Mohamed A. El-Erian: Millennials should decide Italy referendum

Italian Prime Minister Matteo Renzi officially closes the national campaign for the 'Yes' vote in the constitutional referendum at Piazza della Signoria. Photo / Getty

It would be understandable if Italian millennials were feeling apprehensive in the days leading up to the December 4 constitutional referendum. Political processes once believed improbable have already delivered the Brexit vote and the equally surprising election of Donald Trump in the U.S. Could the plebiscite in Italy produce yet another political upheaval? And how would it affect the future of the younger generation, which is already burdened with high unemployment and diminishing expectations that its legitimate aspirations will be met?

The context is important. Growth in Italy has been too slow; debt burdens are heavy; joblessness is too high and has persisted for too long, especially for those who risk going from being unemployed to becoming unemployable.

Successive governments have stumbled in providing the economic breakthrough the country needs, and is capable of achieving. Trust in the political class has declined and the system has become more rigid.

Prime Minister Matteo Renzi is seeking greater policy flexibility to implement the reforms that would bring better economic outcomes. But rather than being viewed as a step in this direction, the referendum has been framed for many as a verdict on his government and, more broadly, on the power that is granted to the "establishment."

This reframing carries the risk of uncertain outcomes. The possibility of shaking the system so that it is more motivated to deliver beneficial change also comes with the risk that a "No" vote could -- in the extreme -- lead to the resignation of the prime minister, early elections, financial market instability and even questions about Italy's continued membership of the euro zone and its exclusive use of the euro. A "Yes" vote, however, runs the risk of concentrating power in a political class that doesn't command high levels of trust from the public.

As the Brexit experience illustrated for many millennials, their worst decision would be to sit back and allow their destiny to be determined by the older generations, particularly angry single-issue voters who carry an outsize influence. Instead, they need to participate actively in the democratic process, acting on an informed assessment of the issues, a consideration of the balance of benefits and costs, and of the implications for the well-being of future generations.

There is a lot at stake for millennials and their future, and they need to shape the outcome by turning out in large numbers to vote.

- El-Erian is a Bloomberg View columnist. He is the chief economic adviser at Allianz SE and chairman of the President's Global Development Council, and he was chief executive and co-chief investment officer of Pimco. His books include "The Only Game in Town: Central Banks, Instability and Avoiding the Next Collapse."