Italy – Everything Changes To Stay The Same

Unless change means more inequality

As with all the best stories with a happy ending, after more than two months of wrangling, Italy has finally its government. The two major populist parties, the Five Star Movement and the Northern League, have eventually been able to agree on the government team that will lead the country for the next – perhaps – five years.

What we have heard since the very beginning of the negotiations is that this executive will be the government of change. A change from the ‘caste-led’ approach the traditional parties had always supported, a revolution concerning the people to the detriment of the privileged, a breakthrough from a bunch of liars to a government of honest rulers.

First contradictions

However, if the new government really wanted to distance themselves from the past malpractices, the immediate meeting between the new minister of labor, Luigi di Maio, and the chief of the first Italian company in the defense and aerospace sectors, the Leonardo Group, was not their best start. In fact, in the past few years, the Five Star Movement had repeatedly called for the resignation of the company leaders. At the end of the meeting, Di Maio affirmed his intention to cooperate with the CEO Alessandro Profumo, and with the President of the group, Gianni De Gennaro, who were both considered absolute evils by the Movement.

Indeed, Profumo is remanded for sentencing in Milan for insider trading and false accounting, in relation to the accounting of the Santorini and Alexandria derivatives when he was at the top of the Monte dei Paschi di Siena bank. Just last year, the Five Star Movement, immediately after the appointment of Profumo, announced a vote of no confidence against the then Economy Minister Giancarlo Padoan for the choice of the former CEO of Unicredit at the top of Finmeccanica. Same for De Gennaro, sadly famous for his former role of police chief at the time of the G8 in Genoa. The 5SM had always criticized his appointment as president of Leonardo, both before and after the judgments of the Court of Strasbourg for the accidents of Genoa. These sudden friendly relations seem at least suspicious.

Citizens’ income versus flat tax

This is just the beginning. During the electoral campaign, the two yellow-green coalition leaders pledged to finally take care of the poorest social classes and give them a more decent lifestyle. The Five Star Movement citizens’ income best embodied this promise. However, even when this policy takes place, its effects would be completely nullified by the League’s big electoral pledge: the flat tax. Not for nothing, Matteo Salvini himself declared: “It’s fair that those who earn more, pay fewer taxes.”

Now, either Salvini is not any good at economy, or he does not really care about the impact of this proposal on the Italians. Italy has one of the highest Gini coefficients in Europe. The Gini coefficient is the index that measures the degree of inequality in terms of family income distribution within a country. The value ranges from 0 to 1, where zero means no inequality at all, hence that all citizens have the same income. On the contrary, one is symptom of total inequality, up to the point where someone has everything and someone else owns nothing.

These are extreme cases and are therefore purely illustrative. However, in 2016, Italy’s Gini coefficient was 0,33, a measure that indicates a quite high inequality rate, especially compared to the lowest value (and thus to the lowest average inequality) registered in Sweden (0,24). Having said that, the clear aim behind the combination of these two policy proposals is to make the lowest classes feel better off, by giving them a ‘sweetener’ in the form of citizens’ income, while, in comparative terms, the only ones better off will be again the wealthy classes.

Indeed, supporting tax cuts for the rich means increasing the gap between rich and poor. Nonetheless, when the poor receive something in exchange for the worsening of their condition, they will probably not complain too much about it. Apparently, our new government is more interested in making few people happy. Here again, no change.

Panem et circenses

Finally, we eventually reach the third point of the list: where is the much vaunted honesty? The Five Star Movement, as well as the Northern League, are both lying. They are not standing up for the majority of the people, but they are just meeting the needs of a well known minority, as Italian governments have always done before. They are trying to shift the focus from these dangerous measures to migration, Europe, and the vague ‘international financial lobbies’.

However, there’s an elephant in the room: what they do not intend to admit is that the citizens’ income and the flat tax are two measures totally incompatible with each other. In order to implement the citizens’ income, the only acceptable taxation system is a progressive one. That would mean exactly the contrary of what they want to do, that is stealing from the poor to give to the rich.