Do we have an Italian problem?
Philippe Legrain argues that Italy is on the brink after its constitutional referendum. Its banking system needs fresh influx of capital to remain competitive, and the new political instability only exacerbates this need. Italy’s political situation is also unsustainable due to high youth unemployment and increasing support for Eurosceptic parties. Wolfgang Munchau agrees that having only one truly pro-euro party makes Italy a source of instability for the EU. Should the country eventually be governed by a party in favour of withdrawal from the common currency, the latter would probably turn into a self-fulfilling prophecy, as a run on Italy’s banks and its government’s bonds would likely ensue. Italy’s new prime minister will hence need to explain to the next German chancellor that her choice will not be one between a political union and the status quo, but rather one between a political union or an “Italexit” from the euro, with all its consequences.
A different take comes from Benedetta Brevini, who claims that the No victory in Italy does not threaten the European Union, and reminds us that the country’s constitution forbids the referenda on international treaties, hence ruling out that way of withdrawing from the common currency–which is currently supported by the Five Star Movement. Moreover, a majority (58%) of italians still support the EU. According to Brevini, the debate around this topic counts as an instance of “truthiness”: the emotional and selfish quality of perceived realities, which are derived from passionate preferences rather than scientific, logical, or even journalistic certainties. An analysis for Bruegel by Silvia Merler finds that the socio-economic factors behind the No victory in Italy differ from those behind the Brexit vote, thus lumping the two phenomena in the same category may be a mistake. The italian No vote seems to have been driven mostly by young voters, and was mostly related to a sense of economic “malaise”, while the Brexit vote appears to have been strongly driven by older and somewhat less educated voters.
Humans need not apply
Sandro Scocco questions the argument that new and better technologies in production result in jobs being destroyed and are yet another factor behind the emerging social divide in Europe. Several historical reasons suggest that this is not likely to be the case. For one thing, the period between 1980 to 2015 was characterized less by strong technological change in production than by change in the private sphere. Moreover, in the long run there is no significant correlation between technological change and trade growth on income distribution or unemployment. Rather than unemployment driven by technological change, Paul Mason claims that we should worry about the opposite effect, namely de-industrialization due to extremely low labour costs. This trend is exemplified by car wash machines, whose number in the space of a decade has halved, simply because five guys with rags can undercut a machine that cost tens of thousands of pounds to build. The broader problem is that the entire economic system is geared to distributing the proceeds of globalization upwards and its costs downwards, and the response of policymakers has been to prescribe more of the things that generated this crisis, in the first place free market and globalization.
Cities and countrysides drifting apart
Andy Beckett observes that a revolt against urban liberalism and multiculturalism was a big component of both the Brexit and Donald Trump’s campaigns. Urban and rural areas tend to support different political positions and, most interestingly, cities are currently losing political weight. The very thing that makes modern cities vibrant and culturally dominant–increasing population density, and the atmosphere and networks resulting from it–has left them politically underrepresented. In the UK, for instance, many foreign nationals reside in cities (London alone has one million), and they cannot vote other than in local elections. In the United States a different mechanism with similar results is in place: electoral districts have not been rebalanced to reflect recent re-urbanization, so making cities relatively underrepresented in institutions.
Photo Credits CC Global Panorama
Also published on Medium.
– Brexit/Trump: Wake-up Calls For More Active EU – Social Europe