The Genoa Bridge collapse, neoliberalism, and the Italian left-right coalition government

The deadly collapse of the Morandi Bridge in Genoa, Italy, on August 14 has focused the attention of numerous journalists and commentators on the economic situation of Italy.

• Hilary Clarke and Gianluca Mezzofiore, Genoa bridge collapse came after years of warnings CNN 08/16/2018
• Italy bridge collapse: Genoa death toll rises to 43 BBC News 08/19/2018
• Franz Kössler, Genua: Der Einsturz der Brücke und der Politik Falter 34:2018 22.08.2018 (momentan hinter Abo)
• Walter Mayr, "Schakale und Lügner" Der Spiegel 34:2018 (18.08.2018)
• Thomas Migge et al, "Ein Sommernachtsalptraum" Profil 34:2018 20.08/.2018
• Paola Subacchi, Hard Lessons from Genoa Project Syndicate 08/21/2018
• Christian Wüst in "Tod im Tragwerk" Der Spiegel 34:2018 (18.08.2018) goes into some of the technical issues around the collapse.

The political background

The EU establishment has been in a tizzy since the current Italian government took office in June. It is a coalition of the left-populist Five Star Movement (5Stars) and the right-populist Lega. The Prime Minister from the senior coalition party 5Stars is Giuseppe Conte and Matteo Salvini, the longtime head of the junior partner Lega, is the Deputy Prime Minister and Interior Minister, the latter being the country's chief law enforcement official. Conte is an attorney with very little experience in politics. So it's no surprise that Salvini seems to be the actual government leader on policy.

Salvini has been enthusiastically pressing forward an anti-immigrant policy, which has included banning ships carrying passengers rescued at sea from the high risk immigrant route from Northern Africa. (Alexander Stille, How Matteo Salvini pulled Italy to the far right The Guardian 08/09/2018) Such a ban is a serious rejection of international law. Stefan Schmidt, a sea captain with experience in Mediterranean rescues who is current commisioner for asylum and refugee issues in the German state of Schleswig-Holstein, in this interview talks about the broader issue of sea rescues in the Mediterranean, not simply in relation to Malvinini, in this German-language interview, Stefan Schmidt: "Menschenleben stehen bei mir an erster Stelle" Deutsche Welle 19.08.2018:

Salvini's actions on the chronic refugee crisis are anti-EU and narrowly nationalistic.

And defenders of democracy and the EU see good reason to worry about the direction he's going, as Stille reports:

Salvini’s rise to power has heightened concerns in Italy about the escalation of racist and xenophobic violence in the country. Dozens of attacks on black people and Roma have been recorded in the last year, all over Italy, from Treviso in the north to Gioia Tauro in the south, including Florence and Rome. The attacks range from drive-by shootings with air guns, in which the attackers were reported to shout “Salvini!” to the assassination of a Malian trade unionist campaigning for fair pay for migrant workers. An Italian athlete of Nigerian descent, Daisy Osakue, the Italian under-23 champion discus thrower, was hit in the eye by an egg thrown from a car. Police have been pursuing attackers and making arrests, but the government has been more reticent. After a torrent of criticism for his anti-migrant policies – culminating with the headline “Get behind me, Salvini” on the cover of Italy’s largest Catholic magazine – Salvini responded with a favorite phrase of Mussolini: “many enemies, much honor.” He also insisted that the idea of widespread Italian racism was “an invention of the left”.

He's also making a show of forming common fronts with other nationalist (and pro-Putin) groups, even though the whole notion in a Nationalist International is inherently bizarre. Even though that's exactly what far-right parties in Europe are trying to have. Salvini's stunt this week is to advertise his fondness for Viktor Orbán, the Prime Minister of Hungary, which joins Poland as one of two countries in the EU who seem to have become authoritarian enough to no longer meet basic EU requirements for democracy and rule of law.

Lorenzo Tondo reports in Matteo Salvini and Viktor Orbán to form anti-migration front Guardian 08/28/2018. "The Italian interior minister, Matteo Salvini, and the Hungarian prime minister, Viktor Orbán, have said they are “walking down the same path” after discussing the formation of a common anti-migration front they said would oppose the policies of the French president."

Diplomatically, it also strengthens the impression that Malvini and the Lega are in reality the dominant party in the Italian coalition.

But it's not only the anti-EU refugee policies that causes the EU establishment to worry. The new government is also committed, for the moment, to defying Angela Merkel's austerity politics, which is treated like religious truth in EU economic policy.

The obsession with austerity politics of the Herbert Hoover/Heinrich Brüning cast has meant, among other things, delays in upgrades, repair, and expansion of infrastructure. That's been true even in Germany, where Merkel's governments have been restrained on infrastructure projects.

This is a familiar story. When faced with budget shortages, deferred maintenance is one of the first budget-cutting methods governments resort to. Paola Subacchi describes the larger problem this way:

In Western Europe and the United States, bridges, roads, and railways built in the 1950s and 1960s during the post-war reconstruction and economic boom are now old, obsolete, and overused. Does any developed economy have a long-term strategy to manage its essential infrastructure? Are risks being correctly assessed and mitigated? What are the trade-offs between maintaining and replacing infrastructure approaching the end of its life? And how can citizens influence the public debate about who should pay for infrastructure and where it should be built?

It's not just in Italy this problem is occurring. It's a chronic feature of the neoliberal era ushered in by Ronald Reagan in the US and Maggie Thatcher in Britain.

This attitude toward public infrastructure is seriously different from the time before "when demand-management policies went out of fashion," as Subacchi puts it:

The Morandi Bridge was inaugurated in 1967 with great pomp by Italy’s president. Back then, political capital was built around such projects – and not only because of patronage and corruption. Nowadays, modern democracies seem stuck around the trade-off between collective benefits from infrastructure and individual rights, and large projects are often the kiss of death for a politician’s career. ...

