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Southern Europe Has Not Seen Net Job Creation in over a Decade

225 points by Four_Star 8y ago

rm_-rf_slash 8y ago
I wish TFA had more detail about the conditions within each country. You can’t just treat northern Italy and southern Italy like they’re the same economy.
- deleted 8y ago
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- axaxs 8y ago
  As someone unfamiliar with Italy, would you mind to explain a bit?
  - rukittenme 8y ago
    The north is industrial. The south is mafia.
    - yulaow 8y ago
      This is a very big oversimplification, mainly because the mafia is everywhere, probably these days they have even far more interests and investments in the rich north. The problem is the industry presence and the type of those (south was mainly low-skilled manufacturing and agricolture, both of which are being heavily delocalized by globalization leaving almost no well paying jobs in those regions)
    - tomcooks 8y ago
      Implying investing in Milan and being very close to Swiss banks hasn't been the rule since the late 90s~
  - rm_-rf_slash 8y ago
    Northern Italy (think Turin, Milan, etc) is highly industrialized and has a robust modern economy, with global exports from fashion and finance and major brands like Fiat and Ferrari. Southern Italy (generally seen as being south of Rome or Lazio, the state Rome is in), has far less industry and mostly relies on agricultural products. I have family in southern Italy and it is very hard for young people because there are few to no opportunities. Many young people leave for better opportunities in the northern part of the country or they leave Italy entirely, which further deepens southern Italy’s economic rut.
  - Arnt 8y ago
    The (far) north of Italy is a bunch of Germans that happen to speak Italian and wear better-looking clothes. The South of Italy is a bunch of nogoodniks who live on handouts from the north unless they... I'm tired of overblown stereotypes already and can't find a suitable mafia-related slur. But even though that previous paragraph was overblown there are differences. Maybe because of the Mafia's firm grip, maybe for other reasons. The Italians seem to feel rather strongly about the differences. Google for "italy mezzogiorno" if you want more. https://en.wikipedia.org/wiki/Autostrada_A3_(Italy)#History https://en.wikipedia.org/wiki/Autostrada_A3_(Italy)#History and ponder the sums and delays. It'll make you feel better about the cost overruns wherever you live ;)
    - toomuchtodo 8y ago
      Does the mafia still have influence in southern Italy?
      - yulaow 8y ago
        Yes, in particular in the poorest areas. The mafia offers very good pays for criminals jobs in areas where basically there are literally no industries and everyone else is living by welfare support.
      - yardie 8y ago
        Yes, and quite visibly too. We aren't even Sicilian, just a humble family preparing our boat for a sabbatical. But we knew which towns not to enter at night, (cough) Gela.
    - 21 8y ago
      Maybe, but at the same time, a bigger country is always better. Splitting Italy into two would be worse long term for both halfs. You have the same talk in US, that California and New York pay all the taxes and carry on their back other "unproductive" states.
      - Udik 8y ago
        > at the same time, a bigger country is always better Why so? And for whom, exactly? Do you think the US would fare better overall if they joined with southern countries like Mexico, Guatemala, Nicaragua, Venezuela and Colombia? Also, Italy is inside the EU. I'm not sure that inside a supra-national entity as the EU the reasons for building bigger nation-states- reasons that were surely valid in the 19th century- still stand.
  - yulaow 8y ago
    Northen regions of Italy have a GDP often of double+ the value of that of Southern regions See: https://en.wikipedia.org/wiki/List_of_Italian_regions_by_GDP https://en.wikipedia.org/wiki/List_of_Italian_regions_by_GDP
    - adventured 8y ago
      You see wide variances in most every country. In Scandinavia, the population centers are drastically wealthier, with far higher GDP per capitas, than the rural areas. In the US, New York and Massachusetts have 2x the GDP per capita of Mississippi (or, eg Connecticut has a 70% higher GDP per capita than Arizona; and that's despite Arizona's GDP per capita being as high as Germany) - https://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP_per_capita#Current https://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP_per...
      - TulliusCicero 8y ago
        That makes Germany sound bad, but factor in PPP and hours worked and it's pretty comparable to the US overall.
  - setgree 8y ago
