Italian Views on Austerity, the Euro and Democracy

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ITALIAN VIEWS ON AUSTERITY, THE EURO AND DEMOCRACY

By Pam Field, with contribution from Sue Davies,

Translations By: Prue Plumridge

Across Europe, ordinary people are struggling, their governments having wanted to ‘repay deficits’, or having been persuaded, or “blackmailed” by financiers who seem able to raise interest rates at will, to make cuts in public services and so to turn on the screws and bring about very real suffering. Governments have imposed austerity measures, which are justified in terms of the need to reassure the markets and finance the increased interest rates. Simplistic it may seem to you, but the only way real wealth was ever produced was by workers. It is the use of precious Earth’s resources transformed by skilled hands which allowed mankind to survive, to be creative and successful. Printing money, like a stuttering press churning out IOUs never made anything else, apart form a subservient populace.

‎”God help me, I can perceive nothing but a certain conspiracy of rich men procuring their own commodities under the name and title of the commonwealth.’ Thomas More Utopia of 1516. 3) Guardian

‎’Yanis Varoufakis, ex-speechwriter for former Greek prime minister George Papandreou and now an economics professor in the US, said … : “There is precisely zero chance of austerity working. It is the same as thinking you can escape from gravity by waving your arms up and down.”‘ 4) Guardian

Amid reports of a divided Europe, we should be reading “Divided classes”. What is needed is an united opposition to austerity. As the people of Europe witness the reality resulting from tolerance of tax evasion by the super-rich, a united approach to counteract that is the only way forward, and must be part of the inevitable rejection of austerity at some point in the future. People can only take so much of this financial abuse.

In April, (5), Tax Research UK reports that the European parliament has officially adopted the policies of the Tax Justice network. The time for action to reclaim wealth stashed away in tax havens is well overdue and until this has been addressed no progress will be made.

We live in an oligarchy. Power rests in the hands of a few.

Democracy in Europe (1.) and beyond (2) has been eroded and power to change currently rests with the financiers and not with the people. Turkeys however, do not vote for Christmas, and power will not be relinquished easily. From an Italian viewpoint, Guido Grossi proposes an alternative way to tackle the injustice of misplaced power and create a democratic federal EU.

Thanks to Prue Plumridge who provided the translation from Italian.

‘The sovereign citizens of Europe want more transparency and more democracy, not an absurd concentration of power in the hands of the usual bureaucrats. The European Commission, composed of non elected technocrats, excessively and shamelessly in the service of the financial markets, don’t give a damn about our real needs and about our aspirations. If Europe must be, let it find the courage to transfer its powers to the European Parliament which, however feeble, would be the only institution that might represent the wish of the European people. And, let if find the courage to draw up a Constitution that sets out the guarantee for real democracy. Until that moment have the decency to admit your shameful failure and step aside.’

Guido Grossi’s proposed Social Pact is echoed by another Italian leftist, Marco d’Eramo, who writes ‘The only solution would be to initiate a process of political unification, launch a common governing body to which much of national sovereignty in economic policy is given up, a government responsible to a truly federal (or confederal) elected parliament, not the parody of the Central Bank…’. (6)

However, in the article reprinted below (from REVOLTING EUROPE), Marco d’Eramo argues that under current conditions the only choice is between saving the Euro or saving European economies.

It is plain to all: monetary union is dividing Europe. The divide is political, social, economic in particular. The euro was designed as a tool to cement European political union and to anchor German prosperity to the rest the Continent. Instead, it has served to highlight the gap between town and country, led to economic collapse and exacerbated nationalism and xenophobia. A collateral by product, but no less devastating, is that the euro is undermining democracy, thwarting universal suffrage, cancelling two centuries of popular gains, erasing with a stroke of the pen essential elements of civilization. In the name of the common currency unbridgeable chasms are dug between one European country and another, and borders more impassable than the Berlin Wall are erected. It is no accident that, in the first round of French presidential elections Marine Le Pen received 18% of the vote with a campaign that was centred on opposing the ‘European Soviet Union.’ A spot-on slogan, even if indigestible. The common currency functions like a Warsaw Pact and the debt burden overwhelms like the armoured divisions of “brother countries”.

