Italy and the European Union are headed for a throwdown. Italy’s new government wants to help its citizens following years of grinding economic immiseration. And the EU is hellbent on stopping them, all in the name of neoliberal budget discipline.

It’s an astonishing spectacle, one that exposes the bottomless stupidity and self-destructive high-handedness of EU leadership.

Italy was hit hard by the global economic collapse of 2008 and the ensuing eurozone crisis. Italy’s unemployment rate peaked at 13 percent, and after years of suffering under EU-imposed austerity measures, Italy’s unemployment is still hovering around 10 percent. Not surprisingly, Italians finally got fed up with this state of affairs; in June, they revolted by electing an oddball coalition of left-wing and right-wing populists to run their government.

That new government promptly proposed an ambitious national budget, including a guaranteed minimum income, cancellation of planned cuts to Italy’s public pension system, a bevy of tax cuts, and more. Needless to say, this massive spending package, along with reductions in tax revenue, would require bigger deficits. Italy projects a gap between spending and tax revenues of 2.4 percent of GDP in 2019.

Why do this? Quite simply, the Italian government wants to cut poverty and offer its citizens some help as their economy continues to trudge along. But it’s also sound macroeconomic policy: With unemployment at 10 percent and GDP falling — from almost $2.4 trillion in 2008 to $1.9 trillion today — Italy is clearly suffering from a big shortfall in aggregate demand. The way to fix that is for the government to spend more than it taxes; specifically, to spend on programs that get money into the hands of consumers. Italians would subsequently spend that extra money, which in turn would create more jobs.

The European Union’s technocratic overlords are not in favor of this plan, to put it mildly.

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