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It's amazing that the Economist still touts Anglo-Saxon "panaceas" for growth: deregulate, get rid of red tape, focus the economy on services rather than manufa

It's amazing that the Economist still touts Anglo-Saxon "panaceas" for growth: deregulate, get rid of red tape, focus the economy on services rather than manufacturing. When Germany entered a period of stagnation after the Euro-introduction in 2002, the Economist made exactly the same prescriptions. Look what that ideology has done to the US and the UK: countless jobs in manufacturing have been offshored and growth was simulated through financial "innovations". Personally, I buy lots of organic food products from Italy (e.g. laselva-bio.eu) as well as clothes (e.g. slowear.it), and for a simple reason: They're the best on the market. Therein lies Italy's potential.

arethuza 15y ago
Italy produces some of the most desirable products: cars, clothes, consumer goods, motorbikes, food....
tokenadult 15y ago
Personally, I buy lots of organic food products from Italy (e.g. laselva-bio.eu) as well as clothes (e.g. slowear.it), and for a simple reason: They're the best on the market. You have endorsed the quality of Italian products made by private business enterprises. To keep this discussion on topic for Hacker News (ahem), I wonder what you think about how well the current Italian governmental administration is allowing business owners like that to succeed. The overall economic growth figures for Italy reported in the submitted article suggest that the preferences of consumers like you are not sustaining steady economic growth in Italy. Could that be the result of government mismanagement?
- ignifero 15y ago
  It seems like exports of lucrative sectors are still strong in Italy. Of course, as in most europe, taxation is heavy. The main factor hindering growth seems to be high wages.
  - grn 15y ago
    I think that non-wage labour costs can be an important factor. I think they are quite high across Europe. Could anyone tell the numbers for Italy? (for example: in Poland a net wage of 2700 PLN (~ $1000) is a gross wage of 4500 PLN (~ $1650)).
tptacek 15y ago
You've responded to an objective assessment of Italy's economy --- it's hugely in debt and lags the EU in job creation and GDP growth --- with subjective claims about organic food and clothes. Everyone seems to realize that Italy's economy is dominated by exports, including those organic foods and designer clothes. They're still getting their credit rating downgraded. Now what?
- ignifero 15y ago
  I think it's fair to say that "Objective assessments" don't have a high level of confidence either. Economies have their ups and downs, and Italy still has some very profitable sectors and a diversified economy. Hopefully Silvio will be out before disaster comes, and indeed the Italians have to correct course before they become the new Greece.
  - Confusion 15y ago
    10 years is too long for a 'down'.
- blumentopf 15y ago
  Actually I've responded to the advice the Economist is giving in that article, which isn't objective at all. Italy needs to boost the sectors it's great in, instead of applying generic Anglo-Saxon recipes.
  - tptacek 15y ago
    This "generic Anglo-Saxon" epithet sounds like an emotional appeal. The facts are straightforward, aren't they? Italy has an immense public debt. It is getting more and more difficult for Eurozone countries to finance sovereign debt. Its population is aging. Pension costs are rising. Productivity, according to Mario Draghi, is stagnant, in part because employment in Italy is structured weirdly, with large numbers of closely-held firms with a two-tiered system of full-time full-benefit workers hired through nepotism and armies of temp workers†. Civil cases in Italy average more than 1,000 days. The country has wild gaps in educational outcomes between different regions. I don't think you can write all this off as an "Anglo-Saxon conspiracy". These are ideas that can be described with simple numbers, aren't they? † Articles about Italy have long attributed this to Italy's family culture, in which people cohabitate with their extended families long into adulthood, but it seems just as likely that this is a result of laws making it hard to fire people.
hpo33 15y ago
Sorry, but your post shows complete ignorance of Germany's economy and economics in general. Germany's services make up 72%+ of its GDP, while manufacturing makes up 27%. Its services sector is growing, while its manufacturing sector is decreasing. That's a fact of every developed economy. A quick scan of Germany's Wikipedia entry and any other developed economy's will show you that. Deregulation has happened across every economy -- aside from North Korea and Cuba -- since the 1980s (e.g. with telecom, airlines, utilities, etc). The result of deregulation has spawned record growth in emerging economies, as well as massive growth with the newly liberalized sectors in developed economies (e.g., transportation, energy, communications). HN has a lot of smart people, but sometimes the lack of any economic wisdom combined with a holier-than-thou attitude among some posters can be a little depressing.
- snth 15y ago
  I downvoted you for tone. Your post would be a good one if you removed your first and last sentences.
  - xiaoma 15y ago
    ditto
- SkyMarshal 15y ago
  >deregulation has spawned record growth in emerging economies, as well as massive growth with the newly liberalized sectors in developed economies (e.g., transportation, energy, communications). In Energy and Finance deregulation has enabled massive crisies, in the former a crisis that led to shut downs of electricity to the 4th largest and most innovative economy in the world, and in the latter a crisis the size of which hasn't been seen since the Great Depression. Is it so surprising that less than 10 years after Graham-Leach-Bliley ('99) undid the last regulations put in place after the Great Depression (Glass-Steagal) that we have another GD-level event? We had a historically unprecedented 80-year run without one of those, then some bankers get greedy, captured both political parties, pay them off, and boom, another Great Depression crisis. In telecom, it's enabling consolidation of the industry into a small cartel that controls the Internet's infrastructure and who are using their massive revenue to lobby against Net Neutrality so they can shape and toll net traffic at will, unleveling the Internet playing field that has laid so many golden eggs. On a more subjective level, it's also made tons of cheap stuff we don't really need much cheaper, but at the expense of eviscerating the middle class, grossly increasing the wealth (and hence political power) gaps between rich and poor, and making developed economies more dependent and fragile rather than robust and self-sufficient. Sometimes I think the deregulation/outsourcing mantra is the Emporer's New Clothes, and I wonder when the consensus will change to recognize that economic optimization may not be so good after all, that economic robustness is a better policy for any self-interested nation.
lupatus 15y ago
Having never heard of slowear.it before, I decided to check out their website. If anyone else also does this, be forewarned that the UI assaults the eyes. It is extremely "busy", has poor (none?) navigational structure, and everything moves slightly and unexpectedly if you hover over it.
stretchwithme 15y ago
Jobs moved offshore because of trillions of dollars borrowed, both by government and individuals. You can't consume more than you produce without importing more than you export. Deregulation and opening of markets did not create the US trade deficit. Nobody did anything to focus the US economy on services, other than borrow massively. Which caused wages to go up, workers to move to the US and imports to soar. All of the long term economic imbalances we're facing are interrelated.

