Millennial vote in Italy shows why the global anti-establishment movement is growing

Life
By James Dennin

About 59% of voters in Italy rejected proposed constitutional amendments in a nationwide vote Sunday, and — because the vote was widely seen as a referendum on the leadership success of Prime Minister Matteo Renzi — he announced his resignation early Monday. Renzi later said he would delay his resignation until the 2017 budget is passed.

Like the election of President-elect Donald Trump in the United States and the United Kingdom's Brexit vote, Italy's "no" vote on streamlining government represents an anti-establishment rejection of the status quo. But unlike in those countries, where older workers led the charge, younger Italian voters played a decisive role in giving Renzi the boot.

According to a poll from Italian news outlet Sky TG24, the younger voters were, the more likely they were to vote against the referendum. More than 80% of people ages 18 to 34 voted "no," while more than half of voters older than 55 voted in support of the changes.

Renzi has touted the changes as crucial to making the nation more economically competitive. But detractors have said Renzi's proposals generally remove power from local provinces and hand it to the central establishment in Rome, while doing little to help the 37% unemployment rate among youth.

Disruptive as it may be politically, the referendum result has not shaken markets, partly because the results were expected and Italy changes its government with frequency. 

But the vote does represent another domino falling in a global trend toward anti-establishment leadership.

As the tweet below suggests, 2016 has been a year of dramatic power restructuring in the United StatesFrance, the United Kingdom and Italy. Only German Chancellor Angela Merkel — the one leader in the image who isn't waving goodbye — will remain in office.

Here's what the anti-establishment shift really means — and why economic forces are at its heart.

Economic anxiety has cut across age groups.

Unlike the results in the U.K. and the U.S., which essentially pitted young against old, Italy's young people voted overwhelmingly against the referendum.

There are a few reasons for that, said Andrea Prat, a professor at Columbia Business School. 

"People have compared this to Brexit and Trump, but it's completely different because the age profile is very different from both," Prat said. "If you look at the unemployment rate in Italy overall, it's not very different from the average of the EU. But if you look at young people, the unemployment rate is huge."

One reason youth unemployment in Italy is so high, Prat said, is the country's job protection policies make it hard to fire workers who have seniority. That keeps people in jobs for a long time, and makes it harder for young people to get a foothold in the economy.

"Young people feel like the establishment is against them," Prat said. "So this was a vote against the establishment."

It doesn't help that Renzi's labor reforms have made it easier for companies to fire new employees, who are disproportionately younger.

Jacob Kirkegaard, a senior fellow at the Peterson Institute of International Economics, agreed that the Italian millennial vote represented an upset.

"[The youth vote] was one of the things that really surprised me as well," Kierkegaard said. "The prime minister is the one of the only politicians in Italy under the age of 60, so it's clear he failed to bring in the youth vote."

Anti-establishment parties don't need racism or anti-immigrant sentiment to win. 

One difference between Italy's vote and the results seen in the United States and the U.K., Kirkegaard and Prat both said, was a lack of widespread anti-immigrant rhetoric. 

"One of the things that you had not seen is an increase in an overall level of support for the populist parties in Italy, their level of support has actually been fairly stable," Kirkegaard said. "These are centrist mainstream voters that swung against the prime minister because they didn't like the [referendum]."

It is true that one of the perceived "winners" following the vote is Italy's populist Five Star Movement party. Like Trump, party leader Beppe Grillo is a former entertainer known for anti-establishment, isolationist views and dabbling in anti-immigrant rhetoric.

But most of the five "stars" that make up the party's political platform are actually policy areas that you might actually associate with the U.S. Green Party: publicly owned water, eco-friendly transportation, sustainable development, internet access and environmentalism.

"There was nothing in the referendum that had to do with the racist and sexist rhetoric you got in the U.S. and U.K.," Prat said. "If anything, the Five Star Movement has been very progressive."

Still, Five Star is known for euro-skepticism, and critics fear the party's isolationist tilt could lead Italy out of the common currency or even out of the European Union altogether.

Indeed, many of Europe's other far-right leaders such as Germany's anti-immigrant Alternative for Germany party, and France's Marine Le Pen have praised the outcome, with Le Pen describing the result as yet another example of a growing "thirst for freedom of nations." 

People left behind economically keep winning at the polls. 

One of the most striking revelations to come out of November's presidential election in the United States was the extent to which economic empowerment drove the results: According to a study from the Brookings Institution, the roughly 500 counties carried by Democratic nominee Hillary Clinton generate some 64% of the country's economic output.

In contrast, more than 2,600 counties carried by Trump generate only 36% of U.S. economic output. 

That dynamic seemed to similarly play out in Italy's referendum as well, where the "no" vote was strongest in the south, where the unemployment is much higher than in the north.

Now, the challenge for newly empowered anti-establishment parties is actually lifting up the economically disenfranchised workers who voted for change.

In Italy, as in the United States and United Kingdom, that may prove to be far harder done than promised.

An early datapoint in Italy is the performance of Rome's mayor Virginia Raggi, a figurehead of the Five Star movement who has been generally seen as unsuccessful and disorganized on economic issues.

Meanwhile, in the U.K., a last-ditch effort to block the Brexit ruling will be considered by the country's Supreme Court on Monday.