5 reasons Renzi gives me hope. And 5 why he crushes it.

Prologue: “Since the Italian electoral system is terrible, why not just skip elections?”
In line with tradition, the umpteenth government crisis is resolved with the appointment of a new prime minister: young and hip Matteo Renzi, mayor of Firenze and leader of the Democratic Party. And this is the first thing I don’t like. After having “campaigned” on the slogan that he would not rob Letta of his office, Renzi decided to “change pace” and form a new government, after his party voted a motion of no confidence against the former PM. Put your money where your mouth is, Matteo.

I wanted to write just after Renzi’s speech but unfortunately Uni gets in the way. On the plus side, I’ve had more time to ponder and organize my (very confused) thoughts in an intelligible form. So here it goes.

Five hopeful points

1. Make education the top priority. With Italy lagging in the PISA tests, with school facilities that are in most cases antiquated if not on the verge of crumbling down, an ambitious program to put education back on the agenda can but be welcomed.
2. Renzi is very direct, he leaves formalities behind and speaks directly to that part of the country that is sick and tired of politics, bypassing the institutional protocol. And he is ready to take responsibility in case he were to fail.
3. He has promised to pay immediately all public sector arrears to the private sector. According to the Italian central Bank report, released last year, the outstanding amount that needs to be paid out is (roughly) 90 billion euros. This is a key issue, since most companies working with the government as contractors or subcontractors are small and if they don’t receive payment from the government for their goods and services (payments that in Italy tend to be handed after 200 days on average), risk to be forced to file for bankruptcy, especially since banks are not extending credit. This measure would bring in more taxes, since the companies receiving the payments would need to pay on the amount they receive, and it would also serve to jump start the economy, since the amount to be payed out is so large. And he has also promised a “double digit reduction” in what is known as the “fiscal wedge“, the amount of taxes the gov levies on workers, which weights on companies making labour extremely expensive in Italy.
4. He is ready to push forward for constitutional reform, namely eliminating the Senate, turning Italy into a single-chamber system, and doing away with the provincial system altogether. Even though these are not huge expenditures in the grand scheme of things, him vowing to eliminate them has a huge symbolic impact on the Italian electorate, tired of feeding an ever growing (and seemingly ever money-hungry) political establishment.
5. He has proposed increased accountability for senior public administration officer, who are now in charge of controlling Italy’s dysfunctional bureaucratic system and who seem to only be pursuing their own interests.

All good, right? Well… Not quite.

Five discouraging considerations

1. Education, right? Yes, all good and fine, but only if his proposed reforms take into account the suggestions and needs of those that live in the school system: the students. Otherwise, I seriously fear that he will just be listening to the teachers’ unions, and let’s not forget that if the new generations are so poorly educated it is also the fault of incompetent professors. This does not mean that all teachers are bad, far from it. However it is not by buying a new blackboard that you improve pupils’ understanding of the world, is by providing them with a great professor.
2. Direct? Yes, maybe even too much. Too many attacks to the 5 Star Movement during his speech in the Senate, he is not his party’s leader anymore, he represents the entire country as PM. I feel those gratuitous remarks were better left during a debate. And please, you are not campaigning. So how about staying in Rome and work on the reforms Italy so badly needs instead of visiting the schools in the entire country?
3. Pay the public administration liabilities, reduce the fiscal wedge, increase the public fund to help small and medium companies, build new schools. But where does the money come from? Renzi hasn’t given us a single number. Everybody is good at talking, but when it is time to translate words into action, all the fantastic promises politicians make sadly crumble. As it’s the case for the fiscal wedge reduction. Not a “double digit” reduction in percentage points. Rather a 10 billion euros reduction. Are you joking, right? In addition, it seems that Renzi wishes to use the Cassa Depositi e Prestiti, the state-controlled financing agency, which manages 250 billion in savings accounts, to finance the other reforms. Which is not anything new, similar solutions have been put forward in the past. However it is also apparent he believes he will be able to take on additional debt to finance the rest. However it is highly unlikely the EU is going to let him do that, especially since Italy is barely abiding by the 3% deficit rule.
4. He was extremely vague on the steps he intends to take to modify the constitution, especially the V Article, which states the characteristics and prerogatives of Italy’s Regions.
5. What happened to foreign policy? And, more importantly, what happened to the spending cuts? He still has not announced any idea on how he intends to approach the issue.

Demagogy is not what we want to hear. We need someone ready to do the reforms everybody knows Italy desperately needs. We do not need words, not anymore, not ever more. We need actions. And fast. I am willing to give him 100 days, but overall I am bearish on Italy’s outlook. And it pains me to say it.