Alberto Mingardi  

An update on Mr. Renzi

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In a comment to my blog post on Mr Renzi, the new Italian prime minister, Shane L has posed a very interesting question:


I wonder if, in the same sense that only Nixon could go to China, only a respected left-winger could challenge special interests of unions, small businesses, farmers, welfare recipients, etc? Any chance of that?

I haven't answered right away, and my temptation is to continue to avoid to answer. There are very mixed signals. The new government was just sworn in. Mr Renzi's team is refreshingly small (16 ministers), equally divided among men and women. The main characteristic of this new executive is that most of the ministers come from the central regions of Italy (Toscana, Liguria, Emilia Romagna) - which are traditionally the bedrock of the left-wing parties' consensus in Italy. This is not necessarily an argument against Shane L's hypothesis: in those regions, the Left is used to being in government (Bologna had a right-of-center mayor just once in 50 years!) and has thus developed a more pragmatic and less ideological agenda. Interestingly enough, in the primaries that brought Mr Renzi to the leadership of his party, he was able to secure strong support in those regions, even though he was "from the right", so to say, of the party. My explanation is that his true most intense supporters are local administrators that wanted to escalate in politics, and who got fed up with left wing leaders incapable of defying the right electorally. Mr Renzi is surely a mastermind of political communication, and was the best vehicle this "power block" could rent (or ride).
On the other hand, the first claims of the new prime minister could certainly be traced back to the literary genre of "political over-promises" - as the Economist points out in a very fair piece. Commenting on Mr Renzi's speech to obtain the confidence vote in the Senate, the Economist writes:
The biggest problem, however, was the lack of detail in Mr Renzi's speech. He has promised a reform a month until June: of employment law, bureaucracy and taxation. But he put no flesh on his proposal for a new employment contract, or the extension of unemployment benefits to all. Instead he talked about a €10 billion ($13.7 billion) cut in the direct-tax wedge (income tax plus social-security contributions), a school-building programme costing "several billion" as well as clearing the state's debts to private firms, estimated at up to €100 billion. But there was no real explanation as to how Mr Renzi intended to pay.

Mr Renzi's economic team include former OECD Deputy Secretary General Piercarlo Padoan (now Finance Minister), a couple of politicians with a strong public finance background as Deputy Finance Ministers (Enrico Zanetti and Enrico Morando), economist Filippo Taddei as the cook of his party's economic recipes. They will need to come up, in the next few months, with carefully crafted reforms to keep up with their leader's activism.
My impression is that Mr Renzi is not going to challenge the special interests of unions, and my sense is that most of his promises will go in the direction of increasing public spending. With European elections in sight (May 25), a left-of-center politician has an understandable self-interest in blaming "austerity" (whatever it means) and preaching "vulgar Keynesianism" as not to lose votes to the raising populist parties. But I may be wrong, and that would make me much happier.


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CATEGORIES: Eurozone crisis



COMMENTS (2 to date)
TMC writes:

China wasn't paying Nixon to stay away.

Shane L writes:

Thanks for giving it some thought, Alberto, interesting.

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