Monday, June 25, 2012

The Euro and more nonsense.

This is the second article by Antonio Martino which I have translated into English.
If you'd like to know who Antonio Martino is, please check out the first post:
The following article is a critique of an editorial which Angelo Panebianco, an important Italian editorialist and a professor of Political Science at the University of Bologna, published on the Corriere della Sera, the most widely read Italian newspaper.

Angelo Panebianco

Martino's critique is important because it points out the main flaw that unfortunately, I think, mars the thinking of many European and especially Italian intellectuals. That is, the contradictory idea that overarching super-national structures are needed to guarantee democracy and that the self-determination, the freedom and the well being of the European people depend on transnational organization which are nearly unaccountable to voters..
It is symptomatic of a certain attitude and distrust for democracy, which is found among too many Italian intellectuals. Since the end of the second world war, argues Panebianco, international frameworks have saved us from ourselves. The Europeans cannot really be trusted to vote for whatever and whomever they like. (Especially the Italians). Italy, he says, would be just a raft in the middle of the Mediterranean Sea, if it weren't for the anchors that the framework of  international agreements provide. We need these councils of (unelected) sages, who don't need the approval of the people, to tell us what's best for us.
The Euro, in this confuse vision, has become sort of the symbol of that European integration to which too many people, like Panebianco, are willing to sacrifice too much.
The cartoon is mine. It's not very good, but I have to start somewhere.
Your comments will be greatly appreciated.
Thank you.  

That's Italy in the Eurozone. Hint: she doesn't like it!

The Euro and more nonsense.
(by Antonio Martino. Translated and adapted by Leonardo Pavese)

A most estimable friend of mine, Angelo Panebianco, whom I consider one of the best, if not the best among Italian editorialists, every once in a while ventures into a mine field which is outside his province.
I’m not saying he’s talking without knowing what he’s talking about; just that he’d better not use the hatchet and that he should be less drastic in his judgments, when he’s talking about economics instead of political science.
This is not the first time, and I’m sure it won’t be the last. The legacy of Benedetto Croce consists in that too: making people believe that economics are not a science, rather an optional field of study; a matter that concerns only domestic help, (as my greatly loved philosophy professor used to say).
I believe that in many cases domestic help is much more useful than economists are, but I don’t think house cleaners amuse themselves with this “dismal science”, as Carlyle used to call it.  

Panebianco says:

“Very estimable people, from Paolo Savona to Antonio Martino (me), think it and they’re not afraid to say it: Italy would be better off reverting to the Lira.

“Nevertheless, it is not farfetched to suppose that if the Euro collapsed, even disregarding the consequences for the world economy and therefore for us, the political aftershocks of such an event would be very violent for our country.”   

Now, I’d like to point out to my friend Angelo (Panebianco), that a return of Italy to the Lira wouldn’t necessarily mean the collapse of the Euro. It could, maybe, induce other countries to do the same, but that is not a given either.
The title that the editors plastered on Panebianco’s editorial is, to say the least, peculiar: “A Single and Democratic Currency”.
It’s not really up to Panebianco, but it is certainly the job of the editor of the best selling newspaper in Italy to explain to us, kindly, in what way the Euro is democratic, being a framework which is controlled by people whom nobody elected.  
Mario Draghi is not at the head of the ECB (European Central Bank) by the will of the sovereign people of Europe, but rather because of a political agreement among countries which regard themselves as more important than others.
The head of the ECB, being above any check and evaluation, answers only to God and he’s totally unaccountable to us.  
The states that use the Euro did not delegate their sovereignty in matters of monetary policy to a super-national democratically elected authority, but rather to a “technician,” who was chosen with methods which were not very transparent and surely not democratic.
Panebianco’s thesis, which is correctly summed up in the subtitle, is the following: “Without the external bind of the Euro”, the Italian democracy and the very unity of the country would be on a “slippery slope.”

