To better understand the terms of the problem, a valuable book was published a few days ago by an Italian economist who teaches at the University of Chicago, Luigi Zingales who, not being an ardent and ideological supporter of the Euro, detachedly examines the pros and cons of the single currency in a popular way and often resorting to stories of real life or popular examples, keeping references to economic doctrine and graphs to a minimum.
Zingales has no doubts. After having examined all the clues of guilt and those of innocence that develop like a detective story that leaves the reader in suspense until the very last pages, Zingales reveals the culprit: our crisis is structural, it comes from a strong loss of competitiveness which has lasted for about twenty years and cannot be resolved by leaving the Euro. Indeed, our crisis would risk worsening in a medium-term perspective, even if, hypothetically, we were able to cushion the immediate costs of changing the currency which could lead to a real collapse of the economic system. In short, if the Northern League Salvini instead of waving the book of prof. Bagnai (of the University of Pescara) managed to read this book as well, perhaps his positions would be a little more prudent.
But beyond the general conclusions, there are some specific notations in the book that are worth pointing out. The first concerns the advantage that Italy has been given since 1998 by the fall in interest rates following its entry into the Euro. According to Prof. Zingales, if we had fully used the interest savings to reduce the public debt which in 98 was equal to 114% of GDP, we would have arrived at the appointment with the great crisis of 2008 with a debt equal to 67% of GDP and not 103,3% as we actually had. In short, we could have faced the crisis without difficulty, like Germany. And instead we have squandered an important part of that advantage in political waste and crumbs of wages and pensions distributed in rain. Paradoxically, Berlusconi's decade was also made possible by the gift given to us by the Euro. And now they speak of it as a "foreign currency"!
The second demonstration concerns the trend of our productivity and foreign trade. Between 1999 and 2011 while wages per hour worked increased in Italy more or less like the French one (but double the German one) but productivity increased by 7% in France, by 11% in Germany, while dropped by 6% in Italy. And this is the result of public sector wastefulness and union rigidities. But our companies are also lagging behind. In fact, our exports have gone worse than those of other countries not because of the overvaluation of the Euro (which, moreover, was not there in the first five years) but because our companies have not been able to modernize using the new Ict technologies and they remained in low-tech, low-growth sectors. This being the case, the devaluation does not bring us any benefit, if not of very short duration, as indeed happened already in 1992.
Finally, a more political note. Zingales does not give much weight to the need to reform our institutions which have instead been so mistreated in recent years as to make any decision virtually impossible. Reliable governance is the premise not only for being able to set up policies capable of improving internal competitiveness, but also for being able to go to Europe with the necessary credibility to be able to contribute to making those reforms which also on the Community side appear indispensable. On the other hand, this is an obligatory path if we want to avoid that the many unemployed young people can see in the choice of inflation advocated by Grillo the only way out of the impasse in which they find themselves.
