Citizens’ income, welfare out of control

It is unheard of outside of Italy, but the populist leaders of the Italian rightist coalition have come up with a novel idea to give money to people who are either poor or unable, if not unwilling, to work. It is called “citizenship income,” a form of financial assistance financed by public debt.

The government’s scheme calls for monthly hand-outs of 780 euros (less than 900 dollars) to the unemployed and other people below an undefined threshold of poverty. It is the brainchild of the deputy prime minister and labor minister Luigi Di Maio, an obscure small-time politician who shot to the top by cleverly pumping up the anti-establishment rebellion of the Five Stars party, a new political movement started by a former comedian, Beppe Grillo.

Americans know little and care even less about what is happening in Italy, a country that gave the Renaissance to the world and much later Benito Mussolini and Silvio Berlusconi. Yet Americans should be curious to learn that Italy has opened another mystifying chapter of its history by jettisoning the traditional parties, from the post Communist Democratic Party to Berlusconi’s Forza Italia, and empowering the strange alliance of the Five Stars and the League, originally a Northern secessionist movement led by a brilliant demagogue, Matteo Salvini.

Since the last elections of March 4, the League shot up from 17.4 to 25.4 percent in the latest polls. Its fellow travelers Five Stars remained stable at 32.8 percent, which still makes it the largest Italian party. A third right-wing party, Brothers of Italy, with a definite Fascist DNA, went from 4.3 to 3.4 percent, after showing support for the League-Five Stars coalition.

The politics of welfare are thus dominating the dialogue among Italians. Many understandingly like the idea of getting state money in their pockets. A strong minority, however, has condemned the Five Stars wholesale embrace of assistance because of its high financial cost and its lack of any significant stimulus upon the economy.

The mechanics of the distribution of the “citizenship income” are just as puzzling. Minister Di Maio envisions the creation of an electronic card that would be credited each month, allowing the “citizen” to receive a limited number of goods and services. An important clause is that the credit would disappear if not used within a certain amount of time.

Experts have compared this cockamamie scheme to the “food card” used in wartime, popularly known as the “hunger card.” The risks of its misuse are so high that the minister threatens penalties for those who would use the card for “immoral expenses.” And herein lies the absurdity of the state-distributed assistance. A complex apparatus should be instituted to administer the program, to verify the legitimacy of those covered by the assistance and their behavior in using it.

What the rightist government in Italy does not take into account is the simple economic principle that the only effective weapon in combating poverty is not by controlled state alms, but by a wide-ranging public investment program. The “citizen’s income” has nothing in common with a scheme such as Social Security for the simple reason that the latter’s beneficiaries receive the equivalent of a pension based on contributions made in their lifetime while the “citizen’s income”goes to people who made no contribution at all. Finally, the reality in today’s Italy is that unemployment is much higher in the south than in the north. The assistance program would cause public money to flow from the north to the south, a situation that in the past led to the birth of the League and to its racial-like condemnation of southern dependence upon government largesse.

The “citizen’s income” will contribute mightily to the state deficit that is now at the center of a sharp conflict between the Rome government and the financial authorities of the European Union. The conclusion is not only that government in Italy is growing and going deeply into debt, but that the introduction of the “citizen’s income” will trap the poor citizens in an “electronic ghetto.” The only hope is that in that kingdom of inefficiencies that is Italy the scheme will not be implemented on account of bureaucratic impediments rather than legislative opposition. As long as it is a spending project justified as a civilized approach to helping the poor, Italians may even applaud it. In fact, there are five million people in absolute poverty and 11 million in relative poverty.

On the other hand, should the “citizen’s income” become law resulting in a considerable outlay in the state budget, many Italians will raise the issue of giving money to people who do not work. The rest of Europe is afraid that the higher deficit may lead to a financial collapse of the Italian economy and quite possibly to Italy’s exit from the euro system. This would be bad news indeed for member countries of the European Union. And yet, that ineffable duo Di Maio – Salvini is determined to push the populist welfare state. The unavoidable outcome is that everybody will become poorer, including those who need help the most.

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