    Re: differences between Northern and Southern Italy: Robert Putnam's 'Making Democracy Work' covers differences between the regions in great detail. I read it three years ago so I can't give a better summary than its wikipedia page [0]: "Around 1000 A.D. Northern Italy and Central Italy had a more active civil society,[2] with many citizens taking part in politics and social gatherings in their communities. Northern-Central Italians had a mutual trust for their fellow citizen, governing horizontally. Politics was less hierarchical in their region. Southern Italy, however, was very different from its Northern-Central counterpart; a group of Norman Mercenaries created order in the area. The governing structure was much more vertical: the peasants were controlled by the knights and the knights were controlled by the kings. Northern and Central Italy created a democratic-type system for their citizens. Conversely, Southern Italy created a feudal and autocratic system of governing. Putnam concludes that these long-standing differences still help to explain North-South differences in governance, many centuries later...The civic nature of Northern Italy and Central Italy dating back to medieval times has caused the region to be prosperous in modern times. Southern Italy, however, with its more feudal nature in medieval times has caused the region to be the origin of the Mafia and has created a less successful region. The Mafia's hierarchical structure is very similar to Southern Italy's feudal roots, according to Putnam." [0] https://en.wikipedia.org/wiki/Making_Democracy_Work https://en.wikipedia.org/wiki/Making_Democracy_Work
    - pmontra 8y ago
      Add the unification process to that, which was in part welcomed by people and in part forced by an army from the North. It was like when two companies merge: the people from the company that leads the merge end up in better positions than the ones from the weaker company. The South kind of lost a war and perhaps they didn't realize it, even now.
- tluyben2 8y ago
  Same with Spain.
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vivafrance 8y ago
The ECB should just do more QE. Monetary policy solved all the US’s problems following 2008 - should work for Europe too. Printing money to buy bonds definitey doesn’t cause inflation in asset prices or real estate. Furthermore, buying bonds is totally different than simply buying stocks. Additionally, I think people really like when the interest they’re paid on their savings is below the rate of inflation. In fact, they should follow Japan’s lead and start printing money to buy ETFs! This will definitely incentivize the creation of high quality jobs.
- slededit 8y ago
  It certainly solved a lot of problems, the US is at full employment now. It took over a decade for interest rates to start ticking up with the exception of the housing market and stocks. The money supply is only one factor in inflation, velocity is the other and it has been extremely low for a long time.
  - vivafrance 8y ago
    Inflation is rampant in many areas right now. It’s dishonest to claim inflation is low because TVs are still cheap when house prices, healthcare, and education are exploding. Furthermore, if the unemployment rate was as low as is advertised we would be seeing wage growth. The fact that wages are not rising is evidence that the unemployment numbers are fudged. The fact that Trump was elected is evidence that the majority of people are unhappy with the “recovery”.
    - JumpCrisscross 8y ago
      > if the unemployment rate was as low as is advertised we would be seeing wage growth Median usual weekly real earnings for Americans 16 and over were 5% higher in Q1 2018 then they were Q4 of 2007 [1]. From Q1 2014 to Q1 2018, we've seen that statistic grow at about 1% per year (CAGR). [1] https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q
      - deleted 8y ago
dzink 8y ago
I wonder how much of that is gray economy. Greece has massive underreporting of anything tax and business related, because they don’t verify it. Farms and businesses don’t report actual sales, earnings, probably even employees (anecdotally from locals reporting of income is less than 10% of actual). Spain has a problem with permanent labor given to senior employees with most youth being excluded from full time jobs. There is also some type of earn-in system to get to a full time job. If a lot of local industry is tourism, those can be filled with temporary work as well, that is probably not accounted for in these statistics.
- yulaow 8y ago
  Italy has almost 200 Billions of shadow economy (untaxed profits) per year see: https://www.statista.com/statistics/629463/shadow-economy-italy/ https://www.statista.com/statistics/629463/shadow-economy-it...
  - adventured 8y ago
    It's larger than that. 20% of the Italian economy is shadow, something around $400 billion, according to a recent study by the Institute for Applied Economic Research at the University of Tübingen in Germany (IAW). The US has a $1 trillion shadow economy, around 5% +/-. Canada has a 10% shadow economy. Norway is up at 12%. https://www.forbes.com/sites/niallmccarthy/2017/02/09/where-the-worlds-shadow-economies-are-firmly-established-infographic/ https://www.forbes.com/sites/niallmccarthy/2017/02/09/where-...
    - superhuzza 8y ago
      I'm surprised Canada has such a large shadow economy. My guess is that a lot of it is restaurants/bars + cannabis.
  - sonnyblarney 8y ago
    This is a really good point - but most good industries cannot exist in the shadows. You can't make cars 'in the shadows' for example. So while that may be a silver lining ... it's not a very happy one in the long term.
