Why Can't Italy's Economy Get into Gear? Consider the Taxi Line | Hacker News Reader

Why Can't Italy's Economy Get into Gear? Consider the Taxi Line

wsj.com

I always found Italy as a neighboring country to have a pretty good workers' rights and an active government body that crushes foreign agents attempting to break the status quo at the cost of the common man. Maybe that slows down the economy, but the end result seems to benefit the middle class more than in the rest of the world where the economy is basically extincting it. I imagine there's a lot that could be done to raise the economy, but it's hard to say what can be done without lowering the living standards somewhat for the majority of people.

Government policies that prevent economic growth and ensure high unemployment rates do nothing to benefit the middle class. It's better to limit worker rights because that makes employers more likely to hire workers in the first place. This improves growth rates and economic mobility.

I was watching a documentary on the penal system in brazil and how companies use it to exploit them and treats inmates as a cheap right-less, tax-evasion slave workforce

Brazil was also the last country in North or South America to ban Slavery.

you ban slavery and it rebrands itself to another name

> prevent economic growth and ensure high unemployment rates

odd to hear reliable Chicago-School-of-Economics "facts" spoken with such confidence, while ignoring the change of local roads to superhiways, and 100 local retail stores closing at the same time. The very nature of the consumer transaction is changing. Economic analysis at the Nation level says that daily spending by consumers is the large majority of economic growth, especially when subtracting pure-government spending programs in the analysis.

Where are consumer transactions taking place? Involving what number of ordinary jobs? Consider that in the last five years, basically all retail clothing in New York City has closed. Are Milano or Rome different?

There are seismic, continental changes in economy that are not addressed by simple supply-side one liners.

We have too much retail space as it is. Closing a lot of stores will be better for all of society in the long run. Of course, government should help impacted workers with a safety net through the transition.

Then you gotta explain places like Sweden and Germany, or why the richest, most productive US states are the ones with the strictest workers rights.

Chances are it's something else.

I mean the US has some of the highest wages and least workers rights if you come pare countries.

Absolutely.

It also has functionally infinite land, weak neighbours, incredible energy resources, isolation from any other world power, a (relatively) egalitarian culture, and the single biggest patch of good, arable land on the planet.

No shit workers get paid lots in such a productive piece of territory.

Those factors are likely irrelevant to industries like tech.

And I mean Canada has all those same things and wages are much lower.

No, Canada doesn't have those things, namely arable land. Much of Canadian land is wasteland, too cold for much agricultural use. Its economy isn't that large either (much less population), and its currency isn't a major currency worldwide.

Canada has fertile farmland below about the 53 parallel. It’s massive.

Its does - still colder, less fertile, and less sunny than the US Midwest, and hardly comparable to the California Central Valley.

The Central Valley is not naturally fertile

The big effect of all these things is to make stuff cheaper and easier in the US. Cheaper land, cheaper energy, cheaper food. It means America can generate more capital with less inputs than anywhere else. That capital is then available to other industries, like tech.

Canada has lots of land, although it's generally much colder, less fertile, and just worse. They have oil, only it's thousands of miles away from the economic centres. They have arable land, also thousands of miles away from population centres (also far inland). And they border a hyperpower who could destroy them in a glance.

I'm not a US resident, not born there, but they are more ambitious

It's funny how often that involves interfering with the "common man"'s own personal autonomy.

Yeah, the current model works so well that 860,000 Italians emigrated from Italy in 10 years [0]. And their favorite destination? The UK [0]. I guess UK's lack of workers' rights is better than the Italian model for these emigrants at least...

[0] https://www.istat.it/it/files//2020/05/Migrazioni_EN.pdf

Germany had the same amount of emigration in 3.5 years and I'm only counting Germans, not migrants who left Germany.

And where did they go? I know that there are huge amounts of Italians in the UK, in Ireland, in the Netherlands, in Germany and even in Spain. I've met much fewer Germans around- it might of course be because of social circles, but my impression is that there is less emigration from Germany. Do you have any insight?

