Both there and in Greece, jumbled parliaments came together with urgency to install more technocratic governments that are committed to delivering the difficult reforms and austerity measures demanded by the European Union, the European Central Bank and the International Monetary Fund.That sounds pretty dire! Euro-centric technocrats swooping into government, carrying with them a new, tough agenda that promotes the welfare of international bodies and organizations.
How have the Italian people reacted to their plight? With, uh, raucous street celebrations.
Am I the only one who notices a mismatch here? Those celebrating Italians don't exactly have the look of people about to have their happiness crushed under the jackboot of internationalist technocrats.
On some level, this incongruity seems connected to something I don't understand terribly well about the eurozone crisis: why reform must be so difficult for Italy in the first place.
As far as I'm aware, Italy faces a very specific problem. While it is currently running budget surpluses, it has a massive amount of debt floating around. The key to keeping Italy afloat, then, is to ensure that it can continue to pay the interest on its debt, and, over time, pay down the principal as well. That in turn requires Italian GDP to grow -- either nominally, through inflation, or actually, through, well, economic growth.
The ECB seems presently unwilling to print money and assist Italy by inflating the euro. As a result, Italy has little choice but to seek a growth-oriented path out of the crisis. (This may not be feasible, of course, but bear with me.) That's ostensibly the agenda of the post-Berlusconi Italian national leadership.
But here's the thing: Italian economic growth is good for everyone, including Italians. Pro-growth reforms shouldn't be deeply unpopular -- they should be very popular! And yet, you'd be hard-pressed to find a prescription for saving the eurozone that doesn't yammer on about the need for Italy to impose "discipline" or "accept difficult reform." It's as if fixing the crisis entails whipping profligate Italians, and paying back bondholders with tears.
Look, no set of reforms is going to be all wine and roses for Italians. But, likewise, no plausible set of reforms should actually slow the Italian economy, either. Doing so would just make everybody worse off. So the idea that fixing the eurozone requires horrendous sacrifice from the Italian people just doesn't parse for me.
I don't get it. The interests of Italy and the interests of the rest of Europe seem at least somewhat aligned at the moment -- but nobody's seemed to notice, because they're too busy trying to instill some misguided moral order.