Monetary union has been a disaster for Italy:
The latest panic on global stock markets has reminded the world of the vulnerability of the euro, and this week pundits in the British press have been busy speculating about France’s possible collapse. Hardly anyone bothers to fret about Italy any more, even though last week its exchanges took the second biggest hit after Greece. Italy’s irreversible demise is a foregone conclusion. The country is just too much of a basket case even to think about.
Italy’s experience of the European monetary union has been particularly painful. The Italians sleepwalked into joining the euro with scarcely any serious debate, and were so keen to sign up that they accepted a throttlingly high exchange rate with the lira. The price of life’s essentials, such as cigarettes, coffee and wine, doubled overnight while wages remained static — though back then jobs were still easy to find and money easy to borrow. But when the great crash happened, Italy, as a prisoner of a monetary union without a political union, was unable to do anything much about it, and could not even resort to the traditional medicine of currency devaluation.
The only path to recovery permitted by Brussels and Berlin — that of austerity — has been counterproductive because it has only been skin-deep. If austerity is to stimulate growth, it must be done to the hilt, which inevitably involves terrible suffering and the risk of mass agitation. No Italian politician can stomach that.
Italy also has one of the lowest birthrates in low-birthrate Europe, so there’s little chance of the country growing its way out of its problems.
Then there’s this:
Anyone who works in the real private sector — the family businesses that have made Italy’s name around the world — is in a bad place. Italy has the heaviest ‘total tax’ burden on businesses in the world at 68 per cent, according to the Sole 24 Ore newspaper, followed by France on 66 per cent, compared with just 36 per cent in Britain. To start a business in Italy is to enter a Kafkaesque bureaucratic nightmare, and to keep it going is even worse.
A hundred years from now, who will make the prosciutto?