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Articles on Italy after 2013
Paralysis in the USA and in Italy
Articles on Italy before 2013

  • (march 2013) Paralysis in the USA and in Italy.
    The well-kept secret of democracy is that it inevitably nurtures corruption: if you cannot win by military force, the second most efficient way to win is to buy your way to the top. At the beginning of its democratic life (1948) Italy had one of the best infrastructures of organized crime in the world (generally known as "mafia", although it is not quite the monolithic structure that most people imagine). Inevitably, political parties and organized crime made deals in democratic Italy, and eventually the border between a political party and a criminal organization got blurred.
    Corruption became endemic. Voters knew and let it happen with minimal protests because the government lavished subsidies, labor laws and entitlements on the country. This was, of course, a Ponzi scheme because there wasn't enough money to pay for both the robberies and the entitlements.
    This social contract worked for as long as the economy was growing and nobody asked Italians to pay for this system. Now that the economy is collapsing (in part because of the debt created by those robberies and those entitlements) and that the bill is come due, Italians are rising up against corruption. Politics is now discredited and the government is paralyzed. Out of the dust a populist demagogue is screaming against compromise, determined to cut wasteful spending and corruption: comedian "Grillo" ("Cricket"). His "Five Star Movement" is not quite a party although it won the recent elections: it does not want to govern Italy, but simply veto what the career politicians do. Grillo's consultant Gianroberto Casaleggio is correct in emphasizing that this is not just a protest movement: Casaleggio created an Internet-based movement that bypasses the traditional political process and the traditional structures of power, empowering ordinary citizens in their homes. Watch carefully because Italy has a record of experimenting new forms of power that then spread widely (fascism, mafia, Christian democrats, etc).
    The USA is a very different country, and a very different political system (a presidential republic instead of a parliamentary democracy), but the same principle applies: democracy nurtures corruption. In the USA the equivalent of organized crime (the provider of votes) is represented by the Washington lobbies. Washington has become a major economy because of the many lobbies that camp there, each one representing billions of dollars of interests. Their job is literally to bribe politicians. Bribing worked so well that the USA can compete with Italy in terms of wasteful spending. Again, voters were willing to largely ignore the corruption as long as the government was, occasionally, passing laws that benefited the middle class. Again, corruption plus entitlements created an expensive system.
    This worked as long as the economy was growing at a good pace. George W Bush's presidency (two unpaid wars and one huge unpaid tax cut) and the Great Recession, however, brought the issue of the unsustainable national debt into the foreground. That, again, caused paralysis in government and discredited the parties. Out of the blue came a populist and demagogic movement, the Tea Party, demanding cuts in spending, especially wasteful spending. In theory the Tea Party and other fiscal conservatives are more mature than their Italian counterparts (who are careful not to mention the word "pension" or "universal health care"), but in practice the very same people who scream against excessive spending are not willing to cut a penny out of the entitlements that benefit their families and friends. In theory the Tea Party is also a much more libertarian kind of movement, defending for example the right to bear guns, but, again, this is a movement that does not have a plan for government, simply a desire to veto what career politicians do. While not as high-tech as Casaleggio's Internet-based platform, the Tea Party represents a grass-roots revolution that relies on new media, although in this case it's not the Internet but radio (Rush Limbaugh), bloggers (Michelle Malkin and Ann Coulter) and television (the various Fox News shows).
    In both cases people are responsible with their voting pattern for the national debt, but nobody in government has the moral standing to preach. Hence they have to acquiesce to a protest movement that tends to blame outside factors. Italians increasingly blame the euro and Germany for their problems: the euro caused a sharp increase in prices and Germany is the country that demands austerity from its undisciplined partners in the European Union. In the USA the middle class increasingly blames the United Nations and illegal immigrants.
    Both nations live in denial of the social contract that led their politicians to the current impasse. More than sixty years ago Italians made a deal with their politicians: we'll tolerate corruption and even ties to organized crime if you give us pensions, health care and many other benefits that the nation cannot afford. That system, unpaid on both sides of the equation (the corruption side as well as the welfare side) was founded on the principle that the country would borrow forever. Now that the country cannot borrow anymore the people are demanding an end to corruption but are not willing to give up their end of the bargain, one of the most luxurious social systems in the world. In the USA the people signed a deal with their politicians: we'll let you stay in power indefinitely through political maneovres, gerrymanding, etc and pass laws to please the highest-paying lobbies as long as you bring us lots of pork barrel and don't tax us for it. Now that the deficit is out of control people ask for an end to the old political system (the politicians' end of the bargain) for not for an end to the ban on taxation (the people's end of the bargain).
