3 ms·

Interesting. Could you expand on that?

mrweasel 6y ago
It has nothing to do with the article but in general the people of northern Europe feel like they constantly need to help the struggling economies in the south finans their government budgets. Recently the EU borrowed money collectively for the first time to help coutries like Italy. Italy can not borrow at the same low rates as Germany, or Denmark, but if the EU borrow the money on behalf of Italy then they can piggy back on the excellent credit rating of northen Europe. There’s a grown sense that the southern economies should be allowed to collaps and just deal with their own mess. This is completely ignoring any knock of effect on the rest of the EU and centered on a rather outdate world view, assuming the the economies of the individual EU coutries are completely disconnected.
- TheOtherHobbes 6y ago
  The EU's model essentially assumes that everyone should be a net exporter, which is clearly insane. It makes no sense at all to expect Portugal or Croatia to compete with the German industrial establishment. It would take massive infrastructure investment to make that even remotely plausible, even if it was a good idea - which it isn't. The reality is that the Southern countries are best suited for tourism, leisure, and agriculture, not industry, and so will never be competitive with FR, NL, and DE on those terms. But there are plenty of mid/long term opportunities for developing Internet and bio/med businesses and related primary research. The EU could do more to encourage those. (It's making some effort, but more is always possible.)
  - RobertoG 6y ago
    >>"It makes no sense at all to expect Portugal or Croatia to compete with the German industrial establishment. It would take massive infrastructure investment to make that even remotely plausible, [..]" What would be necessary for competing with Germany, state investment and some protectionism of new industries, is forbidden inside the framework of the common market and the Euro anyway. The last thing a net exporter country want is real competition, and the more desirable thing they want is a not-borders market with a not de-valuable currency. It's funny (actually sad) how so many people think that it's, the less industrialized countries in the Euro, who have the better part of the deal.
  - KSteffensen 6y ago
    You are right, but there is also the issue that a lot of the South Europe countries have structural problems (corruption, bureaucracy, poor infrastructure) that they seem to be unable or unwilling to address. This is also a factor that's holding them back.
    - okokwhatever 6y ago
      There is such unhealthy paternalism in northern European countries based so exclusively on economics that I even find it amusing. Later, we are surprised by the statistics that speak of life expectancy or quality of life and in that case we dont remember southern Europe. And yes, as a citizen of Southern Europe I am constantly feeling insulted.
- bildung 6y ago
  Italy was perfectly fine before the 2008 crisis, and Italy's current position would certainly be better without the EU's austerity nonsense post 2008. There just is no intrinsically Italian "mess". Italy had constantly shrinking debt to gdp ratio since the early 90s, right up to 2008: https://tradingeconomics.com/italy/government-debt-to-gdp https://tradingeconomics.com/italy/government-debt-to-gdp
  - killtimeatwork 6y ago
    > EU's austerity nonsense post 2008 Can you elaborate? My country (Poland) was in the EU at the time and I didn't notice any "austerity nonsense". Was it related to the eurozone somehow? (we don't have euro in Poland).
    - bildung 6y ago
      I mean things like "Stability and Growth Pact", which Poland simply ignored post 2008, which probably is the reason you didn't notice: Poland breached the deficit/GDP rule from 2008-2014, while Italy only did from 2009-2011.[0] Poland also missed the MTO for every year since 2005 (same as Italy). The only core difference is that Poland had a lower absolute debt ratio than Italy when entering the crisis. The relative rises in debt in Poland post 2008 were higher than those of Italy.[1] Polands debt to gdp ratio rose 21.5% from 2007 to 2012, and Italy's ratio rose 20.5% during the same period. [0] https://en.wikipedia.org/wiki/Stability_and_Growth_Pact#Member_states_by_SGP_criteria https://en.wikipedia.org/wiki/Stability_and_Growth_Pact#Memb... [1] https://tradingeconomics.com/poland/government-debt-to-gdp https://tradingeconomics.com/poland/government-debt-to-gdp No offence intended, BTW! It's hard to speak about things like these without threads devolving into us-vs-them debates.
  - tomatocracy 6y ago
    Another interpretation is that Italy historically had run its economy on the basis of periodically devaluing the currency to maintain international competitiveness. Not the "correct" way to do things but it worked for them. Joining the Euro stopped Italy from devaluing but they didn't change the way they ran their economy (for good reasons - doing so would have been very very hard) to avoid the need to devalue coming again; and 2008 was the first time this bit them.
- deleted 6y ago
  [deleted]

It has nothing to do with the article but in general the people of northern Europe feel like they constantly need to help the struggling economies in the south finans their government budgets. Recently the EU borrowed money collectively for the first time to help coutries like Italy. Italy can not borrow at the same low rates as Germany, or Denmark, but if the EU borrow the money on behalf of Italy then they can piggy back on the excellent credit rating of northen Europe. There’s a grown sense that the southern economies should be allowed to collaps and just deal with their own mess. This is completely ignoring any knock of effect on the rest of the EU and centered on a rather outdate world view, assuming the the economies of the individual EU coutries are completely disconnected.

