ago in which we were compared organised crime in the two countries. Apart from the bike gangs which run most of the illicit trade, there are also immigrant gangs who also look after trade like the Danes. A minority in some communities turns to crime.
In Italy since the influx of foreigners, above all over the last decade or so, there are indeed foreign mafias. The regular Ministry of the Interior reports on organised crime have subheadings on “Chinese”, “Maghreb and North Africa”, “Nigeria”, “Russian”, “Romanian”, “Bulgarian”, “South American”, “Turkish” which often work closely with Italian groups.
The paradox is that in areas of organised crime like Sicily, Calabria and Campania, the immigrants are the ones who fight back against the mafia, camorra and ndrangheta usually more forcibly than the general population.
In September 2008, six west Africans (three Ghanaians and three from Togo) were killed in Castelvolturno just north of Naples, an area controlled by one of the most brutal camorra groups, the Casalesi. The first presumption was that if was part of a turf war between the camorra and the Nigerian gangs who have a licence to run drugs and prostitution there but none of the victims had anything to do with any organised crime group. They had been killed as a show of violence to keep immigrant labour in line.
The remarkable reaction was that instead of meekly accepting the camorra’s near monopoly of violence, the immigrant community protested and demonstrated in a way which no locals had ever done. These were people who picked fruit for €30, €40 a day and many lived in desperate conditions paying rent to the same landlords who were exploiting them. They put up with appalling pay and conditions without batting an eyelid but the murder of six of their fellow immigrants was too much. The day after the massacre, the west Africans protested, a protest which ended in a riot and almost became a battle between Italians and Africans. It was a vivid demonstration that poor immigrants were not prepared to put up with the overwhelming presence of the men of violence.
They had become part of the fight against organised crime in Campania and forced the police to increase their presence in Castelvolturno. They were part of the solution increasing legality and reducing violence.
Just over a year later, in January 2010, a group of orange and olive pickers in Rosarno in Calabria demonstrated against conditions and pay. As in Castelvolturno, most of them were west Africans, from Ghana, Senegal, Mali, Burkina, Côte d’Ivoire. The area is controlled by the ndrangheta or Calabrian mafia which has always had a tight rein on the labour market. Shots were fired at the demonstrator; this time no one was killed and the injuries were not serious. Once again, immigrants were revolting against organised crime in a way the local people rarely did.
They were almost all irregular and none wanted to play the hero but together they were not prepared to put up with potentially lethal violence.
After the demonstrations, they were moved to other parts of Italy. Some came here to Rome and bided their time at an empty factory on the Casilina, the SNIA, doing odd jobs, learning Italian (some of our students went to teach there) and jumping through the legal hoops to get a permit to stay. Volunteers from a local anti-racist association provided legal advice. A film was made about them, Andrea Segre’s “Sangue Verde” which was screened last year at the SNIA. There were some murmured complaints but the documentary is an eloquent testimony of their desire to lead normal lives… lives where the law protects them and is not just used to harass them.
Earlier this week, in Caulonia on the other side of Calabria to Rosarno a cooperative looking after work for refugees was bombed. No casualties but the ndrangheta uses little bombs as frighteners and for them, it is much better to have irregular and blackmailable immigrants.
Back in Rome Zhou Zeng’s killers were not mafiosi but they almost certainly were part of a local gang, one of many that are becoming increasingly important in some parts of town, or maybe “just” drug addicts in need of cash.
The reaction from not just the Chinese and other immigrant communities of Tor Pignattara but Romans of all sorts means that immigrants do not just enrich the host community with their culture and their labour, but they also add to a civic society.
Wednesday, January 04, 2012
Squealing parliamentarians
On the day that the German president, Christian Wulff finds himself under pressure because of an equivocal soft loan of €500,000, Italian parliamentarians are moaning that they are worse off than their European colleagues. The rest of Italy is preparing to pay the reintroduced property tax, to put off retirement and is already paying €10 or €20 more every time they fill their car but the political class cries poverty and refuses to take action… at least not now “we need another committee” they proclaim, from the far right to far left, united in protecting their own privileges. Yesterday an eminent committee reported that parliamentarians’ income was indeed higher than in the rest of Europe… but… The Chamber replied that after tax, their salaries were actually lower. Anyone who dissents is accused of being a “populist” even a “fascist” who does not appreciate that democracy has a price.
And what a price! The risk is that popular resentment really does reach a dangerous level while the Honorable Members debate the difference between “salary”, “travel allowance”, “living allowance” and “contribution for research and secretarial assistance”. If they completely lose touch with the electorate, that would indeed be a disaster for Italian democracy.
But they are moving towards it. First of all, these are people who are responsible to their party bosses and not to their electors – with Italy’s fixed party list system, a parliamentarian’s election depends on where they are on the list which depends on the party, not the electorate. That already puts some distance between “representatives” and the people.
Any survey one takes shows clearly that Italian parliamentarians are better off than any other European legislator. It is only by very selective accounting that they are able to massage some of the numbers down to approximate parity with the French and Germans. All of them (including those who live in Rome) have tax free housing and travel allowances even though they travel free anywhere in Italy (whether on parliamentary business or not). Research and secretarial support is more than €3,600 per month given directly to the parliamentarian who may pocket it all, employ a relation or employ an assistant for much less. With all perks included, an Italian parliamentarian has around €25,000 per month which even after tax is a healthy sum.
Salaries and pensions can also be summed. It is bad enough that someone can be mayor and deputy at the same time (not only an Italian vice) but that they take home two salaries and sets of perks is difficult to persuade the public over in time of recession. Former prime minister, Giuliano Amato has €31,000 gross p.m. between his university and ministerial pensions and there are many like him.