    Both countries have the same fundamental problem: a wealth gap that is widening. On one side a wildly rich aristocracy that is getting richer and richer, and on the other side an increasingly struggling middle class plus people living under the threshold of poverty who don't even make the statistics anymore. In Italy that has been caused by government mismanagement and plain corruption. In the USA the causes are more sophisticated but not less amoral: ultimately, the policies of the Federal Reserve, that for more than 20 years has helped speculators at the expense of the middle class. First Alan Greenspan and now Ben Bernanke preached and practiced a policy of easy money, knowing that this money comes from taxpayers and goes to the large Wall Street firms and to the multinational corporations. De facto, there has been a transfer of wealth from the poor to the rich. It takes money from the saving accounts of retirees and gives it to financial speculators. During the Great Recession, for example, that policy helped the rich to buy the homes that the poor were losing. The poor do not benefit from the "easy money" policy because they do not qualify for loans from banks, especially in hard times. Therefore the policy only favors the rich. The taxation system, the health care system and many other small and big tricks all contribute to shrink the middle class while accumulating capital in the hands of very few firms and people. In both countries the middle class complains but doesn't quite mobilize: in fact, yet again, it is that very middle class that voted those people in power who passed those laws that are hurting the middle class.
    In both countries there is also a sense that one has to choose between two equally unpleasant options: a party of dishonest people (roughly the Right, whether Berlusconi in Italy or Wall Street in the USA) and a party of incompetent people (roughly the Left, whether the former communists in Italy or Obama in the USA).
    In both countries democracy has been twisted by shameless electoral laws. In Italy the main coalition automatically gets the majority in the lower house, a trick devised by Berlusconi when he was in power to bypass the noisy opposition. In the USA gerrymanding allowed the Republican Party to retain a majority in the lower house although the Republican Party lost the popular vote.
    In both countries money is legally a way to win elections. Italian laws allow Berlusconi (the richest man of the country) to own several television networks and newspapers which obviously influence voters, a fact that in other countries constitutes a conflict of interests. In the USA the Supreme Court itself decided that "corporations are persons" in order to allow rich people to influence elections with their campaign contributions.
    More importantly, in both cases the popular perception is that the national government is the main obstacle to economic recovery.
    Like it or not, similarities extend to the two men who are at the center of each crisis. Berlusconi is widely viewed as an amoral man, but Obama is, ultimately, guilty of serious misconduct (amazingly condoned by the very same people who assailed his predecessor on a daily basis): Obama not only expanded the program of bombing of foreign countries that are not at war with the USA (notably Pakistan and Yemen), including bombings that have killed scores of innocent civilians, but he has even ordered the assassination of a citizen of the USA with no trial. And for that matter Osama bin Laden himself never got much of a trial (we will never know his version of the facts). Obama scored a political victory in an election year when his troops assassinated Osama bin Laden, but that compares to Berlusconi's soccer team Milan winning the national championship. Neither is particularly educational from the viewpoint of the rule of law.
    In march 2013 the similarities between the two men are even more striking. Berlusconi is basically fighting to avoid indictment and jail, and is willing to cause a national paralysis in order to stay in politics (the only way he can hope to delay and possibly erase the trials). Obama is willing to cripple the weak economy in the USA rather than compromise with his archenemies in the Republican Party. (When the Republicans offered to give him executive powers to choose which programs to cut, Obama refused, demonstrating that his intention was to inflict maximum, not minimum, pain to the nation as long as that would make his point to the middle class).
    Which country is better off? In the middle of government paralysis the Dow Jones share index set a new all-time high. At least Italy knows the mess it's into, whereas the USA seems to be driven by waves of irrational exuberance.

    See also: How not to solve a problem and Too big to be saved? The limits of parliamentary democracy and national sovereignty

    TM, ®, Copyright © 2013 Piero Scaruffi All rights reserved.
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