But don’t laugh: The combined wisdom of the Italian electorate and politicians may be all that stands between today’s financial calm in Europe and a renewal of crisis. A main reason for the relative stability was the European Central Bank’s recent promise to provide financing for troubled governments in return for structural reforms.
If any message came through from Italy’s voters, however, it was that they are fed up with austerity and a grinding economic downturn that has reduced their per capita income to the levels of a decade ago, in real terms. That, and Italians’ desire to blame their woes on various villains — Germany, corrupt politicians, bankers — rather than the melange of nepotism, inefficiency and rent-seeking that has brought the Italian economy to its state of dysfunction.
Does this impasse mean Italy is about to blow up politically, taking the euro down with it? Not necessarily. Comfortable, aging populations such as those of most European countries generally don’t take to the streets; decay is a greater threat than revolution. A little shock therapy from the likes of Mr. Grillo is not the worst thing that could happen to Italy’s political class.
Greece is in far worse shape than Italy, and there’s been no uncontrolled upheaval there. Indeed, its last electoral cycle was a two-part affair in which the radical insurgent party scared parties committed to structural reform and the euro — but lost the final round. It’s entirely possible that Italian voters will decide their local demagogues represent the greater evil.
But to reach that rational conclusion, they’ll need some help and encouragement. Specifically, they need some prospect that structural reform actually means an end to corruption, the liberation of overregulated productive forces, and not just more blunt-force fiscal austerity. Germany, the euro zone’s paymaster, must adjust both its orthodox adherence to balanced budgets and its export-led economic model, to permit greater market share for Italy and others.
Given a reasonable prospect of tangible benefits, Italians may accept the systemic changes that alone promise a way out of their economic predicament. Endless austerity, by contrast, could cause more and more of them to question their country’s commitment to the euro and the European Union — and not without justification.