The Italy Eurozone crisis – Part 3. Germany doesn’t want to be the Lombardy of Europe.

When I used to work at the Victorian Ethnic Affairs Commission, in the halcyon days even when the Federal Liberals liked to talk about multiculturalism, my boss used to say: ‘behind any stereotype there is a grain of truth’. It has been a factor in my life that stereotypes were always somewhere. Being born in ‘cosmopolitan’ Milan but living amongst provincials in Bergamo. Being from the north of Italy and hearing lots of prejudice for the southerners.   Living in Australia and hearing Europeans generally believing of Australia as a pleasant place to live but without culture and racist. And of course plenty of stereotype in Australia about Italy.

I remember talking about this to a psychologist who told me that our brains are wired to stereotype. Our brains like order. And allocating characteristics to certain people create some sort of order. Often stereotypes also makes those holding them superior, so it makes us feel better.

As I mentioned before the euro-crisis allowed the stereotypes to run wild with impunity. The age old belief that people living below the Alps, Pyrenees or in the Mediterranean generally were lazy, and were on some sort euro gravy train being sustained by hard working northern Europeans was wildly mentioned. Even by people that I thought had a bit more sophistication in economic knowledge, or at least were on the ‘left’ and while would be aghast in stereotyping gays or women, were very happy to label Greeks and Italians with all type of negative attributes.

At this point I will say that Italy is may main area of interest. Other Europeans I can’t vouch for. And I also won’t be blithely blind at the shortcomings of successive Italian governments, and a large part of the electorate that has allowed them to make decisions that have positioned Italy in the situation it finds itself at the moment. But the issue here is that if you want to criticise Italy, at least try to look at the issues. A glib statement of ‘Italians are lazy’ or statement of the kind really are ignorant ones.

Wealthy Italy

The issue that people forget is that Italians are not lazier than others. Quite the opposite. We in Australia have seen literally thousands of examples of Italians who faced with little prospect decided to leave their country of birth, and their families and travel on the other side of the world to work hard in the cane fields of Queensland, or the building sites of Sydney and Melbourne to re-build their lives. But many parts of Italy are extremely wealthy. Just look at this map which shows the gross domestic product per inhabitant in purchasing power. This maps show the Europe of regions rather than states, and you can see that regions like Lombardy and Emilia Romagna are as wealthy as many Landers in Germany and the London area. In fact, apart from the south Italy is not that bad. We see Germany and France having all these talks. But Italy is the third largest economy. You don’t become that by taking many siestas. But the problem with Italy, is that the wealth is concentrated in the north (as the map shows) but also the disparity between wealthy and poor people is one of the highest in Europe.

Germany is right. They don’t want to become the Lombardy of Europe

Over the years the north’s wealth has been used in well meaning measures initially to develop the south. Unfortunately by the 80’s many of these funds were misused for politicians to buy votes and in worst cases assist local organised crime. With the fall of the Berlin Wall and the Second Italian Republic with the dissolved of the Christian Democrats – Communist Party blocks resentment grew in the North and this gave rise of the Northern League a party that nominally is working towards secession for the Northern regions from Italy. I do wonder whether Merkel is against the idea of providing bailouts funds not only because of the inflation issue, but also because she doesn’t want what happened in Italy to happen in the whole of Europe, that is a ‘German Northern League’ because of resentment of Germans in paying for others in the Union. The Italian journalist Gabrio Casati makes a similar argument in an article (in Italian).

In essence the German position is very simple: Solidarity doesn’t exist without responsibility. It is not possible, because it is not fair that we all share something that hasn’t been produced together without allowing those who are paying to have some control to those who spend. Does this remind you of something? It should (for Italians at least) because in reality Berlin is saying one thing: We will do whatever is necessary to save the Euro, 50 years of integration (and our exports) but we will be never become the Lombardy of Europe. We will not sign blank cheques for failing economies

On the other hand if Italy uses 10 years of imposts at 2% to finance a current unproductive expenditure from its southern regions, instead of lowering the debt in the first place, she has as a country no legitimately ask for assistance. If anything it should be Lombardy, Veneto and Emilia Romagna that should ask some return for the money successive Italian government threw to the wind by to keep votes in the south. But no one, including the Northern League that supposedly was supposed to look after the more productive parts of Italy (but instead became ally of  Berlusconi) did anything. They didn’t make a parallel to how Milan was the Berlin of Italy, something that would have made the politicians perhaps realise to change its financial responsibilities, and change the politics that discourage growth, and is destabilising the whole continent.

So where to now

I have read many left commentary about the measures taken by the Monti Government (such as those of the Purple People for instance). I may disagree with those measures as well. But Italy decided to be part of a currency and a system that is marked influenced and capitalist. If you take that path you dance to the tunes of the banks, markets, and rating agencies. If you don’t they will punish you and that’s what happened to Italy. In my opinion there is no choice in the immediate future than take these measures and cop it. Because otherwise you go bankrupt and discussions about merits of the Eurozone etc. go out of the window as people scramble to save the furniture. But is there a different path?

A de-facto pre-unification Italy?

While many may think Italy as being an old country, in fact it is relatively new one being unified in 1861. Before that the north of Italy was part of Spain, France and at the end the Austro-Hungarian empire. A famous Italian journalist Gianni Riotta who tweeted “Born Italian, grew up American, then European, will die German”. Many commentators are writing that Merkel is being resistant in providing money to struggling economies because she wants other eurozone countries to copy Germany’s budget discipline, so that their borrowing is kept under control. So are we going to have a new Maria Theresa Walburga Amalia Christina of Austria, Empress of Mantua, Milan, Parma and Grand Duchess of Tuscany?

Well of course not, I am being facetious. But it wouldn’t be the first time that Italians would take orders from the north.  Germany doesn’t want to be the Lombardy of Europe. But I am sure Lombardy doesn’t want to be in the Empire of the Euro dictated by other governments.

If Italy doesn’t want to be part of a more austere financial system I think that’s fine. Go it alone. But I hope the divorce is amicable.

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3 Comments

Filed under Politics and Current Affairs

3 responses to “The Italy Eurozone crisis – Part 3. Germany doesn’t want to be the Lombardy of Europe.

  1. Alex

    “If you take that path you dance to the tunes of the banks, markets, and rating agencies”

    I disagree there – no matter what system you have, if you need to borrow money from the market, then you dance to the tunes of banks, markets and rating agencies. There was a news story yesterday that France hadn’t balanced a budget in 30 years. If your default position is to have a budget deficit, then at some point you will need to borrow money, and that puts you at the mercy of those with money to lend.

  2. It’s enormous that you are getting ideas
    from this post as well as from our dialogue made here.

  3. I like reading through a post that will make people
    think. Also, many thanks for allowing me to comment!

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