The Clown Says, "Italy Should Not Be In A Rush To Have A Government"

And Beppe Grillo, the (former) clown, may be right.  Indeed, as of yesterday, Luigi Bersani of the Democratic Party who has been trying to form a government in Italy, gave up.  He has refused to make a grand coalition with Silvio Berlusconi's party, and his efforts to attract support from Grillo's 5 Star Movement have failed.  As a result, while there is a parliament, there is no government.  President Napolitano has appointed a group of 10 Wise Men to work for 10 days to come up with proposals to change how elections are run, five politicians and five bureaucrats.  None are from Grillo's 5 Star Movement, which came in second in the Senate election, which has led to Grillo's statement contained in the subject head of this post.  For more details see http://www.euronews.com/2013/04/02/10-wise-men-try-to-get-italy-s-politics-moving .

While the rise of Grillo and his "Grillismo" and even "Grillonomics" has led many to essentially freak out that this is the end of Western Civilization As We Know It, or at least of any hope for reasonable or sensible government in Italy, with these fears exacerbated in light of the financial crisis in Cyprus and the potential threat to the European and world economies, these fears may well be overblown.  While there has been much reporting of increasing spreads between Italian and German bonds, in fact the movement has been minor, with these well below crisis levels.  In Autumn 2011, 10-year Italian bonds hit 7%, viewed by many as the crisis point, but the latest report has them only at 4.63%, compared with 5.02% in Spain, 6.58% in Portugal, and 12.25% in Greece.  Grillo has made many provocative statements, including in 2007 instituting Veffanculo (Fuck you) Days, or "V-days," but it is far from clear that his actual economic ideas are all that outrageous, even if he refuses to back Bersani or a new government at this time.

Indeed, the 5 stars of the movement's name (it is not a "party"), represents the five planks from its economic platform: public water, sustainable transport, development, connectivity, and environmentalism.  Clearly these are somewhat vague, but they have taken more concrete form in writings and documents coming from Grillo's top economic adviser, Mauro Gallegati of the Polytechnic University in Ancona.  Gallegati is the co-founder with Alan Kirman of the Workshop on Heterogeneous Interacting Agents (WEHIA) and a coauthor of several papers with Joseph Stiglitz and Bruce Greenwald, which has led to reports that Stiglitz would be advising Grillo, although this does not appear to be the case.  Nevertheless, Gallegati has led a group to advise the newly elected Grillini to the Italian parliament on economic policy, and has more specifically advocated taxing the rich, emphasizing happiness over standard economic growth, with a focus on developing culture and tourism as keys to non-corrupt and sustainable Italian economic growth, along with a focus on encouraging green technologies.

What is somewhat unclear is the group's view on the most pressing macroeconomic issues facing Italy.  Grillo like Berlusconi ran at least partly opposing externally imposed austerity coming from Germany in particular.  More than Berlusconi, Grillo also seems to support a departure by Italy from the euro, although this does not seem to have been the central issue in his refusal to support a government led by Bersani.  Of course many observers think that indeed the euro is bad for the periphery and doomed in some longer run, although I have forecast that the euro will probably muddle through.  Nevertheless, the most likely locus of a move to really end the euro is Italy, and the Grillini may be the key to this, even if none of their number are among Napolitano's Wise Men.

(I should note that I have coauthored with Gallegati and consider him a friend, although I have not discussed in any depth his views on all this other than to make jokes about his role in the movement.  He is a big wise cracker who has been known to preface professional presentations with anti-Berlusconi jokes.)

I note trhat critics of Grillo argue that he is overly nationalistic and that there is a lack of internal democracy within his movement, although its candidates for office have been selected by online voting and must have certain educational and "cleanliness" credentials.  Nevertheless, some Grilli critics have been expelled from the movement by him.

In any case, Italy is leading us into interesting times, one of those old Chinese curses, and the Grillini may end up playing a decisive role in how these events transpire.

Barkley Rosser