Monday, January 16, 2012

Flow My Tears, the Minister Said



They call it the government of the technocrats. They say that they take their orders from the market, or from the European Central Bank. Passera, Severini, Terzi, Gnudi, Giarda, Catania, Catricalà, Clini, Profumo, Ornaghi, Fornero. Who had ever heard of these people? They sound like the lineup of a third-division football team, but they are lawyers, economists and academics. They used to work for banks, international regulators, the IMF. They consulted widely and sat on dozens of boards. Then one day in late November they were sworn in as Ministers, at a time when the lack of political affiliation or experience had suddenly become the main qualification for the job of politician.

Italy is not new to these arrangements: Carlo Azeglio Ciampi led such a government in 1993-94, then again Lamberto Dini in 1995-96. It seems that periodically we need people who are able to rise above politics, or possibly crawl under it, and fix things, which generally means getting the nation’s finances in order and stave off the collapse of the public administration ahead of the next election. This is achieved in turn via the time-honoured practice of asking salaried employee and pensioners – the only two categories of citizens who haven’t yet figured out how to hide their money – to give a little more. In times of need, the country always turns to the needy.

Nonetheless, there is an etiquette to these things. We ask of our technocrats that they reassure us that while everybody will have to contribute, those who have more will be asked to give more. This never actually happens, of course. In truth we wouldn’t even know how to ask. A couple of years ago Berlusconi's government, in one of those very ordinary extraordinary measures that Italian politics has developed into an art form, instituted the so called ‘tax shield’, whereby people who had illegally transferred their capital out of the country to avoid taxation were allowed to re-import it, with no questions asked and in exchange for a nominal tax, mainly so our banking system could benefit from the injection of cash. It was a very polite arrangement. Please, Mr. Blood-Sucking Parasite sir, we would just like to take a look at your money. We promise we won’t touch it.

So it goes, and this time was no different, with the exception that the state of our finances had become an international story, which everyone bought. Italy’s current fiscal problem is not the current account – which is in fact reasonably healthy – but rather its debt, which at just under two trillion euro is one of the highest per capita in the world. Servicing such a large debt requires a sufficient pool of creditors who trust in your capacity to keep up with the repayments. If the pool shrinks, the interest rates go up and lo!, suddenly you find that you really can’t pay back the money. Loss of confidence has a way of becoming self-fulfilling like that.

Which is not to say that Italy’s economic problems are all in the mind – for one, the lagging of our productivity relative to the rest of Europe over the last two decades is well-documented – but rather that we lack a political class capable not only of addressing them, but also of questioning the narrative of the crisis. This narrative – which is loosely structured along the lines of the popular fable of the ant and the grasshopper, with the north of Europe in the role of the ant, and the south in that of the grasshopper – has succeeded in persuading us that perhaps we really don’t deserve modern hospitals, or to retire after forty years of strenuous physical work, or to be protected from arbitrary dismissal by our employers, because we just don’t work hard enough to earn these things. They are beyond our means.

Technocrats – these odd, unpolitical creatures – couldn’t reasonably be expected to do anything other than operate in accordance with the dominant narrative, hence with the logic of austerity, just like an accountant must operate according to standard accounting practices. (‘Creativity’ is frowned upon in both, and occasionally leads to criminal charges.) And so we passed yet another emergency budget, and called it – for real, in Parliament, not in the press – ‘decreto Salva-Italia’. We might expect a document so-named, this saviour of the nation, to be inspired by lofty principles or aim to achieve momentous goals, but no: it was the usual collection plate put in front of the usual people, making it that much harder for those on mid to low incomes to make ends meet, and for what? To kick a twenty-four billion pebble off a two trillion mountain. And on top of that, structural reforms, aimed at making older people work five, six, seven years longer (this will create more jobs for young people) and making it easier for employers to fire their employees (this will help more people into work).

