Tag Archives: Matteo Renzi

Italy’s PM passes brand new election system law

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Italy’s (unelected) Prime Minister Matteo Renzi has very narrowly — with just 53% of MPs supporting — managed to ram through a major electoral reform to stabilize Italy’s increasingly fractured and ineffectual parliamentary lower house. The reform appears to take a page from the Greek parliamentary system (described further below) but adapts it. Here’s a news summary of the new Italian elections law from France24:

The new legislation, which only takes effect in July 2016 [and only if the Senate is reformed first], is based on proportional representation but guarantees a big majority to the winning party and gives party bosses wide powers to handpick preferred candidates.

If the winning party gains at least 40 percent of the vote, it qualifies for a winner’s bonus that automatically gives it 340 seats in the 630-seat Chamber of Deputies.

If no party wins 40 percent, a run-off ballot between the two largest parties is held two weeks after the first election to determine which party gets the winner’s bonus.

 
Now to the comparison. Previously, I wrote an explanation of the Greek election system, which is quite similar but had some serious flaws:

250 members of Greece’s parliament are elected through a system that ensures fair geographic representation along with the proportional will of the national electorate, using a 3% threshold.

However, there is one big innovation to clarify the executive mandate. As of the 2008 revisions to Greek election laws, the top-finishing party is given a victory bonus of 50 extra seats – bringing the total to 300 seats in parliament – to help the winner get closer to a governing majority.

This represents a bonus equal to 20% of the proportionally elected seats. (An earlier law gave the winner 40 seats.)

It’s not a perfect setup, of course. A party earning relatively low percentage of the vote share can gain an extra 20% of the seats even if it falls well short of capturing the confidence of a majority of voters and even if another party were to capture just 1% less of the electorate than the winner.

However, it substantially boosts the chances of quickly forming a government and allowing that government to push through its major agenda items, rather than floundering along with the status quo due to internal gridlock.

Meanwhile, it still allows for diverse, multi-party elections — but constructively counteracts the growth of fringe, single-issue, or personality-centric parties that take up seats or weaken serious parties without actually contributing to the government or the opposition in any substantive way.

 
Renzi’s Italian law is actually probably a substantial improvement on the Greek system. First, it includes a backup runoff component if no party wins at least 40% (which prevents a very small first place finisher from gaining a huge boost or even an outright majority without broad national support). Second, if I understand the news summary correctly, the Italian system will have a sliding-scale/diminishing victory bonus of up to something like 88 additional seats, and as few as about 25, rather than a fixed bonus number whether the winning party got 40%, 50%, or 60% of the vote in the first round. (That way, the extra seats allotment is not unfairly overwhelming if the margin between the first and second finishing parties is very small.

Depending on how it works in practice, Italy’s new law might actually end up being one of the better proportional representation election systems in the world.

Granted, it won’t be without controversy (rightfully so), that an unelected young Prime Minister with a bare majority of parliamentary support has significantly revised the country’s election law (in a way that temporarily favors his large party over the fractured center and right oppositions) and is planning to more or less abolish the Italian Senate in favor of a completely different upper house. But this has been passed constitutionally by a majority of the duly elected people’s representatives, and if it improves Italy’s democratic stability and representation, there won’t be much to complain about.

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Italy’s economy: Cocaine and prostitutes to the rescue!

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One of the key features of the European Union and eurozone currency system, as outlined in the early 1990s, is that member country’s would be expected to keep their budget deficits low and their public debt to gross domestic product (GDP) ratios reasonably under control. On the latter indicator, the debt is the numerator and can be changed by increasing or decreasing borrowing (and by extension, of course, annual spending). The GDP makes up the denominator and rises or falls as the national economy grows or shrinks. Changing either part affects the ratio.

