Saturday, March 25, 2006

the italian elections: tax policy and the return of "solidarity"

The Italian elections, scheduled for April 9, seem likely to return the left-center coalition under former Prime Minister Romano Prodi to power, although some polls show the incumbent leader, Silvio Berlusconi, pulling a last minute upset. In a debate last week Berlusconi appeared testy and defensive, repeatedly complaining about the American-style debating rules, while Prodi, if hardly dynamic (he is after all a professor), appeared quietly confident. The endorsement of Prodi by Corriere Della Sera, normally a conservative newspaper, and incessant backbiting by Berlusconi's coalition partners didn't help him much, either.

One fascinating aspect of the campaign is the role of taxation and fiscal policy, which seems to occupy a rather more central position that in an American election. I reported previously on Prodi's proposal for a 20 percent tax on financial income, substantially higher than that collected today in most cases. The left has also experimented with proposals for new succession (inheritance) levies and other tax increases.

But more interesting than these technical proposals is the language used to discuss fiscal policy and its link to broader election themes. In Prodi's debate summation he referred at least three different times to the concept of solidarieta', variously translated as solidarity or coherence, but referring broadly to the obligations owed by members of society to one another--the responsibilities as opposed to the rights side of the liberal equation, to use the more familiar American terminology. Solidarity is an old concept, with roots in the Medieval Church and (legally speaking) in the commonality of interest between creditors of the same payor; although appropriated more recently by the secular left, it has never quite shed its spiritual aspect and its appeal to values beyond the day-to-day give and take between interest groups. By couching his appeal in the language of solidarity, Prodi was implicitly criticizing Berlusconi for allowing Italy to drift (his view) in the directon of short-term self-interest and calling for a Government that placed renewed emphasis on the common good.

The tax policy implications of solidarity are fascinating in theory if rather elusive in practice. What is attractive about the concept is that it attempts to justify progressive taxation as a means of shared social sacrifice without resort to redistribution or similar marxist doctrines. This might seem unexceptional in America, but remains somewhat novel in Italy, whose politics has traditionally divided between a marxist left and a fiercely anti-marxist (some would say neo-fascist) right with not terribly much in between. (Prodi himself is a moderate, but the bulk of his coalition would consist of one-time PCI (Communist Party) members.) In American terms it is perhaps most reminiscent of scholars like Marjorie Kornhauser who have attempted to locate progressivity in a broader sense of mutual assistance and communal responsibility. But the Catholic tradition, which has always been rather less individualist than Anglo-Saxon Protestantism, gives the concept a special appeal in France, Italy, and other similar countries: by appealing to it Prodi appears to be seeking a third way between American style capitalism and the anti-globalization reaction, but one with authentic local roots, and with taxes a small but not insignificant part of the overall equation.

A bit more solidarite' would surely be welcome in France, where protests over labor reforms have taken an increasingly ugly turn. Among other things, the protests show the difficulty of distinguishing reform from reaction in a changing world: the liberalized rules, which were originally designed to reduce unemployment in poorer neighborhoods, are vigorously opposed by students and labor unions who are theoretically defenders of the poor and underprivileged. Further tax reforms, and much else besides, will await the outcome of this struggle.


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