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It isn't fair to blame euro for Italy's troubles. You should rather look at poor governance: * high public debt and as a consequence high percentage [over 3%]

by chewz 8y ago

It isn't fair to blame euro for Italy's troubles. You should rather look at poor governance: * high public debt and as a consequence high percentage [over 3%] of GDP going for public debt servicing. [Just stop and think about it - Italy is spending on debt servicing the same percentage of GDP that US is spending on military] * failure at attracting foreign greenfield investments * one of lowest percentage of youths with university degree [below 30% - 44% OECD average] * poor education system [2015 OECD PISA lower then US which means very bottom] * low productivity at Italy's many small enterprises. Italy failed at adapting it's economy to globalization age. And the blame should go to Italy's political class not EU. [1] - https://www.ft.com/content/b3c85b34-e10a-11e8-a6e5-792428919cee https://www.ft.com/content/b3c85b34-e10a-11e8-a6e5-792428919...

ironic_ali 8y ago
I replied to another poster and although your points are valid, each members debt load had a greater effect. Please see https://www.armstrongeconomics.com/international-news/europes-current-economy/the-euro-crisis-the-previous-debt/ https://www.armstrongeconomics.com/international-news/europe...
- chewz 8y ago
  We are not at odds. My point is since 1992 we have era of rapid globalization and many economies adapted (usually at the expense of ordinary folk ie. economy is doing great and people not so much). Debt, currency etc. is just technicality. The rules have changed, the world is playing brutal Texas Holdem now and Italy is still trying to play chess.
paganel 8y ago
> low productivity at Italy's many small enterprises. Just as an example the Italian white-goods industry used to be world class but it got almost obliterated first by Turkish competition and then by the Chinese and the Koreans (which probably also manufacture most of their stuff in China). I’ll also whant to add a mention about Italy’s car industry (which was not small, I agree). The Germans somehow managed to keep their brands and most of their car manufacture going while the car industry in Italy is about to dissapear completely. I’m not exactly sure of the reasons of why that happened (as late as the 1990s the Fiat Punto was still the best sold model in Europe) but this has also had a very adverse effect on Italy’s lack of growth. Afaik the German car industry is responsible for almost 10% of its GDP, Italy wouldn’t have been in a as dire a situation as the current one if it still had a well-established car industry on its own.
- chewz 8y ago
  Italy used to be export powerhouse in 60-ties, 70-ties - scooters[1], computers, textiles, everything. If they have stayed on track Italy would be 2nd economy in EU now, right after Germany. No country in Europe had it easy in last 30 years. Germany, Netherlands had to fight tooth and nail to keep their position as export powerhouses against competition from Asia. But they did. Sweden, Finland have invested heavily in education to keep their small economies relevant in the game. Poland, Romania, Czech had to rebuilt their economies from ashes of communist central planning. Not to mention other countries like UK, France, Spain. Somehow Italy didn't choose that path and just drifted. I disagree with narrative that there is a cabal of European countries conspiring against Italy's growth. [1] In Thailand or Indonesia you can still find hundreds of old Vespas which dominated scooter market in Asia before Hondas and Suzukis came.
wazoox 8y ago
Oh yes it is. The Eurozone has exactly ZERO transfers. What is the proposed, officially sanctioned solution? Lower salaries. Austerity. Impoverishment. Then what happens? Fascism. Slow clap... We've tried this shit before, it was the gold standard in the 20s. Remember how it ended? Yeah, it was a heck of a good job! The whole Euro project is brain-dead, and it's killing the EU, fast. Wait to see the results of the coming European elections...
- antientropic 8y ago
  It is false that there are "exactly ZERO transfers" in the EU. Sadly for Italy however, it is a net contributor of about 5 billion a year: https://en.wikipedia.org/wiki/Budget_of_the_European_Union#EU-28_contributions_(2014) https://en.wikipedia.org/wiki/Budget_of_the_European_Union#E...
  - wazoox 8y ago
    Strictly speaking, there are some transfers, however they're minuscule compared to EU GDP. The simple fact is that rich California pays for poor Montana, but rich Bavaria doesn't pay for poor Greece, doesn't want to and politically can't be forced to do it. IIRC the volume of transfers necessary to reach equilibrium would be around 8% of GDP.
    - taysic 8y ago
      California doesn’t exactly pay for Montana... they do pay for some federal services for which everyone has voted for. In theory though poor management can cause a state to default on its debt.
- Udik 8y ago
  I don't think the two explanations are mutually exclusive. Yes, given the limitations of Italy's society and economy, the euro is probably causing damages (not in a absolute terms, it has also positive sides, but let's pretend it's a net negative). At the same time, Italy's economy and society are losing the pace with the rest of the world. This might be also a consequence of long economic stagnation due to the euro, but it's definitely a cultural trait: people are angry, distrustful, poorly educated, incapable of finding common ground even on the basics. The political crises of the last thirty years have left a deep mark on the public opinion, which is now suspicious of every public project, every politician, every successful entrepreneur, and addicted to news of political scandals. There is nothing that Italians seem to enjoy more than seeing a politician or entrepreneur indicted for corruption; the widespread idea is that someone stole the money, and the most approved government measures are those that redistribute public money and punish this or that perceived offender. Source: I'm Italian.

