Mario Monti and Italy's Generational Crisis

Rome's Economic Solutions Don't Solve Its Political Problems

A protester holds fake euros in Rome. (Alessandro Bianchi / Courtesy Reuters)

Italian Prime Minister Mario Monti returned home from a successful visit to the United States over the weekend, having won the praise of U.S. President Barack Obama for the rapid economic reforms he has implemented since replacing Silvio Berlusconi in November. Obama’s endorsement followed plaudits on both sides of the Atlantic for Monti’s bold package of budget cuts, tax increases, and deregulatory measures. Yet although the prime minister has given the global financial markets hope that his country can climb out of its immediate fiscal emergency, Italy’s real dilemma is political, not economic. Unless Rome fundamentally alters its political culture, the changes that the Monti government has brought to Italy -- greater sobriety and a stiff dose of liberalization -- are unlikely to endure.

Monti, an academic and a former European Union commissioner for competition policy, took office to lead a unity government and enforce a program of austerity. He quickly persuaded the Italian parliament to pass a package of tax increases, pension reforms, and spending cuts that he called the Save Italy decree. Monti has also demonstrated that he will no longer tolerate Italy’s rampant tax evasion; high-profile raids by the Guardia di Finanza (tax police) on resorts frequented by the rich and famous have sent a clear message to the wealthy professionals who drive luxury cars but declare lower incomes than factory workers. To compensate for the recessionary consequences of the Save

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