Among the many devastating effects of the current global financial crisis, one of the
most pernicious in the developed world is the upward trajectory of the unemployment
rate for young people, which rose by six percentage points in the OECD area from 2007
to 2009, with Spain experiencing an alarming 42% youth unemployment rate in 2010.
When young people cease to be the engine of an economy, long-run economic growth is
endangered and social unrest becomes a real threat to the democratic political order.
In this sense, Italy represents an extreme case, since even highly skilled young workers,
though usually over the age threshold of the youth unemployment rate (29.5% in the
country), are being marginalised. Nevertheless, understanding this phenomenon and its
political consequences sheds light on what other OECD countries might face in the near
future.
As one of the fastest-ageing societies in the world, with an economy and a political system
inaccessible to its young people, Italy has all the makings of a gerontocracy. According to a
study by Luiss University, half of the country's top business leaders and political officials
are 60 or older. Moreover, the national statistical institute, Istat, points out that in 2009
about 60% of people aged 18-34 (and 30% among people aged 30-34) were living with their
parents as a result of their inability to support themselves. Two million in the same age
range were classified as neets (not in employment, education, or training).
The system is slowly cracking, and Italian youth risk becoming the first generation in
modern history that is worse off than its predecessors. It comes as no surprise that 79% of
the unemployment generated by the financial crisis is attributable to young, precarious
workers. Even if the country is still far from the radical impulses of 1968, Italy's lockout of
its young people sets the stage for a generational revolt.
Over the last 30 years, Italy has fallen into an old-age trap – a self-reinforcing mechanism
whereby rent-seekers (old people) have used control of the political system to prevent new
generations (the most dynamic and innovative part of the population) from getting a slice
of the pie. Young people used to believe that, once old and with access to power, their own
welfare would be at least as high as that of previous generations. Instead, the gerontocracy
has simply realised older generations' dreams of equity and social security at the expense of
today's youth, who have been shouldered with a crushing burden of public debt.
Lavish favours, demographic trends and the absence of serious family policies guaranteed
the demise of the social contract now under threat. First, high levels of debt will limit both
welfare benefits and future governments' ability to swap favours for votes. Second,
globalisation, a low-quality educational system and weak institutions generate uncertainty
and insecurity for young people, thereby threatening Italy's growth prospects – and thus
the prospect that future generations will be compensated in old age for a lifetime of hard
work and sacrifice.
The process of escaping the old-age trap and allowing younger generations to assume their
key role in the economy can be either gradual and relatively smooth, or abrupt and
relatively traumatic. In the former case, politicians implement structural reforms aimed at
redistributing costs and benefits among generations. In the latter, we face an intergenerational
clash.
This situation resembles that of declining organisations, as described in Albert O
Hirschman's seminal treatise Exit, Voice, and Loyalty. When the quality of an institution or
a political system decreases, its members can withdraw ("exit"), improve the situation
through direct action ("voice"), or passively accept the decline in conditions ("loyalty").
"Exit" and "loyalty" dominate in Italy. The former can be physical (according to some
studies, Italy is the only European country experiencing a "brain drain" rather than a "brain
exchange") or silent (for example, low voter turnout). But the difficulty of critical thought in
an environment of low press freedom, together with intra-family wealth transfers to young
people, keep the majority loyal to the system.
"Voice" is almost absent in Italy, as dissatisfaction, however widespread, remains far from
sufficient to give rise to an organised protest movement. Instead, "exit" and "loyalty" delay
the collective consciousness-raising that Italy needs in order to ensure a gradual escape
from the old-age trap. Once all citizens are aware of the situation, it will be too late: the
system will have collapsed, and "voice" will become so strong that intergenerational
conflict will be unavoidable.
Will that conflict be peaceful or violent? In the former case, a youth party might use
democratic institutions to press for sharp cuts in old people's benefits. In the latter, violent
protests could lead to a revolutionary wave similar to 1968. Then, protesters wanted to free
disadvantaged classes from the oppression of capitalism; now, they would seek to free
disadvantaged generations from the fetters of gerontocracy.
Unfortunately, demographic trends make the latter scenario more likely, since young
people will be a minority, unable to win power through democratic channels. Only by
adopting serious family policies, or by enfranchising new immigrants, who are usually
quite young, would a democratic economic transition be more likely.
Leaders of OECD countries should look at Italy and recognise the dangers emerging from
their young people who are being left behind. In Italy itself, it is high time that older
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generations started acting with wisdom.