With the can continuing to be kicked down the road while existing infrastructure approaches its expiration date, we can expect many more such headlines in the not-too-distant future.

She also means that more broadly than just for Italy.

The bridge

I'm not going to claim to have any special insight into the technical problems involved. Christian Wüst's article talks at length about how the collapse was supposed totally unpredictable. Wüst explains that the bridge was made from a steel-and-concrete combination whose flaws from rust are very difficult to evaluate.

Only very near the end do we read this:

Nur zwei weitere Brucken dieser Art (Patent Morandi M5) wurden damals gebaut, eine in Venezuela, eine in Libyen. Das Konzept erwies sich als Irrweg. Der Beton schützt die Spannelemente nicht auf Dauer var Rost, wie anfangs gedacht, er kann den Verfall sogar beschleunigen, verhindert eine zuverlässige Prüfung und erhöht unnötig die Masse der Konstruktion.

[Only two other bridges of this type (patent Morandi M5) were then built, one in Venezuela, one in Libya. The concept proved to be wrong. The concrete does not protect the elements of the span from rust over a long time, as was originally thought. It can even accelerate the decline, hinders an adequate examination, and increase the mass of the construction unnecessarily.]

In other words, it sounds like there was good reason for the company responsible for the bridge to be very concerned that the bridge posed serious risks. And that measures needed to be taken to mitigate the risks: repairs, restrictions on traffic and vehicle weights, even replacements of the bridge or parts of it.

The neoliberal bridge and Italian populism

What's that you say? The company that was responsible for it? Why, yes, the bridge was being managed by a private, for-profit company, the holding company Atlantia. According to Franz Kössler, Atlantia (he uses the older name Autostrade per l'Italia) "controls about half of the Italian highways." (my translation)

The Morandi Bridge was originally built a state-owned company, IRI, and opened in 1967. But it long since came under the neoliberal gospel, of which privatization is one of the cardinal dogmas. IRI itself, which as Franz Kössler observes, was once "Italy's largest employer and a center of economic miracle of the postwar era," now has "long since fallen victim to the privatization policy."

When a major bridge collapse like this happens, the citizens obviously should demand accountability for the problem and, at a minimum, a serious and honest answer as to what happened in the disaster. And democracies should expect that their government will take the necessary steps to make sure the country's public infrastructure is safe and adequate.

And the Italian government parties are pointing fingers. Prime Minister Conte and 5Stars are blaming Atlantia and calling attention to the large ownership role of the Benetton family of Italian oligarchs. And, as Walter Mayr reports, Atlantia's operational earnings in 2017 was €2.6 billion ($3 billion at current rates).

But Mayr's Spiegel article treat the idea that there could have been any neglect on the part of Atlantia with contempt. And takes the idea that Italy should reduce it's budget deficit to zero without any reference to actual economic conditions as self-evidently sensible.

Which comes to the left side of Italian populism. Both 5Stars and the Lega want to get out of the current fiscal constraints imposed by the EU. Malvini has blamed the EU for the bridge callapse, which conveniently fits with the Lega's narrow-nationalist, anti-EU outlook..

But the Hoover/Brüning economic policies dominant in the EU are bad. And while I've seen no reason to think the EU specifically directed neglect of the Morandi Bridge, it's also not just demagoguery to link the event to EU austerity policies. And Italy's economy does need a boost, even apart from rickety bridges.

Walter Mayr and and Franz Kössler make a point the some 5Stars figures had opposed a proposed road project that could have reduced traffic on the Morandi Bridge. And Profil that 5Stars "rejects big infrastructure programs on principle for ideological reasons." (my translation) Whether that is more a real ideological commitment of 5Stars or more of a "gotcha" point, I don't know. What does seem obvious is that some serious infrastruction

Italy's banks have been wobbly for a while and their economy is still slow in recovering from the Great Recession that began a decade ago. The Conte-Salvini (or Salvini-Conte?) government is pushing for a more expansive fiscal policy than Merkel and the EU want to allow.

But the combination of shaky banks and a government pushing back against Herbert Hooverish fiscal constraints imposed by the EU could bring a re-run of the Greek debt crisis and the eurozone confrontation of 2015. The Profil article cited above observes:

Die Populisten hatten Zeit genug, um erkennen zu konnen: Budgetdisziplin macht unpopular. Das, in Kombination mit ideologischer EU-Feindseligkeit, konnte Italien zum Sprengsatz der Eurozone machen.

[The {Italian} populists had enough time {since the 2008 economic crisis} to recognize: budget discipline makes you unpopular. That, in combination with ideological hostility to the EU, could make Italy into an explosive charge.]

Daniel Gros takes a wonkish look at the current risks in Italian risk spreads: Fiscal versus redenomination risk VoxEU 08/29/2018.

Former Greek Finance Minister Yanis Varoufakis notes in With his choice of prime minister, Italy’s president has gifted the far right Guardian 05/28/2018:

While it is true that Italy is in serious need of reforms, those who blame the stagnation on domestic inefficiencies and corruption must explain why Italy grew so fast throughout the postwar period until it entered the eurozone. Was its government and polity more efficient and virtuous in the 1970s and 1980s? Hardly.

The singular reason for Italy’s woes is its membership of a terribly designed monetary union, the eurozone, in which the Italian economy cannot breathe and which consecutive German governments refuse to reform.

The Genoa bridge collapse is another reminder that chronic austerity has longterm costs. The metaphorical collapse of the banks may be far more damaging to the economy and become the immediate cause of a new euozone crisis. But literal collapses are happening, too. And costing people who have the misfortune of being on the wrong bridge at the wrong time their lives.