You may question the logic, but what is important to understand is that the efficacy of these measures is irrelevant. What matters is that they are what the markets expect of us. Markets – much like mob lynchpins – don’t need to give explicit instructions. Instead, they send coded messages regarding what they consider a desirable outcome, or let you know when they’re displeased with you. They were very displeased with Greece when it threatened to let its citizens vote on the bailout package, weren’t they? Oh my! It’s like there was a horse’s head in Papandreou’s bed that night. But often the signals are more ambiguous than that, which is why it is important to find yourself technocrats who can correctly interpret them. To wit: if interest rates on your debt plummet after you’ve just announced a round of austerity measures, success! The measures worked, and confidence is restored. If they climb back up to where they started within two weeks of your nation-saving efforts, don’t worry! It just means that the measures weren’t harsh enough. You needn’t fear that you impoverished half the population of the country for nothing.

The extent in which Mario Monti’s government has behaved according to these expectations, as if it were colouring-in by the numbers a picture of Italy two, three, five years from now, much poorer but somehow still solvent, has been and continues to be something to behold. Except for one episode, a little unscripted moment, during the press conference in which the first round of measures were introduced, and Social Development and Labour Minister Elsa Fornero tried to say that it was with a heavy heart that the government was about to ask its people to make yet more sacrifices. But instead, this.


The word just wouldn’t come out. Sacrifices. Somebody else had to say it for her. It was a quietly moving little moment in which the technocrat let her feeling show, and demonstrated without the need for words that these highly skilled professionals whom we put in charge of saving us from ourselves aren’t a bunch of automatons after all, they are just ordinary people in charge of making difficult choices, and that it’s a hard task and that it too entails a sacrifice.

Alternatively, you know, fuck her.

Elsa Fornero is one of the foremost world experts on savings and old age pensions, so – had she actually mustered the nerve to do so – it would have been particularly galling to hear her announce that the single best idea that the government had come up with to save Italy was to halve or abolish the indexation of pensions, with the sole exclusion the very lowest level of benefit (under €470 a month). Combined with the reintroduction of the tax on home ownership and the increase of value-added tax and of the duty on petrol, this measure spells hardship for millions of retirees, and yet it was – in number terms – the centrepiece of the decree, being expected to net three times as much money as the very modest one-off taxation (1.5%) of the capitals protected by Berlusconi’s ‘shield’. The symbolism wasn’t lost on the public, who singled it out in opinion polls as the most abhorrent measure introduced by the government, and the clearest indication that the ‘sacrifices with fairness’ promised by Monti upon taking office were going to lean heavily on the former and tiptoe around the latter.

But Fornero didn’t announce any of that, she just couldn’t. What we got instead was an awkward silence and the welling up of tears, until Monti took pity and took over, exhorting her to at least correct him if he should get some detail wrong. It was a telling little moment, and no doubt the Minister was genuinely moved, but I’d rather we had been spared the spectacle. For it read as a thesis on the crude necessity of austerity measures, to which even the just must capitulate, and as such was far too political a gesture for a supposed non-politician.

In any event, Fornero regained enough of her composure in the following days to announce her plans to go after article 18 of the Workers' Statute, the provision that subjects arbitrary dismissals to the scrutiny of a judge, that ‘Italian anomaly’ – in the eyes of the EU and its central bank – that must be corrected in order for our country to regain its competitiveness and start growing again. This is the real battleground for the Monti government and in this campaign, which will unfold in the coming months, Fornero has already given every indication that she’ll be a ruthless strategist, beginning with her refusal to meet with the joint representatives of the unions. That a technical, unelected government should even think of undertaking such profound reforms, whose aims and rationale are quite disconnected from the urgent administrative tasks that supposedly underpin its constitutional legitimacy, is bad enough. The least that they could do is not to put a human face on it.

So please, from here on in: no tears.






27 comments:

francesca said...

Sacrifice is a peculiar word, a word which generated not only the unacceptable, disgusting minister's reaction, but also one of the worst articles Barbara Spinelli has ever written, politically speaking. There is something divine (sacrum) in it, something having to do with the untouchable, supreme power. Agamemnon was ready to sacrifice his daughter Iphigenia to obtain from the gods the wind needed to sail to Troy. Agamemnon cried too, by the way, while he was willing to accept the death of his daughter, which per se made his crying at least inappropriate, a mere pose, an empty gesture. Since war could not be postponed any longer, eventually the real decision maker, Artemis, satisfied of having sufficiently humiliated Agamemnon, exchanged Iphigenia with a deer. In this way, Artemis simultaneously attained two concurrent objectives: demonstration of power and war. Both Italy and Greece are still under strict surveillance by "Artemis": no restriction is set on their military budget. I can't stand Agamemnon.
(I also note that Andreotti never cried when he imposed entirely analogous sacrifices to low- and middle-class people. He did not break into tears even in the most horrible day of his long, political life: on 16th March 1976, when he heard Moro had been kidnapped by the Brigate Rosse, he did not cry, he threw up.)