sonnyblarney 8y ago
For the same reason jobs are not created as much in Wyoming or Vermont so much as they are in LA or NYC ... the jobs are being created, it's just that they're in Germany and the UK and not Spain. Part of the issue is that Spain & periphery tend to have fewer 'large industrial conglomerates' that enable profitable things to be done at scale (i.e. making cars etc.). % people employed at companies with >1000 people is much bigger in Northern Europe - which makes it more difficult to compete in the periphery. But really, this is what can be expected with a true Union in Europe, and it's why Germany is so keen on it, and of course the Lib Dem (i.e. business types) are super keen on it in the UK, despite populist upset over Brexit. The short run advantages of common market and supposed common risk of the Euro (which never happened), the downside is that skilled people are flooding out of the mediocre areas into the competitive areas. Portugal is turning into a nation-sized retirement home, sadly. In an odd way, this might actually be a 'net good thing' economically, because Germany might be better at putting people to productive use in industry ... which is why the Lib Dem types like it (i.e. they see the economics) ... but really this speaks to an existential challenge to the very nature of European nations and peoples.
- phobosdeimos 8y ago
  Nothing stopping Portugal from becoming successful. Germany isn't really as rich as people think though: lot of hidden poverty. My own country was in very dire straits after WW2 and it took a lot of work and clever scheming to get on top.
  - sveme 8y ago
    Germany has massive geographical advantages compared to nearly every other country in Europe, especially compared to Portugal. East-west and north-south navigatable rivers, few mountains, very fertile soils, located in the center of Europe covering two seas... Italy has a similarly spiderwebby location, but a much more difficult topography.
    - jxub 8y ago
      If someone wants to learn more about this stuff, geopolitics, Tim Marshall has written a pretty neat book about the topic which was a quick, fun and mind-expanding read: https://www.goodreads.com/book/show/25135194-prisoners-of-geography https://www.goodreads.com/book/show/25135194-prisoners-of-ge...
angarg12 8y ago
Is not even an issue of number of jobs, but of quality of labor. Spain grew economically in the 70s and 80s because it was a developing country, and could provide cheap labor to neighboring countries. The growth in the 2000s came from a massive housing bubble that didn't end well for most involved. As we became a developed country we didn't know how to reorient our economy. Now we are too expensive for cheap labor, which is relocating elsewhere, neither we are specialized or competitive enough to oppose other strong economies. Some times I have evaluated the possibility of going back there and try to make a career in tech. It just takes a couple of conversations with locals to erase that idea from my mind. The country is not socially tailored to attract and retain highly skilled specialized workers, and sadly it's an issue that I don't hope to see changed in the future.
- l5870uoo9y 8y ago
  > The country is not socially tailored to attract and retain highly skilled specialized workers. Care to elaborate? Genuinely curious. Spain does attract expats, they are however often pensioners.
  - jxub 8y ago
    The situation with Spain is quite interesting. Usually engineers aren't that well regarded in Spain, people tend to aim to get into management. Other than that, salaries are pretty low and work culture is quite intense at most places, with people usually working ~10 hours a day. This is aided by the general lack of options in the market and a quite high degree of conformity which is a byproduct of the rigid educational system in Spain and which most graduates are embued with. Innovation, aside from a couple startups is lacking as most of the ecosystem is made of big consulting companies which have agreed to set cap on salaries to protect their shrinking margins resulting from years of cranking poor code by replaceable coders working in bad conditions. However, things are getting better with the arrival of some international companies like Xing or local successes like Cabify. Spain is a really attractive place for high tech, with most of the Mediterranean coast boasting Californian climate with Richmond house prices, great cuisine, high level of services comparable to Northern Europe and quite open culture. So it's logically pretty undervalued in my eyes.
kbcool 8y ago
Wow...about the same level of journalism/fact checking as expected these days....none. Let's compare the workforce of countries with an ageing population and rapidly dropping net population with countries like Australia that are absorbing 250k immigrants per year into "self employed" (read: rich third worlder's buying a house and a passport) of course you're going come up with a figure like that. Throw in some countries with massive populations who have also got an ageing population but have 20x the population of Portugal to make them look bad on absolute numbers and you have a winner. Of course a tiny change in employment is going to look amazeballs or on the other hand terrible. The difference is..being in one of those countries right now but from the greedy nation of Australia is that sustainability is practised. It's not all about greed here. You don't need to destroy the planet to have a family here so seriously a big middle finger to anyone who thinks that Europe not growing is a "problem".