> Italy’s economy is 1.5% smaller than it was in 2007

That is impressively bad for a developed western economy.

I suspect the country would be in severe trouble if it wasn’t for their membership in the EU single market.

That is what is keeping them afloat (along with Greece, Romania, Bulgaria and Hungary to some extent).

Check Canada out, especially considering the strong growth of the US economy:

> Firm says Canada per-capita GDP fell a whopping 4.4% in 3Q. On WSJ wires:

https://twitter.com/paulvieira/status/1737948835349991818

> their membership in the EU single market.

Which is likely negated by the membership of the Euro single currency.

> The German economy was relatively prosperous by 2012, and European monetary policy was far too tight for weaker economies. Portugal, Italy, Ireland, Greece, and Spain all faced high debt, high interest rates, and high unemployment. This time, monetary policy was too tight rather than too loose. The only constant was that the euro continued to work in favor of Germany.

https://www.investopedia.com/ask/answers/09/euro-introductio...

They would be far better served by a single market, without the Euro.

Or a Euro with greater fiscal union.

This is an article that explores one way to achieve this given political reality, that the "North" would be sending money to the "South" if implemented, yet both North and South benefit from the Euro system continuing:

https://www.cambridge.org/core/journals/european-review/arti...

> An EU Fiscal Union is being discussed as a way to avoid future euro-crises and guarantee the stability of the euro. So far, however, it has proved politically impossible, as EU countries are unwilling to give up their sovereignty on fiscal policy. This article develops a bargaining model that sheds light on how fiscal pooling could become politically acceptable. The model differentiates between the ‘South’ (net beneficiaries) and the ‘North’ (net payers). We find that fiscal pooling should be done via a combination of the fiscal instruments with the highest fiscal multipliers. Instead of a single Fiscal Union, we therefore propose a combination of fiscal pooling instruments which, together, add up to the sufficient level of fiscal integration.

Germany already complain about joint development programs that involve 1 billion in loans to India because of their $75 million moon mission making them somehow more advanced than ESA.

ESA is an independent entity from EU.

> Or a Euro with greater fiscal union

The creation and response to the sovereign debt crisis shows that this won't happen.

It will require a political union as well. German taxpayers aren't going to pay for Greek pensioners.

https://archive.ph/mhjOb

This is like an American complaining that the burger they got in Bangkok doesn’t taste like a Big Mac.

Every country has their own setup and typically it reflects a set of tradeoffs. Outsiders see the downsides but then seem not to see the upsides, or treat those upsides as intrinsic (via the essentialist fallacy) rather than the consequence of tradeoffs. In this case, Italians tend to value social connectedness and fierce regional affiliation, which as a cultural force has great benefits even while it drives corruption.

I’m not downplaying Italy’s crappy economic performance. It sucks, especially for the young and for the credentialed elite. But Italy is (intentionally or not) perhaps running a different race than aiming for the top of the GDP ranking list.

I don't really think the differnce between an economy that grows by 2% a year and economy that is consitently getting poorer, is analogous to a difference in taste.

Well you can listen to all the western economists decrying Japan based on economic values or you could take a trip and see the factors that GDP does not reflect.

Wealth inequality is not reflected in GDP Quality is not reflected in GDP Consumer protection is negative influence on GDP as is, in the short and mid term that is measured, almost any other intervention like Environmental protection.

GDP is shit.

As an Italian, I can only confirm: that the lack of concurrency and free market here is probably the biggest problem for economic growth. So many markets are under heavy regulation and there are a lot of barriers to entering it. Lobbying and political personal interests are just aggravating the situation: taxi license owners, Alitalia workers or tourism minister that own a luxury bath that pay a very little of concession tax are just few examples. Together with a high level of populism in almost every political party this is the biggest issue for Italy economic growth and development.

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