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Renzi’s Right Way

Italy's Constitutional Reform Vote

On Dec. 4th, Italian citizens will cast their ballot to approve or reject a vast Constitutional reform firmly put forward by the so-called “center-left” government headed by Mr. Matteo Renzi. If the votes in favor prevail, a third of the articles of the Italian main law will change. This would entail — for instance — the indirect election of Senators, the drastic reshaping of their powers, the centralization of some regional prerogatives, and the suppression of the National Council for Economics and Labor. It would be the most significant alteration of the Italian Constitution since 1948.

In spite of the wide range of issues touched by the reform, the Italian electorate can only give an overall judgment — a “yes” or a “no.” That is, there will be no opportunity to express approval or disapproval for individual aspects of the reform. This binary choice will result in a neat victory or defeat for all of the major or minor the political actors which have aligned for or against the reform during the campaign. Thus, each of them will end up unequivocally among the winners or losers of a campaign which has lasted for several months and which has received significant media coverage — indeed, the reform has been, by far, the most publicly debated topic of the last few months. As a consequence, it is not only the totality of victory or defeat, but the massive effort deployed by all political parties which makes this vote so relevant.

The day after the elections all the protagonists of this long struggle will be forced to recognize their success or defeat. And the unambiguous outcome of the vote is expected to produce severe effects in the national political landscape: if “yes” wins, Renzi will consolidate his hold on the parliamentary coalition which supports the executive, proving that the dissenting opinions (even in his own party) are not shared by the majority of voters. Otherwise, if Renzi is defeated, an era of political uncertainty may arise, and this for two reasons. First, it is unclear whether, if he loses, he will resign as Prime Minister, as secretary of the Democratic Party or both. Secondly, even if he decides not to resign, the heterogeneous coalition supporting his government could decide to put an end to his relatively long experience as Prime Minister.

While what could follow in the case of Renzi’s resignation is hardly predictable, much of what will happen rests in the hands of Sergio Mattarella, Head of State, who is entitled to choose whether to appoint a new President of the Council of Ministers or to dissolve Parliament and call new elections. This last scenario is complicated by an all-but-secondary aspect, the absence of a consistent electoral law for both the Chamber of Deputees (the “lower house”) and for the Senate. It is acknowledged by almost all political actors and analysts that in case of snap elections a period of transition would be necessary in order to approve a new electoral law. This is said even supposing that the Constitutional Court will not declare (part of) Renzi’s electoral reform unconstitutional — a judgment which will come out shortly after the referendum.

This considerable uncertainty notwithstanding, the Italian Prime Minister has already achieved a non-negligible success in the present referendary campaign: he has been able to create a significant political cleavage around a topic which, at first sight, is highly unpalatable from an ideological perspective. If, in their classical study on party formation, Stein Rokkan and Martin Lipset identified four main oppositions around which different parties can define their peculiar proposals (centre/periphery; State/Church; urban/rural; owner/worker), Renzi has accomplished the difficult goal of dividing an entire country on a matter difficult to connect with these historical divides. This fact is even more perplexing once we consider that constitutional reforms are usually understood as institutional moments requiring a vast and disparate agreement across the aisle – especially in a context as the Italian one, which has a long tradition of political polarization. The fact that a future different majority will repeal this reform (thus creating exactly the kind of institutional instability Renzi wants to cancel) would not be simply a paradox. It would be the precise result of the highly controversial content of the new Constitution. How, then, should we explain such a development?

A first clue is to be found in a short postscript to a reprint of Norberto Bobbio’s famous Left and Right. The Significance of a Political Distinction that Renzi wrote in 2014. In that brief essay, he (or, perhaps, his ghostwriter) claimed that Bobbio’s thesis — which claimed that it is divergent attitudes towards inequality that compose the main difference between left-wing and right-wing political forces — is no longer sufficient to explain the current political landscape. That criterion alone, the Italian Prime Minister went on, would not be able to account for the populist and xenophobic parties which have appeared in recent years. Today, Renzi stated, the real contrast is between innovators and conservatives, between a pragmatic left which gets things done and a nostalgic, overtly intellectual one which cannot provide the change we need. He left this concluding phrase unspecified, however, failing to clarify what precisely should be changed, or which principles have to inspire innovation. He recognized that the left is still defined by its interest for the least advantaged, but it is not clear how such a vocation would be compatible with his magnification of the “extraordinary, irrepressible movement” of our times, which “breaks down the old bidimensionality of the couple left/right” — a movement whose name, we know all too well, is neoliberalism.

We have now a first element allowing us to better grasp Renzi’s self-proclaimed new left: its emphasis on process rather than on specific contents. This characteristic is plainly in line with what Gianfranco Pasquino (perhaps, with Giovanni Sartori, the most important living Italian living political scientist) wrote a few months ago: according to him, Mr Renzi’s Democratic Party (PD) shows all the features of what is traditionally labeled a “catch-all party.” It has (1) drastically reduced its ideological baggage, (2) strengthened leadership groups, (3) downgraded the role of the individual party member, (4) de-emphased the classe-gardée, and (5) secured access to a variety of interest groups. In this way, the innovative left ends up as something more like a “Party of the Nation,” one that represents as many social strata as possible through the elaboration of an all-encompassing platform.

Renzi’s rhetoric throughout the referendary campaign is mirroring a scheme of this kind. Noting that his opponents in this vote include a heterogenous array of forces ranging from the radical right to the extreme left, Renzi’s rhetoric is attempting to create a new alternative by appealing to voters on both sides of the electoral spectrum. He does this by depicting himself as a staunch innovator willing to dismantle all kinds of privilege and inefficiency by reforming the Italian parliament in a way that would make its deliberations faster and its legislative outcomes clearer.