arethuza 15y ago

Italy produces some of the most desirable products: cars, clothes, consumer goods, motorbikes, food....

tokenadult 15y ago

Personally, I buy lots of organic food products from Italy (e.g. laselva-bio.eu) as well as clothes (e.g. slowear.it), and for a simple reason: They're the best on the market. You have endorsed the quality of Italian products made by private business enterprises. To keep this discussion on topic for Hacker News (ahem), I wonder what you think about how well the current Italian governmental administration is allowing business owners like that to succeed. The overall economic growth figures for Italy reported in the submitted article suggest that the preferences of consumers like you are not sustaining steady economic growth in Italy. Could that be the result of government mismanagement?

ignifero 15y ago
It seems like exports of lucrative sectors are still strong in Italy. Of course, as in most europe, taxation is heavy. The main factor hindering growth seems to be high wages.
- grn 15y ago
  I think that non-wage labour costs can be an important factor. I think they are quite high across Europe. Could anyone tell the numbers for Italy? (for example: in Poland a net wage of 2700 PLN (~ $1000) is a gross wage of 4500 PLN (~ $1650)).

tptacek 15y ago

You've responded to an objective assessment of Italy's economy --- it's hugely in debt and lags the EU in job creation and GDP growth --- with subjective claims about organic food and clothes. Everyone seems to realize that Italy's economy is dominated by exports, including those organic foods and designer clothes. They're still getting their credit rating downgraded. Now what?