Giovanni Tiso said...

What a wonderful comment. I agree with every word of it, beginning with your assessment of Spinelli's piece.

To readers of Italian I commend this by Umberto Romagnoli on article 18.

Ben Wilson said...

>So please, from here on in: no tears.

Good luck with that! I'm expecting to see more and more displays like this.

Nice comment, Francesca. Yes, mythological forms are returning. Seems like Greece fell for the Euro Trojan horse. The gutting of it's establishments will by Pyrrhic. The women and children will be taken back to Germany as debt slaves.

James Butler said...

In reference to your title, it seems that the governing classes live in hope that if only someone else will take their medicine, we'll be transported to a new, better reality.

Giovanni Tiso said...

That. And besides the complex psychological roots of the idea of the sacrifice that Francesca has hinted at, I'd add the more straightforward expiatory reading: the south of Europe (but also Ireland and the east, so let's say the margins of Europe) must suffer for its profligacy. The imbalance to be redressed is not only economic, it's also symbolic.

merc said...

And following on from Francesca, the Father sacrificed the Son and so became both the sacrificer and the sacrificed.
Alchemy followed this up. It seems our leaders are digging deep, method-like for their repertoire.

Ben Wilson said...

Quite a few people recently have been saying that Greece should leave the economic union, if it is not to endure hardship for pretty much the foreseeable future. To me, this actually sounds like a good idea. If they could take control of their own currency, they could actually manage their own economy again, which appears to have been managed disastrously by the Euro banks. But I'm not at all sure how this could be done. The scariest part of this is that the likely people to put this idea forward are ultra-nationalists.

It would not be a good sign at all for Europe. But really, when being part of Europe means powerless suffering, the idea is dead already. Europe is looking more and more like the League of Nations every day.

Ben Wilson said...

Oh, and I don't hold out much hope for Italy, I'm afraid. A country that lets itself be run by the likes of Berlusconi for this length of time isn't a country whose future I can even pretend to predict. Nothing about it made sense to me, ever.

Giovanni Tiso said...

Quite a few people recently have been saying that Greece should leave the economic union, if it is not to endure hardship for pretty much the foreseeable future.

Nobody quite knows what would happen in the short to mid-term, which is why the Left isn't calling for it. You're looking at an immediate collapse of the banking system and the real possibility of hyperinflation, which would wipe out what's left of the Greeks' savings.

I'd add that the Greek economy accounts for less than 2 per cent of the eurozone's GDP. It could have been bailed out very easily, had there been a political will to do it. Now there is some poetic justice in the fact that the richer countries might be paying some of the price for that non-decision. As Michael Burke has written, 'it is as if the existence of the US dollar were under threat because Rhode Island had a big deficit.'

Ben Wilson said...

You're looking at an immediate collapse of the banking system and the real possibility of hyperinflation, which would wipe out what's left of the Greeks' savings.

I'm not so sure that would actually be worse than what they're already in for. The banking system seems to be the basic problem. Privately owned institutions profiting from debt is not the only way currency can be injected into a system to start economy activity happening again.

As Michael Burke has written, 'it is as if the existence of the US dollar were under threat because Rhode Island had a big deficit.'

To me, it's more like the threat of secession from the Union to the USA. Or from the Soviet Union. They just couldn't allow it, because it's a wedge issue. Others might do it.

Yes, it's crazy, evil thinking. But what isn't crazy and evil about the way that banking has killed first world productive industry and increased poverty, over and over again?

Dougal said...

I agree with your point that the question of a Greek bailout was more to do with political will than supposedly 'apolitical' technical economics, but I'm not sure you can say that "the Left" is arguing a particular line on the question of the union, Giovanni.