Nor could it be otherwise: very different economies have been forced to squeeze under the umbrella of a single currency without any means of harmonization. Spain will be subject to the same level of interest rates in Germany but with four times as many unemployed, unable to devalue to gain export competitiveness and unable to loosen credit to alleviate a banking system on the brink of collapse. The euro is paying for its original sin: having built a common currency without founding it on a common economic policy. Neither was it possible without a common decision-making centre, democratically elected and democratically controlled. Result: we found ourselves at the mercy of an imposed but highly unbalanced and divided Franco-German duumvirate. That the economic crisis of the European Union is due to a lack of political democracy is only lucidity stated, apart from Il Manifesto, by Barbara Spinelli**, whose voice echoes in the wilderness of the Italian press.

In this situation it is pointless (and unfair) to ask the German taxpayers to shell out money to an entity that is not their own (nor is it ours). The only solution would be to initiate a process of political unification, launch a common governing body to which much of national sovereignty in economic policy is given up, a government responsible to a truly federal (or confederal) elected parliament, not the parody of the Central Bank without key powers, first of which is lending to banks in their [Eurozone] area and buying government debt (as the U.S. Federal Reserve and the Bank of Japan do). This would be the only solution to save the euro and European economies. But this would require a European left or, rather, the emergence of a supranational European dimension of the left. Instead, these first ten years of the single currency have confined the left to their narrow national territories and horizons, making everyone deaf and blind to the worries of their neighbours.

We have been asking for months: what leader of the European left has gone to Athens or invited, at his time, of George Papandreou (when he proposed a referendum on austerity and was threatened with a military coup) and now Alexis Tsipras? In these ten years of the euro the European Left has soaked up, without realizing it, nationalism and Euroskeptiscism that the dictatorship of the spread has fuelled.

Maybe it would have been possible in 2001, but then nobody was ready to cede an ounce of its sovereignty. So now this solution – the only reasonably conceivable – is precluded. We cannot save both the single European currency and the various European economies.

There thus remains only one choice: save the Euro or save our economies.

This we all more or less recognize: yesterday a headline in the New York Times read: ‘A Tempting Rationale For Leaving The Euro’. We know that the choice is not between bad and worse, but between worse and disastrous, and that both dilemmas promise a scary near future.

It is very fashionable these days to recall when in 2001 Argentina abandoned parity of its currency with the US dollar (parity, which it had maintained with great pain for ten years). This virtually wiped out the savings of its citizens, real wages fell and social spending was decimated: in 2002 GDP fell by 11%.

But since then growth has been swift and uninterrupted for a decade. While we know with certainty that the austerity imposed on us from Brussels and Berlin promises us only a decade of recession, impoverishment and barbarism.

Ps. What short memories we have. No one seems to remember that the diktat of the ECB and the European Commission seem borrowed from the recipes that the International Monetary Fund and World Bank prescribed “sick” economies of Third World. And nobody wants to remember the outcomes of those treatments that cured the diseases, but killed the patients. (6)

IN THE RADICAL PRESS / IL MANIFESTO

17.05.2012

Guido Grossi’s blueprint for a new democratically constructed Social Pact is reprinted in full below (with thanks to Prue Plumridge).

A New Social Pact (Guido Grossi, Translated by Prue Plumridge)

Priority No 1 for Italian citizens

The public debt generates social anxiety and aggravates uncertainty. Presently, there are two competing arguments:

  • Austerity is necessary to raise the resources and pay back the creditors
  • We might resort to a more or less controlled default

The proposed medicine plugs the problem but increases anxiety and aggravates social uncertainty, above all amongst the underprivileged.

Do better solutions exist?

Let’s start off with a fact. Italy is a rich country: we have public assets and private savings amongst some of the best in the world. It is envied and sought after. Let’s use these resources in an intelligent manner and without running the risk of getting them snatched from us.

Let’s put the public debt bonds in the hands of Italian families and free ourselves from the blackmail of the finance markets, present and future, without causing suffering.We want to make it attractive and do it without taxation. We can achieve this immediately using two mechanisms:

a) Using public assets to guarantee the state bonds acquired by Italian families. At the present moment the debt is not guaranteed. The creditors will become ‘privileged’, a position to be envied by American, German or Japanese citizens. The spread should be reversed.

b) Convincing holders of illegal capital to underwrite the public debt. Using the carrot and stick method.

