Wednesday, December 14, 2016

Mark Weisbrot — The Deep Economic Roots of Italy’s Political Troubles

In one important sense there are similarities between the rise of Trump and the fall of Renzi. Both are the result of the long-term failure of neoliberal policies implemented by the major political actors. In both cases, the center-left lost a big part of its working and middle-class base because it was jointly responsible for this failure.
In the US, the neoliberal era was launched “big league” by Ronald Reagan, but Bill Clinton became a co-owner by bringing us NAFTA, the WTO, financial deregulation, and other neoliberal structural reforms that have done permanent damage.
In Italy there have also been neoliberal reforms since the 1980s, but the most devastating was adopting the euro in 1999. Now you might think that nothing could be worse than having to say the words “President Trump,” but adopting the euro put Italians in an even worse jam. They lost control over their most important macroeconomic policies (monetary, fiscal, and exchange rate), and gave it to some really wrong people in the European Commission, the European Central Bank (ECB), the Eurogroup of Finance Ministers, and the IMF.

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