- chiefalchemist 8y ago
  It's not so much fact checking as just not understanding data, and as a result ask the right questions and then gather more data. Imho stuff like this doesn't even qualify as journalism, and shouldn't been such credit even to discredit it.
- jp555 8y ago
  Economic growth = learning to do more with less, and arbitraging profits. The myth that economic growth means more waste is just wrong. Compared to the early 20th century we use ~90% fewer resources per dollar of GDP created.
  - vkou 8y ago
    You forgot to subtract inflation * population growth. You can grow your economy, without actually becoming more efficient, or profitable, by tweaking either of those parameters.
chiefalchemist 8y ago
The first graph is in absolute numbers, shouldn't it be in percentages? Along the same lines, where is the birth rate? And death rate? And general population growth / delta? Finally, has, for some reason, automation been a better fit for the industries in these regions? I need more data. I need more information.
- c3833174 8y ago
  Well, there's hundreds of abandoned-looking industrial buildings in my area that are actually filled with CNC machines and only have 3,4 employees
desu_ 8y ago
I searched for "underground", "black" (market/economy) and "undeclared" in the article, but it yielded no results. I am surprised given that (1) the rise of the underground economy is common knowledge for people knowing a bit about the region and (2) measuring its size is a mainstream academic question.
- rb666 8y ago
  Same reason that watching pirated movies/shows is not counted in viewership statistics. It's illegal, you don't get credit for it. Taxes exist for a reason.
  - desu_ 8y ago
    Viewership statistics of movies do not take into account pirated movies mostly because it's difficult to count. Tax offices might only care about movies sold, but producers regularly try to estimate their losses due to pirate channels, and I am sure that people who measure viewership as a proxy for impact on the popular culture would love to have to be able to count everyone. The article's author makes some observation on employment volumes in Southern Europe, then decries "the Eurozone's failure to implement meaningful pro-growth reforms". In that context, It makes sense to try to estimate how much of the economic activity has simply been reclassified. The fact that it isn't taxed makes it, once again, more difficult to measure (if that's what you meant by your "Taxes exist for a reason" truism) but not irrelevant.
  - justincormack 8y ago
    Illegal activity is included in GDP figures. Measuring it is hard though.
127 8y ago
I wonder how much Germany using the Southern Europe to suppress Euro to drive their own economy, is affecting the economies of Southern Europe.
_Codemonkeyism 8y ago
It's funny how Germany is called out here again and again. The EUR was forced on Germany by France (Mitterrand) as a precondition for reunification. Germany was dragging its feet with a common currency and needed be dragged towards a EUR. The French intention was to controll a unified Germany with a common currency.
cherdak 8y ago
I am every time astonished by the low level of analysis of this kind of situation and how dogmatic is the explanation : too high taxes, too much regulation. First of all taxes can seen as an investment of the citizens for better life. So the problem is not the high level of taxes, but how they are used and in what purposes. Certainly, PIGS should optimize many processes and promote initiatives ( business but also social....). Remember that PIGS are the most impacted by migration now. Remember that most were dictatorships many decades ago and have not the same foundations of democracy and economic prosperity than other countries. Remember that many young people that could create jobs just moved in others countries and didn't come back. Remember that you don't have the same impact when you are poor than when you rich. We you are poor you look for more immediate results because it is a matter of life. Remember the role that play mafia/corruption/ criminality, especially the white collar one!! I don't think the Euro has a so big impact and there are plenty to doin order to reach a good growth. However the growth is the result of wise and pragmatic moves which can reach a 2% per year in long term ( according to Angus maddisson from OECD). But it is the good decisions and actions that provides efficiency and so growth, not stupid and blind cut in budget. For OECD , the top down approach of spending money is always bad ( Keynesian approach), but the top down of saving money is ever good. What an hypocrisy which can influence a policy that can destro many life's.