From what I can make out (I don't read Greek) the KKE is arguing much the same orthodox Communist line they've always argued, but there are big debates within Syriza about what approach to take. Staying and leaving both present big problems.

Costas Lapavitsas has been arguing that the Left should press for Greece exiting the eurozone for a while now.

http://www.guardian.co.uk/commentisfree/2011/sep/19/greece-must-default-and-quit-euro

http://www.isj.org.uk/index.php4?id=776&issue=133

Giovanni Tiso said...

I'm not so sure that would actually be worse than what they're already in for.

Undoubtedly, but while the situation you're describing may be satisfyingly cathartic from where we are sitting, it probably looks a little different from the point of view of a family contemplating sudden and total as opposed to partial and gradual immiseration.

Besides, brutal austerity measures and a catastrophic exit from the monetary union aren't the only two short-term options. A third one would be mutualisation of the debt risk across the eurozone, which is being resisted by, amongst others, - you guessed it - banks.

Giovanni Tiso said...

I'm not sure you can say that "the Left" is arguing a particular line on the question of the union, Giovanni.

I'm not, I'm just saying that it's not arguing that particular line - which I guess is why Lavitsas is urging it to. But other socialist economists, like the aforementioned Burke, are arguing for the necessity of a proper bailout instead.

Ben Wilson said...

it probably looks a little different from the point of view of a family contemplating sudden and total as opposed to partial and gradual immiseration.

I don't think families are getting much say in the matter, actually. But yes, it is sold that way, that the world would end if the private banking system collapsed, and was taken over by the government. So long as it sounds apocalyptic, it can be safely written off.

Besides, brutal austerity measures and a catastrophic exit from the monetary union aren't the only two short-term options.

Of course not, but they're two options the Greeks are actually in control of. They have virtually no influence over EU money policy. The option that Germany will stop punishing them is wishful thinking. Perhaps the Germans might reconsider if secession really were on the table.

I'm also not saying this from a position of cozy safety from such problems. My inability to find employment puts my own house at risk, and I'm considering all options, from selling out, and leaving the country, to going bankrupt, to living with my parents with my entire family, or even moving to subsistence farming. Nothing is off the table in such times.

Giovanni Tiso said...

Of course not, but they're two options the Greeks are actually in control of. They have virtually no influence over EU money policy. The option that Germany will stop punishing them is wishful thinking. Perhaps the Germans might reconsider if secession really were on the table.

Sure, Greece could point a gun to its own head, but it requires an enormous resolve and granitic political unity behind that goal, and even then the country might still be let go without the eurozone collapsing, which is what makes it such a gamble. On the other hand nobody is seriously thinking that the system could survive if Italy fell, and so if mutuality is required in order to rescue our economy, it might prop up Greece too. Which is why I think we’re better off thinking solidarity than brinkmanship at this time.

Ben Wilson said...

Sure, Greece could point a gun to its own head

Again with the apocalyptic discourse. It's not putting a gun to your head to refuse to pay odious debt that is killing your nation, and reorganize yourself economically.

Yes, political unity would be required for it to work like a fairy tale. It won't go like that. More likely, their economic health will have to be tortured for a few more years before any such unity will even be approached. But that isn't going to stop me saying that they could beat it to the punch while they've still got an economy.

I'm not sure if the term brinksmanship is fair either. That implies they would not have a real intention to leave that could only be placated by the EU actually having something to offer them other than suffering. Does it? What are the benefits you see? Or are they more like threats? Is the EU the brinksman in this situation, really?

Giovanni Tiso said...

Again with the apocalyptic discourse. It's not putting a gun to your head to refuse to pay odious debt that is killing your nation, and reorganize yourself economically.

You’ll find plenty of apocalyptic discourse in the reports coming out of Greece, for the simple reason that the nation is in desperate straits. A default might work – although there are many economists who think that the comparison with Argentina is misguided – but it wouldn’t be painless, and may well be even more painful than obeying the Troika. Then once the country is on its knees how do you reorganise it, politically or economically, with a disunited Left and right-wing sentiments that range from nostalgia of the colonels to the xenophobia of Chrysi Avgi? I’m as optimistic as they come in terms of what a society can achieve if it’s allowed to reclaim its democracy, but a default wouldn’t necessarily lead to that, nor is it automatically the democratic outcome just because Greek citizens aren’t currently allowed to choose to go down that road.

