Live data from Hacker News

Italy’s austerity-fueled crisis is a warning to the Eurozone

ineteconomics.org

121–130 of 154 posts

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#121
post #9

I wish we had a political version of Mr. Rogers. We need better role models for how to talk about politics in ways that are measured, reasonable, and respectful.

Good point. I would suggest that a better model for discussing politics is even more important than a better role model. Current political discourse is so full of emotionally laden words, shibboleths, and moralizing that discussions inevitably go down the same paths over and over again. So tedious and unproductive. This indicates to me that the current model is broken and it is time to look elsewhere.

What if, for instance, we used software systems engineering as model and thought about political systems in terms of high-availability, reliability, and security? Too-big-to-fail can be thought of as a Single Point of Failure, a system attribute we know works against availability and security. We might further think of corruption as an attack on the system, and hence, plan mechanisms to minimize the "blast radius". And so on.

Other models might work too, for example, physics. My point is that the current model of political discourse is weirdly self-limiting. Something very odd seems to happen as soon as one adopts it. It's as if people immediately forget the knowledge they have outside politics. I have seen this many times in the political writing of otherwise very intelligent scientists and engineers--their technical ideas are creative and rigorous but their political ideas banal and trite.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#122
post #93

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 w…

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...

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#123
post #82

Earlier quoted context omitted.

As someone else pointed out, the US has federal taxes and ways to distribute from rich states to poor states

So issue is really the lack of fiscal union in the EU. Better work on this than on divisive solutions.

Yes, and Germany explicitly rejected all attempts and proposals: no Eurobonds, no Green Fund, no fiscal union, no transfers, no nothing. They'll stick to their guns until the whole thing come apart (real soon now: you liked the Brexit? Wait for Italexit. Or Frexit. Sooner than you think).

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#124
post #122
post #93

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 w…

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 co…

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#E...

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#125
post #122

Earlier quoted context omitted.

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 co…

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#E...

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.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#126
post #122
post #93

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 w…

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 co…

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.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#127
post #7

The Eurozone was never intended to do the damage it has done to PIGS economies but it has. What is worse, is that it has unquestionably been of benefit to Germany, which has one of the strongest hands in shaping the future of the EU. If a macroeconomist had sat down to devise a currency that suffocated Italy, Portugal, Greece and Spain - export driven economies (remember that tourism is an export as you have to buy t…

Extending the same principle to provinces/states within, and then to cities, and then to individuals, you finally get to Hayek's "no state currency" proposal.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#128
post #52
post #29

Earlier quoted context omitted.

The EU already has a version of this. Some countries in the Eurozone are net recipients of EU money. Just like California is a net contributor and Mississippi a net recipient. It can be argued that the Euro has certain structural issues, or that the wealth transfer is too big/small, but the EU demonstrates that you don't need to become one nation just to have wealth transfers.

But is the size of these wealth transfers comparable? I have the impression, maybe wrong (absolutely no data to confirm it, in fact) that wealth transfers within the EU are much lower than those that would take place between the regions of a single nation.

No, but does it matter? I'm pointing out that you structurally don't need a nation-state to do this. The EU isn't going to have some natural or legal tipping-point where the wealth transfer moves up or down by 0.1% and suddenly it structurally doesn't work.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#129
post #126
post #122

Earlier quoted context omitted.

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 co…

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,…

You have described the political landscape in Spain to a T.

I fear than in the upcoming general elections we will see the rise of the populist far right, and with it further polarization of the political landscape.

Source: am Spaniard.

Re: Italy’s austerity-fueled crisis is a warning to the Eurozone

#130
post #125

Earlier quoted context omitted.

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#E...

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.

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.
Post reply on HN