225 points by Four_Star 8y ago

I wish TFA had more detail about the conditions within each country. You can’t just treat northern Italy and southern Italy like they’re the same economy.

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axaxs 8y ago
As someone unfamiliar with Italy, would you mind to explain a bit?
- rukittenme 8y ago
  The north is industrial. The south is mafia.
  - yulaow 8y ago
    This is a very big oversimplification, mainly because the mafia is everywhere, probably these days they have even far more interests and investments in the rich north. The problem is the industry presence and the type of those (south was mainly low-skilled manufacturing and agricolture, both of which are being heavily delocalized by globalization leaving almost no well paying jobs in those regions)
  - tomcooks 8y ago
    Implying investing in Milan and being very close to Swiss banks hasn't been the rule since the late 90s~
- rm_-rf_slash 8y ago
  Northern Italy (think Turin, Milan, etc) is highly industrialized and has a robust modern economy, with global exports from fashion and finance and major brands like Fiat and Ferrari. Southern Italy (generally seen as being south of Rome or Lazio, the state Rome is in), has far less industry and mostly relies on agricultural products. I have family in southern Italy and it is very hard for young people because there are few to no opportunities. Many young people leave for better opportunities in the northern part of the country or they leave Italy entirely, which further deepens southern Italy’s economic rut.
- Arnt 8y ago
  The (far) north of Italy is a bunch of Germans that happen to speak Italian and wear better-looking clothes. The South of Italy is a bunch of nogoodniks who live on handouts from the north unless they... I'm tired of overblown stereotypes already and can't find a suitable mafia-related slur. But even though that previous paragraph was overblown there are differences. Maybe because of the Mafia's firm grip, maybe for other reasons. The Italians seem to feel rather strongly about the differences. Google for "italy mezzogiorno" if you want more. https://en.wikipedia.org/wiki/Autostrada_A3_(Italy)#History https://en.wikipedia.org/wiki/Autostrada_A3_(Italy)#History and ponder the sums and delays. It'll make you feel better about the cost overruns wherever you live ;)
  - toomuchtodo 8y ago
    Does the mafia still have influence in southern Italy?
    - yulaow 8y ago
      Yes, in particular in the poorest areas. The mafia offers very good pays for criminals jobs in areas where basically there are literally no industries and everyone else is living by welfare support.
    - yardie 8y ago
      Yes, and quite visibly too. We aren't even Sicilian, just a humble family preparing our boat for a sabbatical. But we knew which towns not to enter at night, (cough) Gela.
  - 21 8y ago
    Maybe, but at the same time, a bigger country is always better. Splitting Italy into two would be worse long term for both halfs. You have the same talk in US, that California and New York pay all the taxes and carry on their back other "unproductive" states.
    - Udik 8y ago
      > at the same time, a bigger country is always better Why so? And for whom, exactly? Do you think the US would fare better overall if they joined with southern countries like Mexico, Guatemala, Nicaragua, Venezuela and Colombia? Also, Italy is inside the EU. I'm not sure that inside a supra-national entity as the EU the reasons for building bigger nation-states- reasons that were surely valid in the 19th century- still stand.
- yulaow 8y ago
  Northen regions of Italy have a GDP often of double+ the value of that of Southern regions See: https://en.wikipedia.org/wiki/List_of_Italian_regions_by_GDP https://en.wikipedia.org/wiki/List_of_Italian_regions_by_GDP
  - adventured 8y ago
    You see wide variances in most every country. In Scandinavia, the population centers are drastically wealthier, with far higher GDP per capitas, than the rural areas. In the US, New York and Massachusetts have 2x the GDP per capita of Mississippi (or, eg Connecticut has a 70% higher GDP per capita than Arizona; and that's despite Arizona's GDP per capita being as high as Germany) - https://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP_per_capita#Current https://en.wikipedia.org/wiki/List_of_U.S._states_by_GDP_per...
    - TulliusCicero 8y ago
      That makes Germany sound bad, but factor in PPP and hours worked and it's pretty comparable to the US overall.
- setgree 8y ago
  Re: differences between Northern and Southern Italy: Robert Putnam's 'Making Democracy Work' covers differences between the regions in great detail. I read it three years ago so I can't give a better summary than its wikipedia page [0]: "Around 1000 A.D. Northern Italy and Central Italy had a more active civil society,[2] with many citizens taking part in politics and social gatherings in their communities. Northern-Central Italians had a mutual trust for their fellow citizen, governing horizontally. Politics was less hierarchical in their region. Southern Italy, however, was very different from its Northern-Central counterpart; a group of Norman Mercenaries created order in the area. The governing structure was much more vertical: the peasants were controlled by the knights and the knights were controlled by the kings. Northern and Central Italy created a democratic-type system for their citizens. Conversely, Southern Italy created a feudal and autocratic system of governing. Putnam concludes that these long-standing differences still help to explain North-South differences in governance, many centuries later...The civic nature of Northern Italy and Central Italy dating back to medieval times has caused the region to be prosperous in modern times. Southern Italy, however, with its more feudal nature in medieval times has caused the region to be the origin of the Mafia and has created a less successful region. The Mafia's hierarchical structure is very similar to Southern Italy's feudal roots, according to Putnam." [0] https://en.wikipedia.org/wiki/Making_Democracy_Work https://en.wikipedia.org/wiki/Making_Democracy_Work
  - pmontra 8y ago
    Add the unification process to that, which was in part welcomed by people and in part forced by an army from the North. It was like when two companies merge: the people from the company that leads the merge end up in better positions than the ones from the weaker company. The South kind of lost a war and perhaps they didn't realize it, even now.
tluyben2 8y ago
Same with Spain.