Carrot

  • Payment of a tax on the capital between 10-15% (instead of 30-40%)
  • Obligation to use at least 70% of these sums to underwrite bonds with long due dates and incomes held down, guaranteed by state assets.
  • Decriminalisation of past offences or unlawful behaviour.

Stick

  • Provision for a new offence for those who don’t comply with the initiative :
  • Sanctions equal to 120% of the sum uncovered
  • Prison ranging from 5-10 years

Many countries are proposing international measures for hitting secret bank accounts and the use of tax havens. The risk of being discovered becomes real. There is an enormous collateral advantage. Some might propose placing our public assets as security for institutional investors, often abroad. And through this we would risk losing our precious national assets. As a first step we want them to be secured by Italian families. And tomorrow, even European families, if we succeed in going beyond a Europe of ‘finance dealers’ to build a Europe of people and citizens.

We need to be careful. Public assets must be placed as a security, only for bonds acquired and held by Italian families. Otherwise we risk losing our patrimony.

Priority No. 2 – Italian citizens

But how will this money be used? More corruption, environmental degradation, waste and privilege? Both individual and social uncertainty create anxiety and desperation among the weakest and sense of guilt among the more fortunate, and yet we put up with the intolerable. Why is it so difficult to make a better world? Today Italian society is split into many interest groups in acute conflict with each other, each exclusively defending its own ‘privileges’, both large and small. They are frozen in time and obstacles to change.

The solution: A new social pact

We want to restore effectiveness, using the method of democratic control and active participation of citizens. Make conflicts of interest transparent. To be able to ask each one – by using stick and carrot – to give up his/her own privileges, big and small, in exchange for a stronger, more balanced and sustainable society which will be rich in the fullest sense of the word.

The way:

  • Fiscal system to be rendered simple, transparent and just. Progressive, as is laid down by the Constitution. Efficient: taxes are paid …. or else.
  • Public expenditure is rendered transparent and directed towards:

a) Satisfying the needs of citizens according to their order of priority.

b) Sustaining productive investments. Creating employment and businesses which increase the wellbeing of all by creating not only economic wealth but also social and environmental capital.

We don’t believe that there is a ‘problem with young people’ to resolve. That we need them is absolutely undeniable. Only ‘generational exchange’ (i.e. employment turnover between the generations) makes the change possible and effective. Beyond the moral duty, to make it easier for the younger generation to have full access to the world of production and social management, we have a practical interest. That is a real interest in obtaining their active, informed and responsible participation in the functions of democratic control over the execution of activities of collective concern.

The process: In bite size

Let’s guarantee the transparency of information and the participation of citizens by:

  • Creating an Institution of Public Organisations of Democratic Control which makes possible immediate access to information about key management operations within public administration with an interactive mechanism.
  • Strengthening the institutions of direct democracy – to guarantee real possibilities for correcting and directing the action of representatives.

Let’s eliminate the privileges with deeds and not words by:

  • Recovering the money lost through tax evasion: by simplifying and making the tax system more just; by simplifying and making the certification and the enforcement process more just. Providing for severe punitive sanctions, including jail.
  • Eliminating the black economy: actions aimed at making the regular economy more advantageous. Currently it is not.
  • Cutting the costs and privileges in politics: costs of corruption; individual economic privileges. We do not want, however to reduce representation.
  • Liberalising the professions; abolishing and changing the structures which today impede generational exchange and keep costs artificially high for citizens.

Let’s redesign the world of production by:

  • Separating Finance from Commercial Credit in order to move investments from speculative bubbles to production of real goods and services.
  • Using happiness indicators in place of the GDP. They demonstrate that citizens attribute importance not only to the economy but also more human values.
  • Giving substance to article 41 of the Constitution: Law of Social Responsibility and Commercial Enterprise and Law of Social Responsibility of Financial Enterprise.
  • Transforming the civil service and local government: eliminating the bureaucratic model. Establishing the principle of the predominance of substance over form and the obligation to be transparent. Freeing up resources to bring them directly under the control of a ‘different and effective’ public service to citizens and to production. Dependent on democratic control. The citizens want efficient public services.