Not only are the legislators generous with themselves, there are lots of them. The Chamber has 630 members, the Senate 315 elected and at the moment seven life senators: 1,000 for a population of 60 million. The US has 535 for 310 million. There has been talk of reducing the number of parliamentarians for decades but once again, turkeys don’t vote for Christmas.
Italy then has two middle levels of government (most countries just have one), the 20 regions and the 110 provinces; the lower level, over 8,000 comuni and for the big cities, a sub-local level, the circoscrizioni or municipi (Rome has 20). All these have assemblies and executives which are paid either salaries or some expenses. For some regions a councillor can earn well over €10,000 p.m. Again, there has been talk of abolishing the provinces since the regions were introduced in 1970 (when, by the way, there were just over 90 provinces).
If we move on to the appointed officials, the situation would be comic if taxpayers were not paying for the show in the middle of austerity measures. According to Gian Antonio Stella and Sergio Rizzo who started uncovering the waste in their bestselling La Casta, an Italian senate stenographer earns €290,000 p.a., as much as the king of Spain’s allowance (and €50,000 more than President Napolitano’s salary) while a barber is earning €160,000 at the end of his career. I could go on.
Then there is the cost of elections. In 1974, parliament introduced public financing for political parties as a result of a funding scandal. The following decade saw the worst corruption Italy has ever seen and in 1993 a referendum abolished public financing. The following year, the new parties got round the measure by creating a “reimbursement for election expenses”.
That is still the law. On top of the legal expenses are the many instances of corruption – kickbacks or tangenti paid to politicians for their assistance in procuring public contracts. In the old days, it was an envelope (or sometimes a suitcase) of used notes; today it comes in tax-deductable donations to this or that foundation or a transfer from a Swiss bank to one in the Cayman islands but the effect on the exchequer is the same.
All of this is referred to as la politica. At the moment, the resentment is still inchoate and mostly does not distinguish between the various elements, each of which needs a different remedy. For years the majority of Italians tolerated the misbehaviour and legalised theft because they hoped to benefit from it as well. But no longer. If the objects of the resentment do not realise what is happening and quickly, and continue urging their fellow citizens to “eat cake”, they risk ending up like a crowd of downmarket Marie Antoinettes, not guillotined literally but cut out of Italian society.
And what a price! The risk is that popular resentment really does reach a dangerous level while the Honorable Members debate the difference between “salary”, “travel allowance”, “living allowance” and “contribution for research and secretarial assistance”. If they completely lose touch with the electorate, that would indeed be a disaster for Italian democracy.
But they are moving towards it. First of all, these are people who are responsible to their party bosses and not to their electors – with Italy’s fixed party list system, a parliamentarian’s election depends on where they are on the list which depends on the party, not the electorate. That already puts some distance between “representatives” and the people.
Any survey one takes shows clearly that Italian parliamentarians are better off than any other European legislator. It is only by very selective accounting that they are able to massage some of the numbers down to approximate parity with the French and Germans. All of them (including those who live in Rome) have tax free housing and travel allowances even though they travel free anywhere in Italy (whether on parliamentary business or not). Research and secretarial support is more than €3,600 per month given directly to the parliamentarian who may pocket it all, employ a relation or employ an assistant for much less. With all perks included, an Italian parliamentarian has around €25,000 per month which even after tax is a healthy sum.
Salaries and pensions can also be summed. It is bad enough that someone can be mayor and deputy at the same time (not only an Italian vice) but that they take home two salaries and sets of perks is difficult to persuade the public over in time of recession. Former prime minister, Giuliano Amato has €31,000 gross p.m. between his university and ministerial pensions and there are many like him.
Not only are the legislators generous with themselves, there are lots of them. The Chamber has 630 members, the Senate 315 elected and at the moment seven life senators: 1,000 for a population of 60 million. The US has 535 for 310 million. There has been talk of reducing the number of parliamentarians for decades but once again, turkeys don’t vote for Christmas.
Italy then has two middle levels of government (most countries just have one), the 20 regions and the 110 provinces; the lower level, over 8,000 comuni and for the big cities, a sub-local level, the circoscrizioni or municipi (Rome has 20). All these have assemblies and executives which are paid either salaries or some expenses. For some regions a councillor can earn well over €10,000 p.m. Again, there has been talk of abolishing the provinces since the regions were introduced in 1970 (when, by the way, there were just over 90 provinces).
If we move on to the appointed officials, the situation would be comic if taxpayers were not paying for the show in the middle of austerity measures. According to Gian Antonio Stella and Sergio Rizzo who started uncovering the waste in their bestselling La Casta, an Italian senate stenographer earns €290,000 p.a., as much as the king of Spain’s allowance (and €50,000 more than President Napolitano’s salary) while a barber is earning €160,000 at the end of his career. I could go on.
Then there is the cost of elections. In 1974, parliament introduced public financing for political parties as a result of a funding scandal. The following decade saw the worst corruption Italy has ever seen and in 1993 a referendum abolished public financing. The following year, the new parties got round the measure by creating a “reimbursement for election expenses”.
That is still the law. On top of the legal expenses are the many instances of corruption – kickbacks or tangenti paid to politicians for their assistance in procuring public contracts. In the old days, it was an envelope (or sometimes a suitcase) of used notes; today it comes in tax-deductable donations to this or that foundation or a transfer from a Swiss bank to one in the Cayman islands but the effect on the exchequer is the same.
All of this is referred to as la politica. At the moment, the resentment is still inchoate and mostly does not distinguish between the various elements, each of which needs a different remedy. For years the majority of Italians tolerated the misbehaviour and legalised theft because they hoped to benefit from it as well. But no longer. If the objects of the resentment do not realise what is happening and quickly, and continue urging their fellow citizens to “eat cake”, they risk ending up like a crowd of downmarket Marie Antoinettes, not guillotined literally but cut out of Italian society.
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