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vivafrance 8y ago

The ECB should just do more QE. Monetary policy solved all the US’s problems following 2008 - should work for Europe too. Printing money to buy bonds definitey doesn’t cause inflation in asset prices or real estate. Furthermore, buying bonds is totally different than simply buying stocks. Additionally, I think people really like when the interest they’re paid on their savings is below the rate of inflation. In fact, they should follow Japan’s lead and start printing money to buy ETFs! This will definitely incentivize the creation of high quality jobs.

slededit 8y ago
It certainly solved a lot of problems, the US is at full employment now. It took over a decade for interest rates to start ticking up with the exception of the housing market and stocks. The money supply is only one factor in inflation, velocity is the other and it has been extremely low for a long time.
- vivafrance 8y ago
  Inflation is rampant in many areas right now. It’s dishonest to claim inflation is low because TVs are still cheap when house prices, healthcare, and education are exploding. Furthermore, if the unemployment rate was as low as is advertised we would be seeing wage growth. The fact that wages are not rising is evidence that the unemployment numbers are fudged. The fact that Trump was elected is evidence that the majority of people are unhappy with the “recovery”.
  - JumpCrisscross 8y ago
    > if the unemployment rate was as low as is advertised we would be seeing wage growth Median usual weekly real earnings for Americans 16 and over were 5% higher in Q1 2018 then they were Q4 of 2007 [1]. From Q1 2014 to Q1 2018, we've seen that statistic grow at about 1% per year (CAGR). [1] https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q
    - deleted 8y ago

dzink 8y ago

I wonder how much of that is gray economy. Greece has massive underreporting of anything tax and business related, because they don’t verify it. Farms and businesses don’t report actual sales, earnings, probably even employees (anecdotally from locals reporting of income is less than 10% of actual). Spain has a problem with permanent labor given to senior employees with most youth being excluded from full time jobs. There is also some type of earn-in system to get to a full time job. If a lot of local industry is tourism, those can be filled with temporary work as well, that is probably not accounted for in these statistics.

yulaow 8y ago
Italy has almost 200 Billions of shadow economy (untaxed profits) per year see: https://www.statista.com/statistics/629463/shadow-economy-italy/ https://www.statista.com/statistics/629463/shadow-economy-it...
- adventured 8y ago
  It's larger than that. 20% of the Italian economy is shadow, something around $400 billion, according to a recent study by the Institute for Applied Economic Research at the University of Tübingen in Germany (IAW). The US has a $1 trillion shadow economy, around 5% +/-. Canada has a 10% shadow economy. Norway is up at 12%. https://www.forbes.com/sites/niallmccarthy/2017/02/09/where-the-worlds-shadow-economies-are-firmly-established-infographic/ https://www.forbes.com/sites/niallmccarthy/2017/02/09/where-...
  - superhuzza 8y ago
    I'm surprised Canada has such a large shadow economy. My guess is that a lot of it is restaurants/bars + cannabis.
- sonnyblarney 8y ago
  This is a really good point - but most good industries cannot exist in the shadows. You can't make cars 'in the shadows' for example. So while that may be a silver lining ... it's not a very happy one in the long term.