TheOtherHobbes 6y ago
The EU's model essentially assumes that everyone should be a net exporter, which is clearly insane. It makes no sense at all to expect Portugal or Croatia to compete with the German industrial establishment. It would take massive infrastructure investment to make that even remotely plausible, even if it was a good idea - which it isn't. The reality is that the Southern countries are best suited for tourism, leisure, and agriculture, not industry, and so will never be competitive with FR, NL, and DE on those terms. But there are plenty of mid/long term opportunities for developing Internet and bio/med businesses and related primary research. The EU could do more to encourage those. (It's making some effort, but more is always possible.)
- RobertoG 6y ago
  >>"It makes no sense at all to expect Portugal or Croatia to compete with the German industrial establishment. It would take massive infrastructure investment to make that even remotely plausible, [..]" What would be necessary for competing with Germany, state investment and some protectionism of new industries, is forbidden inside the framework of the common market and the Euro anyway. The last thing a net exporter country want is real competition, and the more desirable thing they want is a not-borders market with a not de-valuable currency. It's funny (actually sad) how so many people think that it's, the less industrialized countries in the Euro, who have the better part of the deal.
- KSteffensen 6y ago
  You are right, but there is also the issue that a lot of the South Europe countries have structural problems (corruption, bureaucracy, poor infrastructure) that they seem to be unable or unwilling to address. This is also a factor that's holding them back.
  - okokwhatever 6y ago
    There is such unhealthy paternalism in northern European countries based so exclusively on economics that I even find it amusing. Later, we are surprised by the statistics that speak of life expectancy or quality of life and in that case we dont remember southern Europe. And yes, as a citizen of Southern Europe I am constantly feeling insulted.
bildung 6y ago
Italy was perfectly fine before the 2008 crisis, and Italy's current position would certainly be better without the EU's austerity nonsense post 2008. There just is no intrinsically Italian "mess". Italy had constantly shrinking debt to gdp ratio since the early 90s, right up to 2008: https://tradingeconomics.com/italy/government-debt-to-gdp https://tradingeconomics.com/italy/government-debt-to-gdp
- killtimeatwork 6y ago
  > EU's austerity nonsense post 2008 Can you elaborate? My country (Poland) was in the EU at the time and I didn't notice any "austerity nonsense". Was it related to the eurozone somehow? (we don't have euro in Poland).
  - bildung 6y ago
    I mean things like "Stability and Growth Pact", which Poland simply ignored post 2008, which probably is the reason you didn't notice: Poland breached the deficit/GDP rule from 2008-2014, while Italy only did from 2009-2011.[0] Poland also missed the MTO for every year since 2005 (same as Italy). The only core difference is that Poland had a lower absolute debt ratio than Italy when entering the crisis. The relative rises in debt in Poland post 2008 were higher than those of Italy.[1] Polands debt to gdp ratio rose 21.5% from 2007 to 2012, and Italy's ratio rose 20.5% during the same period. [0] https://en.wikipedia.org/wiki/Stability_and_Growth_Pact#Member_states_by_SGP_criteria https://en.wikipedia.org/wiki/Stability_and_Growth_Pact#Memb... [1] https://tradingeconomics.com/poland/government-debt-to-gdp https://tradingeconomics.com/poland/government-debt-to-gdp No offence intended, BTW! It's hard to speak about things like these without threads devolving into us-vs-them debates.
- tomatocracy 6y ago
  Another interpretation is that Italy historically had run its economy on the basis of periodically devaluing the currency to maintain international competitiveness. Not the "correct" way to do things but it worked for them. Joining the Euro stopped Italy from devaluing but they didn't change the way they ran their economy (for good reasons - doing so would have been very very hard) to avoid the need to devalue coming again; and 2008 was the first time this bit them.
deleted 6y ago
[deleted]