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Italian populism calls for hard choices

Alessio Terzi, (2018), “Italian populism calls for hard choices”, Bruegel, 31 Μαΐου

Prompted by an unfolding political crisis and financial-market sell-offs, several international observers have only just tuned in to Italy’s current situation. Often, they have been shocked by the strength of support in an EU founder-country for parties embracing such inflammatory, populist and illiberal rhetoric.

In the best case, many have jumped to simplistic explanations, the most frequent of which argues that The League voters just seek lower taxes, while Five-Star Movement supporters – largely located in the poorer south – want easy money through a universal basic income. In the worst cases there have been arrogant explanations posited, along the lines of: “People don’t understand, they are irrational, or daft.”

Looking at the economics of Italian populism, most of the proposals appear to be superficial, unbacked by evidence or careful reasoning, and likely to augment rather than alleviate Italy’s longstanding problems – including poor competitiveness, shaky public finances, high spending on retirees and low spending on youth, and rising inequality. However, some of their premises are far from farfetched. In particular, they are rightfully calling out national and European ruling classes, who have prevaricated over long-known problems and inconsistencies, because they required hard choices.

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