sonnyblarney 8y ago

For the same reason jobs are not created as much in Wyoming or Vermont so much as they are in LA or NYC ... the jobs are being created, it's just that they're in Germany and the UK and not Spain. Part of the issue is that Spain & periphery tend to have fewer 'large industrial conglomerates' that enable profitable things to be done at scale (i.e. making cars etc.). % people employed at companies with >1000 people is much bigger in Northern Europe - which makes it more difficult to compete in the periphery. But really, this is what can be expected with a true Union in Europe, and it's why Germany is so keen on it, and of course the Lib Dem (i.e. business types) are super keen on it in the UK, despite populist upset over Brexit. The short run advantages of common market and supposed common risk of the Euro (which never happened), the downside is that skilled people are flooding out of the mediocre areas into the competitive areas. Portugal is turning into a nation-sized retirement home, sadly. In an odd way, this might actually be a 'net good thing' economically, because Germany might be better at putting people to productive use in industry ... which is why the Lib Dem types like it (i.e. they see the economics) ... but really this speaks to an existential challenge to the very nature of European nations and peoples.

phobosdeimos 8y ago
Nothing stopping Portugal from becoming successful. Germany isn't really as rich as people think though: lot of hidden poverty. My own country was in very dire straits after WW2 and it took a lot of work and clever scheming to get on top.
- sveme 8y ago
  Germany has massive geographical advantages compared to nearly every other country in Europe, especially compared to Portugal. East-west and north-south navigatable rivers, few mountains, very fertile soils, located in the center of Europe covering two seas... Italy has a similarly spiderwebby location, but a much more difficult topography.
  - jxub 8y ago
    If someone wants to learn more about this stuff, geopolitics, Tim Marshall has written a pretty neat book about the topic which was a quick, fun and mind-expanding read: https://www.goodreads.com/book/show/25135194-prisoners-of-geography https://www.goodreads.com/book/show/25135194-prisoners-of-ge...

angarg12 8y ago

Is not even an issue of number of jobs, but of quality of labor. Spain grew economically in the 70s and 80s because it was a developing country, and could provide cheap labor to neighboring countries. The growth in the 2000s came from a massive housing bubble that didn't end well for most involved. As we became a developed country we didn't know how to reorient our economy. Now we are too expensive for cheap labor, which is relocating elsewhere, neither we are specialized or competitive enough to oppose other strong economies. Some times I have evaluated the possibility of going back there and try to make a career in tech. It just takes a couple of conversations with locals to erase that idea from my mind. The country is not socially tailored to attract and retain highly skilled specialized workers, and sadly it's an issue that I don't hope to see changed in the future.

l5870uoo9y 8y ago
> The country is not socially tailored to attract and retain highly skilled specialized workers. Care to elaborate? Genuinely curious. Spain does attract expats, they are however often pensioners.
- jxub 8y ago
  The situation with Spain is quite interesting. Usually engineers aren't that well regarded in Spain, people tend to aim to get into management. Other than that, salaries are pretty low and work culture is quite intense at most places, with people usually working ~10 hours a day. This is aided by the general lack of options in the market and a quite high degree of conformity which is a byproduct of the rigid educational system in Spain and which most graduates are embued with. Innovation, aside from a couple startups is lacking as most of the ecosystem is made of big consulting companies which have agreed to set cap on salaries to protect their shrinking margins resulting from years of cranking poor code by replaceable coders working in bad conditions. However, things are getting better with the arrival of some international companies like Xing or local successes like Cabify. Spain is a really attractive place for high tech, with most of the Mediterranean coast boasting Californian climate with Richmond house prices, great cuisine, high level of services comparable to Northern Europe and quite open culture. So it's logically pretty undervalued in my eyes.

