Of power and democracy: the rise and fall of Mario Monti

In November 2011, Mario Monti, an academic and former European Commissioner, was seen as the providential man to save Italy from its troubles. Now, only one year and a few months later, he is trailing behind in the polls and set to lose the upcoming elections. What happened?

Francesca E.S. Montemaggi
7 February 2013
Mario Monti speaks at a campaign rally. Demotix/Ermes Beltrami Vincenzi. All rights reserved.

Mario Monti speaks at a campaign rally ahead of the February 24-25 elections. Demotix/Ermes Beltrami Vincenzi. All rights reserved.

It is November 2011, Italy’s borrowing interest rates have risen to 7.5%, the spread between Italian government bonds (BTP) and German ‘bunds’ is over 500, and the markets are plummeting. Italy is gasping for breath.

Mario Monti, an unassuming professor, is called to rescue Italy from the precipice. He introduces an emergency austerity budget, which includes higher taxes, pension and work reform, and anti-tax evasion measures. A new era begins. Italy is cleansed of Berlusconi’s debauchery, broken promises and compromises. Did Mario Monti save Italy?

The savage attack of the markets on Italy was unwarranted. Italy had a primary surplus and a strong manufacturing industry, notwithstanding the strangling red tape, taxes, and absurd labour laws. The crisis, for Italy, was the result of the markets panicking in the belief that Europeans would not stick together. After all, that’s what they were being told repeatedly by American and British commentators.

They got it wrong, as Philip Stephens explains in the Financial Times. European politicians kept the show on the road and Mario Draghi, the president of the European Central Bank, rescued the euro by guaranteeing liquidity to banks. So what did Mario Monti do?

Monti’s measures reassured markets and European partners that Italy had learnt its lesson and was beginning to put its house in order. This allowed Monti to shift the discourse in Europe towards growth. In Italy, Monti talked like a liberal, behaved impeccably, even renouncing his salary, and proved authoritative, but he ultimately failed the task of making Italy fit for the twenty-first century.

This is not just Goldman Sachs’ opinion, but also that of most Italians who feel let down by the man who gave them hope at a time of despair. There may be many reasons why Monti did not succeed, including lack of time, his own character and ability, and old fashioned obstructive politics. Yet, the picture that emerges is one where the chosen man, endowed with power from above, has squandered his chances.

A closer look at Monti’s failure shows that it is not so much a question of ‘unfinished business’, as one that never began. Important reforms, such as that of the justice system were carried out well although lacking the necessary parliamentary time, but the most important ones have been a fudge. Monti did not manage to face up to the unions protecting closed shops, did not fully liberalise closed professions, such as pharmacists, taxi drivers, lawyers, notaries etc., neither did he cut bloated public spending.

He looked like a liberal, talked like a liberal but was not a liberal. Although hated by the Italian public, the work and pensions reforms are the only ones that begin to tackle Italy’s ills. Yet, of these two, the reform on pensions is marred by technical problems - so much for a technocratic government!

The crisis is far from over and Italians are in the strait-jacket of high taxation, closed professions, and a reduction in consumer spending. The total tax rate on businesses is around 68,3% in Italy, against 46,8% of Germany, 35,5% of the UK, 65% of France, 38,7% of Spain (source, in Italian).

Italy’s property tax, now the highest in Europe, has brought the housing market to a standstill. Businesses have been going bankrupt while waiting for the government to pay for the work for which they were contracted. Yet, in the past ten years, public spending has increased from 600bn to around 800bn (source, in Italian).

Trade unions, professionals, civil servants and politicians have guarded their narrow interests in such a way that makes reform impossible, and Monti will never enjoy the same degree of power he had as a Prime Minister backed by nearly all the members of parliament.

So it is difficult to understand why he has not done more - and why he has now entered politics, going back on his word. Mario Monti is tapping on the great resource of Italian ‘civil society’, which, in the past ten years, has taken the step of entering politics in the form of ‘civic lists’ at local elections. This is something that others, notably the comedian Beppe Grillo, are also doing.

The difference is that Grillo’s ‘civic society’ is comprised of ‘ordinary’ citizens, while Monti’s is crowded by academics and professionals, so much so that the right-wing newspaper il Giornale called it the ‘Monticarlo’ list.

The main fault of Monti is not so much his patronising attitude or his posse of hard-nosed academics, but his lack of understanding of power. He was granted power from above when he became Prime Minister without ever standing for elections. He was also appointed as a European Commissioner and academic. This is not to question his hard work and ability, rather to point out that ‘appointment’ gives one a different perspective on one’s position.

Appointment comes from above and vests one with power on the basis of abilities to be exercised according to one’s better judgement. Democracy is the government of people, who elect candidates to be their representatives, to speak and act on their behalf.

 In a representative democracy, people are the ‘sovereign’, not subjects: thus representation requires politicians to act in accordance with the views and values expressed by the people. Monti’s political venture, however, is fought from the comfort of his (appointed) seat in the Senate without actually facing the electorate.

Of democracy, Monti seems to be learning the tricks of political campaigning with aid from David Axelrod, a former advisor to Bill Clinton and Barack Obama, and the chief strategist of the latter's 2008 and 2012 presidential campaigns.

At any rate, Monti's movement is polling between 10% and 12%. He has an alliance with two veterans of Italian politics, Gianfranco Fini and Pierferdinando Casini, who increase the share of the vote to 14-15%, but bring with them the baggage of a history of previous obstruction to reform.

As the elections approach, Europe looks on in trepidation. The last thing ‘they’ want is a return to Berlusconi or a Democrats’ government of higher spending. Monti is still admired in Europe, while Italians have begun to see him as too soft with Germany, which has been profiting from the crisis through negative borrowing interest rates while Italy was financially aiding Greece. He is also seen as too close to ‘the banks’, arguably the most hated economic sector in Europe. 

Yet Monti might take enough votes to force Bersani, the leader of the left-wing Partito Democratico, into a coalition government. It might be enough to pursue further reforms, but not to free Italy of the shackles of closed shop corporatism, a Byzantine, slow and iniquitous justice system, and an overpowering bureaucracy.

Some Italians express the very peninsular view of Italy being ‘a case apart’, different from anywhere else, which will never be truly ‘European’. But lately, after spending nearly two months in Italy, I saw something breathing, moving and, at times, screaming. It is a liberal reformism that is being taken forward by men and women in local and national politics. Not content to fall prey to populist fears and hollow electoral promises, Italians are daring to express their aspirations for a real future. The revolution has already begun, but that’s for another election.

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