The reason for such controls being imposed by the various European Union treaties is to limit currency value fluctuations in one country that will necessarily affect the currency’s value in another country also on the euro that might have a different set of economic concerns.

italian-republic-emblem-largeUnfortunately, one of the persistent features of Italy specifically has been high debt and low growth. In mid-2013, even after several years of cutbacks, the Italian debt to GDP ratio as a percentage was 130% (meaning the total debt was 30% larger than the entire calculated value of the Italian economy).

Moreover, GDP was growing on average at 0% a year (often actually negative in practice) in the fifteen years from 1998 to 2013. Similarly, annual deficit to GDP ratio targets demanded by the European Union were also not being met. And yet, the EU wanted the ratios reduced further, even though additional rapid cuts in the numerator (total debt or annual deficit, depending on the ratio in question) might start shrinking the denominator (the economy size), thus leaving the ratio more or less unchanged.

Enter the unelected Prime Minister Matteo Renzi — the former Mayor of Florence (and Italy’s youngest prime minister ever, even including Mussolini) — who dramatically assumed control of the country in February. His Finance Ministry has hit upon a brand new solution to help solve the problem in time for the next round of budgeting.

When your supranational federation orders you to rein in your deficit-to-GDP ratios, you can either slash all spending haphazardly until the deficit size falls to an acceptable level — the usual approach — or you can blow up your GDP massively by piling into your calculation everything under the sun, including hookers and blow. YAY MATH!

Bloomberg:

Drugs, prostitution and smuggling will be part of GDP as of 2014 and prior-year figures will be adjusted to reflect the change in methodology, the Istat national statistics office said today. The revision was made to comply with European Union rules, it said.

Renzi, 39, is committed to narrowing Italy’s deficit to 2.6 percent of GDP this year, a task that’s easier if output is boosted by portions of the underground economy that previously went uncounted. Four recessions in the last 13 years left Italy’s GDP at 1.56 trillion euros ($2.13 trillion) last year, 2 percent lower than in 2001 after adjusting for inflation.

“Even if the impact is hard to quantify, it’s obvious it will have a positive impact on GDP,” said Giuseppe Di Taranto, economist and professor of financial history at Rome’s Luiss University. “Therefore Renzi will have a greater margin this year to spend” without breaching the deficit limit, he said.

 
And that’s the big, dirty secret of the concept of GDP, as well as GDP-based targets: They are blunt instruments that depend at heart on a necessarily arbitrary system of measurement, which can be manipulated in the official figures in any given country by including or excluding various sectors of the economy — particularly in the gray or black markets.
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Italy still not on board with democracy, really

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italian-republic-emblemAnother ten months, another failed Italian prime minister. The next prime minister is expected to be the Mayor of Florence, Matteo Renzi of the ruling Democrat Party, who has been summoned to the presidential palace to see about trying to cobble together a new governing majority coalition and cabinet.

Because, as you may have realized from the above, he’s not actually a member of parliament, he will presumably be proclaimed a “Senator-for-Life,” the appointed position granted to Mario Monti at the end of 2011 so he could become Prime Minister. Under the constitution, the President can appoint anyone to the Senate and then invite them to form a cabinet as prime minister. It’s more or less undemocratic, but it’s constitutional.

Monti, a former career EU official at the time with no elected experience, proceeded to select a cabinet composed entirely of other non-elected “technocrats” (apolitical experts), so he could enact austerity measures. He was succeeded by the now-outgoing Enrico Letta, just last year, after losing an election. Letta wasn’t exactly elected either by the country, but he was at least an elected member of parliament who managed to form a majority from within his fellow members across the three largest parties.

He was brought down by a no confidence vote Mayor Renzi instigated last week. Both Letta and Renzi are Democratic Party members but Renzi took control of the party leadership in December 2013 and didn’t feel like waiting his turn — or even being elected to parliament first.

Post-World War II Italian politics have been increasingly wracked by instability due to having several major parties in parliament — usually 3 or 4 at a time — often with strong geographic alignments in the second tier parties. This all adds up to no one party usually being able to form a majority and certainly not one that can survive no confidence votes easily.
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