It is at this point, however, that the “catch-all party” reading needs to be supplemented. And this because Renzi’s government policies have been anything but empty – and, at a closer inspection, less centrist than one may have expected. The most important example of this is the labor market reform, the so called “Jobs Act” (Law 183 of 2014). The Jobs Act introduces a series of important innovations, most notably:

  • it creates a new standard open-ended contract (named Contratto a tutele crescenti) for new hires that abolishes workers’ reinstatement rights if firms invalidly fire them (unless dismissal is discriminatory or is only notified orally);
  • it gives firms the power to monitor employees through many types of electronic devices;
  • it abrogates workers’ right to obtain a permanent contract if the employer exceeds the limit of temporary contracts established by Italian legislation for each firm;
  • it increases the maximum amount of revenue that can be received through vouchers — tickets used to remunerate (with 7.5 Euros per hour) accessory jobs granting no social security rights and a minimal social security contribution — from 5000 to 7000 Euros per year. (The risk being, of course, that vouchers would be used also for paying dependent work);
  • it introduces substantial monetary incentives (of 3-years duration) for firms which hire recurring to open-ended contracts or convert previous temporary contract in this new form.

Broadly conceived, this reform is coherent not with center-left, but with typical right-wing labor policies, policies that are built upon the assumption (questioned by a growing amount of economic literature) that factors such as firing restrictions, high minimum wages, and significant social benefits are the main causes of unemployment and weak competitiveness. The only way to sell a measure like this to a transversal electoral basis is by experiencing so high a boost in employment and productivity that the loss of guarantees for the labor force is countered.

While it is too early to produce a complete assessment of the Jobs Act, the studies currently available show that its likely consequences will be far from satisfactory. For instance, during the first ten months of 2015 the number of permanently employed people registered an increase of two hundred thousand units — a weak result, especially taking into account the massive incentives provided (between 14 and 22 billions over 3 years) — while in the same period vouchers grew at a 70% rate compared to the previous year. These results have been recently confirmed by the Italian Social Security Institute (Inps), which has certified a non-negligible, 32% drop of new, open-ended assumptions in the first eight months of 2016 in comparison with the same time period in 2015. And the long-term weaknesses of the Italian labor market, such as female underemployment and a lack of investments in research and development, do not appear to have been substantially effected by the reform.

The Italian government therefore found itself facing unsatisfying economic outcomes while its main party, Renzi’s PD, adopted an agenda difficult to combine with an electorate which, despite its “party-of-the-nation” ambition, is still mainly center-left. We have to admit that the perception of this alarming situation has partly been concealed by the Italian lack of a modern right. Indeed, Mr. Renzi’s positions on, for example, LGBT rights and the refugee crisis — which distance him from his right-wing national adversaries to a considerable extent — are near to those of David Cameron and Angela Merkel respectively, world leaders who are surely exponents of the center-right. However, the popularity of the executive branch has been declining in the last months. The content of Renzi’s highly publicized reforms has not been as disruptive as the Prime Minister would have liked, and pollsters affirm that today the first Italian party is the hybrid Five Star Movement — PD’s main rival.

In such a context, the enormous amount of energy, time and media space devoted by the Prime Minister and his party to the forthcoming referendum starts to become clear.

It is certainly not our intention to state that such a vast reform of the Constitution should not receive coverage at all, or only minor attention. These much-publicized reforms could drastically change the institutional life of Italy and the Italian electorate has the right to receive enough details to make an informed judgment on Dec 4. Likewise, we do not intend to say that the huge amount of time devoted by the media is the result of direct and precise guidelines given by the executive in order to divert the attention of the audience from bread-and-butter problems of the majority of the Italian population. However, thanks to this extra attention — and to the unwise condescension of the opposition — Renzi has achieved significant goals. Not only he has diverted attention away from the poor economic achievements of his government, but he has also created a political cleavage which has no social base, thus fulfilling the “prophecy” Renzi wrote in his commentary to Bobbio’s work.

While the country is profoundly divided between those who will vote in favor and those who oppose the new Senate, the same Parliament in now examining the new budget law proposed by the government for the next fiscal year. So far, it contains a clearly regressive clause (art. 22) that will make it extremely convenient for ultra-rich people to transfer their residence to Italy. No matter what the revenue produced outside of Italy is, they will be asked to deposit for several years only a lump-sum payment of 100,000 Euros. So, for instance, if a person earns abroad revenues for 1,000,000 Euros and decides to move to Italy, he/she will be required to pay only a 10% share of it, which is lower than the percentage paid by a factory-worker on his/her own income. This “wealthy-catching” clause, as it was labeled (“acchiappa-ricchi” in Italian), can only increase inequality. Not to mention what could possibly happen if also other European countries decide to adopt similar measures, which are far more regressive than a flat tax on the same privileged category. It is up to the left to clearly state it and to try to block it, as it is clearly unrealistic that the right-wing opposition will oppose the introduction of neoliberal measures.

The fairness of the fiscal system and the living conditions of millions of workers who are progressively pushed towards insecure jobs should not be forgotten in the name of an artificial cleavage. Insisting for months on a one-dimensional fracture (pro/against the Constitutional reform), risks causing enormous consequences to the entire political system, especially on the Left, which, as Bobbio himself argued in the above-mentioned work, was born from the desire to reduce social inequalities and injustice.

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