by chewz 8y ago

ironic_ali 8y ago

I replied to another poster and although your points are valid, each members debt load had a greater effect. Please see https://www.armstrongeconomics.com/international-news/europes-current-economy/the-euro-crisis-the-previous-debt/ https://www.armstrongeconomics.com/international-news/europe...

chewz 8y ago
We are not at odds. My point is since 1992 we have era of rapid globalization and many economies adapted (usually at the expense of ordinary folk ie. economy is doing great and people not so much). Debt, currency etc. is just technicality. The rules have changed, the world is playing brutal Texas Holdem now and Italy is still trying to play chess.

paganel 8y ago

> low productivity at Italy's many small enterprises. Just as an example the Italian white-goods industry used to be world class but it got almost obliterated first by Turkish competition and then by the Chinese and the Koreans (which probably also manufacture most of their stuff in China). I’ll also whant to add a mention about Italy’s car industry (which was not small, I agree). The Germans somehow managed to keep their brands and most of their car manufacture going while the car industry in Italy is about to dissapear completely. I’m not exactly sure of the reasons of why that happened (as late as the 1990s the Fiat Punto was still the best sold model in Europe) but this has also had a very adverse effect on Italy’s lack of growth. Afaik the German car industry is responsible for almost 10% of its GDP, Italy wouldn’t have been in a as dire a situation as the current one if it still had a well-established car industry on its own.

chewz 8y ago
Italy used to be export powerhouse in 60-ties, 70-ties - scooters[1], computers, textiles, everything. If they have stayed on track Italy would be 2nd economy in EU now, right after Germany. No country in Europe had it easy in last 30 years. Germany, Netherlands had to fight tooth and nail to keep their position as export powerhouses against competition from Asia. But they did. Sweden, Finland have invested heavily in education to keep their small economies relevant in the game. Poland, Romania, Czech had to rebuilt their economies from ashes of communist central planning. Not to mention other countries like UK, France, Spain. Somehow Italy didn't choose that path and just drifted. I disagree with narrative that there is a cabal of European countries conspiring against Italy's growth. [1] In Thailand or Indonesia you can still find hundreds of old Vespas which dominated scooter market in Asia before Hondas and Suzukis came.

wazoox 8y ago

Oh yes it is. The Eurozone has exactly ZERO transfers. What is the proposed, officially sanctioned solution? Lower salaries. Austerity. Impoverishment. Then what happens? Fascism. Slow clap... We've tried this shit before, it was the gold standard in the 20s. Remember how it ended? Yeah, it was a heck of a good job! The whole Euro project is brain-dead, and it's killing the EU, fast. Wait to see the results of the coming European elections...

antientropic 8y ago
It is false that there are "exactly ZERO transfers" in the EU. Sadly for Italy however, it is a net contributor of about 5 billion a year: https://en.wikipedia.org/wiki/Budget_of_the_European_Union#EU-28_contributions_(2014) https://en.wikipedia.org/wiki/Budget_of_the_European_Union#E...
- wazoox 8y ago
  Strictly speaking, there are some transfers, however they're minuscule compared to EU GDP. The simple fact is that rich California pays for poor Montana, but rich Bavaria doesn't pay for poor Greece, doesn't want to and politically can't be forced to do it. IIRC the volume of transfers necessary to reach equilibrium would be around 8% of GDP.
  - taysic 8y ago
    California doesn’t exactly pay for Montana... they do pay for some federal services for which everyone has voted for. In theory though poor management can cause a state to default on its debt.
Udik 8y ago
I don't think the two explanations are mutually exclusive. Yes, given the limitations of Italy's society and economy, the euro is probably causing damages (not in a absolute terms, it has also positive sides, but let's pretend it's a net negative). At the same time, Italy's economy and society are losing the pace with the rest of the world. This might be also a consequence of long economic stagnation due to the euro, but it's definitely a cultural trait: people are angry, distrustful, poorly educated, incapable of finding common ground even on the basics. The political crises of the last thirty years have left a deep mark on the public opinion, which is now suspicious of every public project, every politician, every successful entrepreneur, and addicted to news of political scandals. There is nothing that Italians seem to enjoy more than seeing a politician or entrepreneur indicted for corruption; the widespread idea is that someone stole the money, and the most approved government measures are those that redistribute public money and punish this or that perceived offender. Source: I'm Italian.