ignifero 15y ago
I think it's fair to say that "Objective assessments" don't have a high level of confidence either. Economies have their ups and downs, and Italy still has some very profitable sectors and a diversified economy. Hopefully Silvio will be out before disaster comes, and indeed the Italians have to correct course before they become the new Greece.
- Confusion 15y ago
  10 years is too long for a 'down'.
blumentopf 15y ago
Actually I've responded to the advice the Economist is giving in that article, which isn't objective at all. Italy needs to boost the sectors it's great in, instead of applying generic Anglo-Saxon recipes.
- tptacek 15y ago
  This "generic Anglo-Saxon" epithet sounds like an emotional appeal. The facts are straightforward, aren't they? Italy has an immense public debt. It is getting more and more difficult for Eurozone countries to finance sovereign debt. Its population is aging. Pension costs are rising. Productivity, according to Mario Draghi, is stagnant, in part because employment in Italy is structured weirdly, with large numbers of closely-held firms with a two-tiered system of full-time full-benefit workers hired through nepotism and armies of temp workers†. Civil cases in Italy average more than 1,000 days. The country has wild gaps in educational outcomes between different regions. I don't think you can write all this off as an "Anglo-Saxon conspiracy". These are ideas that can be described with simple numbers, aren't they? † Articles about Italy have long attributed this to Italy's family culture, in which people cohabitate with their extended families long into adulthood, but it seems just as likely that this is a result of laws making it hard to fire people.

hpo33 15y ago

Sorry, but your post shows complete ignorance of Germany's economy and economics in general. Germany's services make up 72%+ of its GDP, while manufacturing makes up 27%. Its services sector is growing, while its manufacturing sector is decreasing. That's a fact of every developed economy. A quick scan of Germany's Wikipedia entry and any other developed economy's will show you that. Deregulation has happened across every economy -- aside from North Korea and Cuba -- since the 1980s (e.g. with telecom, airlines, utilities, etc). The result of deregulation has spawned record growth in emerging economies, as well as massive growth with the newly liberalized sectors in developed economies (e.g., transportation, energy, communications). HN has a lot of smart people, but sometimes the lack of any economic wisdom combined with a holier-than-thou attitude among some posters can be a little depressing.

snth 15y ago
I downvoted you for tone. Your post would be a good one if you removed your first and last sentences.
- xiaoma 15y ago
  ditto
SkyMarshal 15y ago
>deregulation has spawned record growth in emerging economies, as well as massive growth with the newly liberalized sectors in developed economies (e.g., transportation, energy, communications). In Energy and Finance deregulation has enabled massive crisies, in the former a crisis that led to shut downs of electricity to the 4th largest and most innovative economy in the world, and in the latter a crisis the size of which hasn't been seen since the Great Depression. Is it so surprising that less than 10 years after Graham-Leach-Bliley ('99) undid the last regulations put in place after the Great Depression (Glass-Steagal) that we have another GD-level event? We had a historically unprecedented 80-year run without one of those, then some bankers get greedy, captured both political parties, pay them off, and boom, another Great Depression crisis. In telecom, it's enabling consolidation of the industry into a small cartel that controls the Internet's infrastructure and who are using their massive revenue to lobby against Net Neutrality so they can shape and toll net traffic at will, unleveling the Internet playing field that has laid so many golden eggs. On a more subjective level, it's also made tons of cheap stuff we don't really need much cheaper, but at the expense of eviscerating the middle class, grossly increasing the wealth (and hence political power) gaps between rich and poor, and making developed economies more dependent and fragile rather than robust and self-sufficient. Sometimes I think the deregulation/outsourcing mantra is the Emporer's New Clothes, and I wonder when the consensus will change to recognize that economic optimization may not be so good after all, that economic robustness is a better policy for any self-interested nation.

lupatus 15y ago

Having never heard of slowear.it before, I decided to check out their website. If anyone else also does this, be forewarned that the UI assaults the eyes. It is extremely "busy", has poor (none?) navigational structure, and everything moves slightly and unexpectedly if you hover over it.

stretchwithme 15y ago

Jobs moved offshore because of trillions of dollars borrowed, both by government and individuals. You can't consume more than you produce without importing more than you export. Deregulation and opening of markets did not create the US trade deficit. Nobody did anything to focus the US economy on services, other than borrow massively. Which caused wages to go up, workers to move to the US and imports to soar. All of the long term economic imbalances we're facing are interrelated.