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Italian elections: Monti vs. Berlusconi and a test of democracy

The upcoming Italian elections are a contest between the populism of short-term fixes championed by Silvio Berlusconi and the long-term reforms of Mario Monti necessary to make Italy’s economy solvent, competitive, and sustainable over the long run.

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Vetocracy is a decayed form of democracy in which special interests – from unions to banks – have staked a claim on the state and seek to block any reform that threatens their spoils. In Italy, such special interests even have so-called “acquired rights.” To satisfy such appetites, debt as a percent of GDP in Italy soared from 60 percent in 1980 to 120 percent by 1992.

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A vote to retain this status quo is not only a vote for the past – because it is a vote for the vested interests of the present – but it is a vote against the future. Former Italian prime minister and current candidate Silvio Berlusconi is in many ways the poster boy for Diet Coke democracy and vetocracy as he revs up the right-wing populist impulse. Beppe Grillo on the populist left has more to offer by rightly expressing the anger and frustration over pervasive corruption. But anger and frustration are not a governing program.

Italians should consider what is at stake. Albeit in a global growth environment, former German chancellor, Gerhard Schroeder, was able to push through the kind of structural reforms Monti has proposed back in 2003 when he was in office. He was rewarded by being kicked out of office in the next election. Yet, a decade later, Germany is the strongest and most competitive economy in Europe as a result of those reforms.

Reforms take many years to manifest their benefits, and are always unpopular at the outset. Clearly, democracy mispriced the value of Mr. Schroeder’s reforms. Will it do the same for Monti’s?

Is Monti a legitimate candidate?

The related issue is whether Mario Monti should have put himself forward directly as a candidate for prime minister again in the election campaign. Because he is already a "senator for life," Monti cannot technically stand for parliamentary election, but he could be re-appointed as prime minister if his coalition makes adequate gains in parliament.

In an effort to retain his elevated, “above the fray” impartiality, Monti instead has agreed to serve again in government only if the reform agenda he proposes to continue (his structural reforms) gains enough support from the various parties contending for seats to win a sufficient majority. Only then would a new government be able to see them through. Critics argue that if Monti doesn’t “earn” a leadership role as a candidate, he won’t be “legitimate.”

I understand this argument but can also see how Monti’s path makes sense. What is important is the “circuit breaker” agenda. It would be useless to elect a “re-politicized government” without a majority to implement reform. Monti is already a member of parliament as a senator-for-life and thus legitimately eligible for a leadership role in Italy’s parliamentary system.

Also, what Monti is attempting is not so strange in other democracies. When Jerry Brown successfully campaigned for governor of California in 2010, he pledged he would not raise taxes without “asking the people.” One reason he did this is that bipartisan gridlock in the California legislature – where a supermajority two-thirds vote is required to raise taxes – blocked his ability to raise taxes through the legislature.

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