Recover a sense of dignity in employment: fight against employment insecurity by:

  • Creating regular and useful work and allocating resources for activities that guarantee increased opportunity for regular work and which produce real goods and services that will be valued by citizens. (eg renewable energy, environmental protection, digital infrastructure , food processing, recycling.)
  • Making it easier for young people to start up new businesses
  • Encouraging ‘generational’ exchange (employment turnover) in particular amongst the professions, public administration as well as in the fields of law and justice, schools and research.
  • Restructuring and codifying access to work contracts into a single legal model which is guaranteed. With respect to the demands of production let’s fight in a standardised way against ‘employment insecurity’
  • Urging labour organisations to guarantee effective democratisation of action and integrity of representation.
  • Bringing the pension system into balance: eliminating lifetime pension annuities ( payable to Italian MPs with minimal years of service contributions); reducing substantially the highest pensions which do not correspond to actual contributions; reducing pensions however high they are; increasing the minimum pensions and protecting them from inflation.
  • Maintaining and increasing old age pensions to favour generational exchange. Linking them to a clearer relationship between time served and amount received (first to go, less you take).
  • Eliminating pension funds that have acted as a reservoir for speculation and bring together all the management into a single pot, under democratic control.
  • Making information transparent, by distinguishing the resources which serve to guarantee future pension funds from those necessary for welfare support (accidents)

Regulate immigration by:

  • Facilitating family reunion and social integration whilst respecting cultural diversity and identifying employment in the black economy.
  • Concentrating foreign aid on North Africa. With commercial agreements and direct investments even if it means no economic return so as to make life in these countries sustainable. Redirect funds from military missions abroad.
  • Fighting against clandestine immigration.

Let’s ensure environmental sustainability by:

  • Activating within schools a culture of eco-knowledge: awareness of the risks; knowledge about alternative solutions.
  • Bringing the measurement of the ecological footprint within the sphere of public administration and business balance sheets. Let’s use it to direct our action.
  • Creating an urgent national plan for energy efficiency aimed at reducing energy wastage.
  • Creating an urgent national plan for the development of renewable energy, using a broad model which respects the country, the landscape and the indefeasible right to health.
  • Eliminating petrol and carbon subsidies.

Let’s rediscover a sense of justice and legality by:

  • Undertaking a drastic simplification of standards to bring everything from ‘form’ to ‘substance’
  • Ensuring that the sentences handed down reflect the seriousness of the crime in relation to the effects on society and that it is shared by the community.
  • Drastically reducing the length of time to bring actions to court and deal with them: making the best use of and rationalising resources. And dismantling the formal rules. From ‘form’ to ‘substance’ of procedural truth.

School and university research

  • Private schools should have freedom but cannot be subsidised
  • State schools must form in an impartial manner the social conscience of the citizen by creating the habit of exercising independent, critical skills. Economics and law as a taught subject in primary schools. Bring the world of work closer within secondary school education.
  • Pure research within universities should be free from private influence.
  • Applied research (which results in new products or working methods and which requires private investment) should be subject to democratic control with the aim of promoting good relationships with the private sector.
  • Promote ‘generational’ exchange (employment turnover).

Relationship with Europe

We want to export the model of the new social pact throughout Europe. We must without question go beyond a Europe of dealers and bureaucracy to promote a Europe of people and citizens.

We want to work for a Europe founded on:

  • Centrality of parliament
  • Open to the institutions of direct democracy even and above all in economic matters
  • Granting full monetary sovereignty
  • Provision of an efficient but controllable government with fiscal levers.

Perfectly aware of the necessity to find common solutions, we hope to find as much interest amongst the peoples and citizens of Europe. Ready to force the hand of the present institutions who are, without doubt, incomplete and hardly transparent, in order to drive the change to which we have a right.

1. Think Left Democracy in Europe is under threat

2. Capitalism Neoliberalism, Plutonomy and Neofeudalism

3. No wonder the working man despises the elites. Guardian

4. The facts are clear: This cruel austerity experiment has failed, Guardian

5. Tax Research UK (Richard Murphy) The European Parliament officially adopts the Tax Justice network’s agenda

6. There’s just one choice: save the Euro or save our economies

7. As Michael Hudson Predicted: The Euro-Reality of Austerity

One thought on “Italian Views on Austerity, the Euro and Democracy

  1. Pingback: ‘Brinkmanship’ and the Euro Crisis. | Think Left

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