Articles:
Delaying Elections will Prolong Italy’s Misery

Westerners are
forever lecturing others that they should hold elections and respect democracy.
But when they might have to hold some polls themselves they cry “Instability!
Danger!” That is a not-too-unfair description of the reaction in the Italian
political establishment and in bond markets to the collapse of Italy’s latest
wobbly government and the prospect that it could bring about the country’s
second set of elections this year.

The
bond markets’ response is the more reasonable of the two: new uncertainties
require new risk premia. But the uncertainty caused by the resignation of Silvio
Berlusconi’s ministers from Enrico Letta’s government simply follows the
previous certainty that the Letta government was paralysed.

His government had been hobbled ever since it was formed as a
distinctly unGrand coalition in April, to bring to an end two months of stalemate
following inconclusive elections in February, but has been utterly paralysed
ever since Mr Berlusconi became a convicted criminal on August 2nd.

The former prime minister, who has dominated Italy’s
political scene for two decades, could have responded to that conviction for
tax fraud by acting as a noble martyr, pleading his innocence but accepting his
punishment for the sake of the nation. Instead he chose to challenge all the
country’s political institutions—its judiciary’s right to convict him,
Parliament’s right to expel him under a recent law that forbids convicts from keeping
their seats, the government’s right to continue in office, even the head of
state’s desire to protect the constitution. The result was paralysis.

A
paralysed government, even one led by an able, reformist man like Mr Letta, is
worse than no government at all. As every economist and political pundit knows,
Italy needs a raft of reforms to cure the ills that gave it by far the worst
economic performance among the G7 rich nations over the past 15 years, and a
raft of political reforms to make its elections, its parliament and its
judicial system fit for purpose.

A government formed of sworn enemies, ranging from Mr Letta’s
left-wing Democratic Party, through the tiny centrist forces of his predecessor
Mario Monti, to Mr Berlusconi’s right-wing People of Liberty party, was never
going to be able to implement more than a modest portion of those reforms. It
was a holding operation, designed to see off the threat posed to the old
political parties by the showman Beppe Grillo’s insurgent, populist Five Star
Movement, which came from nowhere to take a quarter of the votes. Yet until
paralysis set in, holding was the best that could be done.

Now Mr Letta is going to attempt another holding manoeuvre:
on Wednesday he will try to win over enough defectors from Mr Berlusconi’s and
Mr Grillo’s parties to win a confidence motion in Parliament and form a new
government. No doubt it is his duty to try, and if he were to succeed in
causing a major split in Mr Berlusconi’s party he might do some lasting good.
But this is still not a proper solution, in a democracy.

The proper solution, and in fact the only way in which a real
reform programme stands any chance of being introduced, is through new
elections. The Italian media protest that according to opinion polls new
elections will still result in a stalemate. Maybe they will, but this conveniently
forgets the way in which the polls swung violently and unexpectedly during the February
campaign.

There is everything to play for—as long as the Italian
political establishment is prepared to learn the lessons of February. The first is that if you let Mr Berlusconi determine the
political agenda, making him the centre of attention, he will prosper. But the
second, and biggest, lesson is that what Italian voters want is change—they
crave a real sense that political leaders understand what has gone wrong, and
that they actually want to do something about it. That sense is what the old political
leaders failed to offer in February, but need urgently to do so now.

The future of the whole euro area hangs on a kind of race
between the internal devaluations and structural reforms being demanded of the
debtor nations by Germany, and the loss by voters of the patience required to
follow that painful course. In Italy, the euro area’s biggest sovereign debtor,
reforms have barely begun and yet voters have already lost patience with their
leaders. Putting elections off won’t make that any better.