Giovanni Tiso said...

(To be absolutely clear, I'm not suggesting for a moment the austerity measures imposed on Greece are desirable, acceptable or even a lesser evil. Just that I'd like the financial and political institutions that created this mess to give the Greeks back their money, together with their democracy.)

Ben Wilson said...

nor is it automatically the democratic outcome just because Greek citizens aren’t currently allowed to choose to go down that road.

I'm trying to wrap my head around the Orwellianism in that. I know there are different models of democracy, but I wasn't aware that total disenfranchisement was one of them.

No, default would not necessarily lead to anything in particular. Every path needs to be managed. That's why I'm not the least bit convinced that one path is more or less apocalyptic than the other, and thus shouldn't be on the table.

Like I first said, I don't know all the details of how it could be done, but there are some perfectly plausible suggestions floating around. The thing that strikes me as most desirable about it is that the near total loss of control over their own economy that has happened can be reversed down this path, whereas the path of austerity is not a path of self-determination at all.

Ben Wilson said...

To be absolutely clear

I know this. I know you're not a neoliberal. You're trying to *explain* why they are acting as they do, rather than *prescribe* it, like I could be seen to be doing. You've still got some faith that Europe is not totally fucked in the head the way it has been many times before, and could organize their way out of this. I do come from a long line of quitters-on-Europe, most of my ancestry having fled the place when it got really bad, no matter how sweet it might once have been, so I guess I'm biased.

To put it simply, I can see both sides of a secession argument, and am aware that there are other possibilities too, more traditionally socialist ones, involving the nation fixing itself with the help of Europe. Or, it can live out the neoliberal dream and suffer the fate of the Maori, its entire country bought out from under it, and the best option for anyone young and aspiring being to leave town.

Giovanni Tiso said...

Like I first said, I don't know all the details of how it could be done, but there are some perfectly plausible suggestions floating around.

They might be plausible, but it seems to me that they're a little sketchy on how you go about protecting people's savings. It should be pointed out that there has been a significant exodus of capitals from Greece's banks in the last year and a half, which suggests that the oligarchy has already taken the necessary steps to protect its money.

The thing that strikes me as most desirable about it is that the near total loss of control over their own economy that has happened can be reversed down this path, whereas the path of austerity is not a path of self-determination at all.

I'm still unsure why the Greeks defaulting on their debt is more desirable (or, indeed, democratic), than having their debt paid by the institutions responsible for the collapse of their economy. It must be my Orwellian side I suppose.

Giovanni Tiso said...

There is also no reason why European countries couldn't try to get out of this mess together, instead of just jettisoning the least fiscally viable members of the union. That would require a massive rethinking of the EU's and the eurozone's governance structures, of course, precisely in that currently they not only don't encourage solidarity and mutuality, but practically forbid them.

Ben Wilson said...

That would require a massive rethinking of the EU's and the eurozone's governance structures, of course, precisely in that currently they not only don't encourage solidarity and mutuality, but actively forbid them.

Yes, it's exactly the kind of union I would expect a technocrat to have devised. Many of them probably don't even know that their touch is poison, so you get faces like the one in your post, the confused and sad person coming to exactly the wrong conclusion, out of the goodness of their heart.

stephen said...

To pick up on Francesca's observation: sacrifices are a devotional ritual for a god. The scripted, predictable, artificial and irrational character of "reform" is reflected here.

The difference is that when God required Abraham to sacrifice Isaac, He provided a ram at the last minute.

wv: evalt. Like _gevalt!_, but not so much.

merc said...

Stephen that is a very shrewd observation, in my view.

nodgeno, a so hip hipster hello.

Christopher said...

It seems to me that the Minister's tears is akin to Lange's cup of tea, in a way.

Ben Wilson said...

Excellent piece by Gio on this topic: http://overland.org.au/previous-issues/issue-occupy/feature-giovanni-tiso/

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