kbcool 8y ago

Wow...about the same level of journalism/fact checking as expected these days....none. Let's compare the workforce of countries with an ageing population and rapidly dropping net population with countries like Australia that are absorbing 250k immigrants per year into "self employed" (read: rich third worlder's buying a house and a passport) of course you're going come up with a figure like that. Throw in some countries with massive populations who have also got an ageing population but have 20x the population of Portugal to make them look bad on absolute numbers and you have a winner. Of course a tiny change in employment is going to look amazeballs or on the other hand terrible. The difference is..being in one of those countries right now but from the greedy nation of Australia is that sustainability is practised. It's not all about greed here. You don't need to destroy the planet to have a family here so seriously a big middle finger to anyone who thinks that Europe not growing is a "problem".

chiefalchemist 8y ago
It's not so much fact checking as just not understanding data, and as a result ask the right questions and then gather more data. Imho stuff like this doesn't even qualify as journalism, and shouldn't been such credit even to discredit it.
jp555 8y ago
Economic growth = learning to do more with less, and arbitraging profits. The myth that economic growth means more waste is just wrong. Compared to the early 20th century we use ~90% fewer resources per dollar of GDP created.
- vkou 8y ago
  You forgot to subtract inflation * population growth. You can grow your economy, without actually becoming more efficient, or profitable, by tweaking either of those parameters.

chiefalchemist 8y ago

The first graph is in absolute numbers, shouldn't it be in percentages? Along the same lines, where is the birth rate? And death rate? And general population growth / delta? Finally, has, for some reason, automation been a better fit for the industries in these regions? I need more data. I need more information.

c3833174 8y ago
Well, there's hundreds of abandoned-looking industrial buildings in my area that are actually filled with CNC machines and only have 3,4 employees

desu_ 8y ago

I searched for "underground", "black" (market/economy) and "undeclared" in the article, but it yielded no results. I am surprised given that (1) the rise of the underground economy is common knowledge for people knowing a bit about the region and (2) measuring its size is a mainstream academic question.

rb666 8y ago
Same reason that watching pirated movies/shows is not counted in viewership statistics. It's illegal, you don't get credit for it. Taxes exist for a reason.
- desu_ 8y ago
  Viewership statistics of movies do not take into account pirated movies mostly because it's difficult to count. Tax offices might only care about movies sold, but producers regularly try to estimate their losses due to pirate channels, and I am sure that people who measure viewership as a proxy for impact on the popular culture would love to have to be able to count everyone. The article's author makes some observation on employment volumes in Southern Europe, then decries "the Eurozone's failure to implement meaningful pro-growth reforms". In that context, It makes sense to try to estimate how much of the economic activity has simply been reclassified. The fact that it isn't taxed makes it, once again, more difficult to measure (if that's what you meant by your "Taxes exist for a reason" truism) but not irrelevant.
- justincormack 8y ago
  Illegal activity is included in GDP figures. Measuring it is hard though.

127 8y ago

I wonder how much Germany using the Southern Europe to suppress Euro to drive their own economy, is affecting the economies of Southern Europe.

_Codemonkeyism 8y ago

It's funny how Germany is called out here again and again. The EUR was forced on Germany by France (Mitterrand) as a precondition for reunification. Germany was dragging its feet with a common currency and needed be dragged towards a EUR. The French intention was to controll a unified Germany with a common currency.

cherdak 8y ago

I am every time astonished by the low level of analysis of this kind of situation and how dogmatic is the explanation : too high taxes, too much regulation. First of all taxes can seen as an investment of the citizens for better life. So the problem is not the high level of taxes, but how they are used and in what purposes. Certainly, PIGS should optimize many processes and promote initiatives ( business but also social....). Remember that PIGS are the most impacted by migration now. Remember that most were dictatorships many decades ago and have not the same foundations of democracy and economic prosperity than other countries. Remember that many young people that could create jobs just moved in others countries and didn't come back. Remember that you don't have the same impact when you are poor than when you rich. We you are poor you look for more immediate results because it is a matter of life. Remember the role that play mafia/corruption/ criminality, especially the white collar one!! I don't think the Euro has a so big impact and there are plenty to doin order to reach a good growth. However the growth is the result of wise and pragmatic moves which can reach a 2% per year in long term ( according to Angus maddisson from OECD). But it is the good decisions and actions that provides efficiency and so growth, not stupid and blind cut in budget. For OECD , the top down approach of spending money is always bad ( Keynesian approach), but the top down of saving money is ever good. What an hypocrisy which can influence a policy that can destro many life's.