Making Italy Great Again, by Peter Schiff

Populist parties do what’s popular, almost by definition. Unfortunately, what’s popular doesn’t always make any sense. From Peter Schiff at europac.com:

This week, market watchers around the world are justifiably fixated with the high-stakes, high-drama political developments unfolding in Italy. While a political crisis in the world’s 9th largest economy (International Monetary Fund figures, 4/17/18) would normally not be enough to cause an international meltdown, given how thin the global economic ice has become as a result of ever-increasing debt loads, even small disruptions can create systemic problems. But from my perspective, what makes the Italian drama so interesting is that it parallels so precisely developments in the United States. It’s amazing that more Americans do not realize, that when looking at Italy, they are looking at a fun house mirror reflection of the United States.

Italy is currently dealing with the results of an election in which populist political forces scored a big victory over the establishment, which they had judged to be both corrupt and ineffective. In other words, the Italians replayed the 2016 Presidential election in the U.S. The big difference is that here the anti-immigrant tendencies of the right and the economic populism of the left were united in one person: Donald Trump. In Italy, those positions are represented by two separate parties that normally would be rivals. But politics can make very strange bedfellows, and the absurdity of the current economic reality has made them partners.

As a result, the top two finishers in their recent election, the left-leaning Five Star Movement and the right-leaning Northern League have cobbled together a contradictory political program that mirrors the Trump agenda. While both parties share nationalist goals to curb immigration and fight for greater autonomy from the European Union, Five Star’s secondary policy goal is to lower the (already low) retirement age and institute universal basic income for all citizens, while the Northern League’s secondary policy goal is to lower income taxes. In other words, their proposed coalition would look to spend more and tax less. That’s the Trump agenda with a little Parmesan cheese on top. Apart from the appointment of a conservative Supreme Court Justice, Trump’s major political achievements have been massive government spending increases and tax cuts that have significantly widened the projected budget deficits. The irony is that the governments of Italy and the United States are among the most indebted countries in the world. (2017 IMF figures) And the solutions being proposed by both countries are to go even deeper into debt!

To continue reading: Making Italy Great Again

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