The fact that democracy in Italy is not very healthy is true; as it is true that the “southern problem” remains completely unresolved but, in the name of God, what has the Euro got to do with the solution of these problems which, granted, it’s still far to come?
Luigi Spaventa, when he was a member of Parliament of the far left, in a memorable speech against the unified currency, expressed his fear that the Euro would have mainly damaged Italy and especially its southern regions. I don’t know if he’s still of the same opinion, but there’s no doubt that the events are proving him right.
Panebianco, instead, is talking like once the Euro is saved, then Europe, Italy and the world economy will also be saved.  
Here I’m sorry I’m not English, because if that were the case I’d say: “I’m afraid I can’t share your opinion”. Being proudly Italian I’m forced to say: “Angelo, you don’t know what the hell you’re talking about!”

The Euro is a misconstructed framework which is running the risk to precipitate Europe and the world into a crisis which will make the Great Depression look like a trifle, a bagatelle, a pinzillàcchera, like Totò used to say.
The mad German diktat to balance the budget, at these current levels of public expenditure, is driving all the countries of the Eurozone to raise taxes, in the (vain) effort to catch up with their expenses.
Does Panebianco really believes that to raise the tax pressure to 52% of GDP (Gross Domestic Product) would be good for the Italian economy? Is he convinced that it would make our country more united and democratic?
Angelo, please do me a favor, concern yourself with something else. I will always read what you write with pleasure; and I will phone to you my admiration after every reading!
Martin Feldstein, an esteemed economist, notwithstanding the fact that he teaches at Harvard, one of the most left-wing institutions in America, recently argued:
“The fiscal compact seems to me wishful thinking. The transfer, on a permanent basis, of the budget policies of every country - meaning taxes, expenses and debt management - to a central European entity, would be a revolution of enormous magnitude: we’re talking about the core of political sovereignty.”
Do Monti, Panebianco, and all the others who argue the inexorability of maintaining the Euro afloat, think that to delegate national political sovereignty to a shady and anti-democratic interstate agreement rather than to the United States of Europe would be better for Italy, Europe and the world?    

Monday, June 18, 2012

Europe will collapse because it resembles Italy

This a translation of an article by Dr. Luigi Marco Bassani which appeared on the Italian newspaper Libero on June 19, 2012.
It seemed interesting to me for the analogy the author sees between the European situation and the financial situation of his own country: Italy.    
Your comments will be greatly appreciated.
Thank you, (special thanks to J.J.P. who reviewed my English text).

Leonardo Pavese

Europe will collapse because it looks exactly like Italy.
By Luigi Marco Bassani. (Translation and adaptation by Leonardo Pavese).

Europe is undoubtedly going through the most serious crisis since the end of the Second World War. A tiny and peripheral nation (Greece) is going to the polls as we speak. Their vote won’t save them or the Euro — but maybe it could just postpone the disaster.
The present crisis is nothing but the final settling of the accounts, on a continental scale, of the Market vs. State conflict, which has afflicted European politics for the last century.
In Europe there is a strong anti-market prejudice, which takes the form of a third-hand, poorly defined, anti-capitalist feeling, the main bearers of which (with varying degrees of virulence) are the political rulers themselves.
While the European political classes dug holes of colossal public debt and jeopardized the well being of living and yet-unborn people, they nevertheless succeeded to convince their foolish bearers of votes that the prosperity of the continent was endangered by “way more menacing things.”
The mission of the European welfare states was nothing else but rescuing their citizens from the “market,” globalized exchanges, “capital” and its inexorable logic based on profit.
The prevailing vision in Europe is still the one held by former Italian Economy & Finance Minister Giulio Tremonti, that is, a market which is only useful if it’s at the service of politics. Unfortunately, it’s painfully evident that this vision doesn’t lead to growth of any kind. And all territorial equilibriums known to us are destined to be challenged by the stalling of economic growth.
As the readers of this paper (Libero) had the chance to observe, a couple of days ago the British newspaper Financial Times showed a map which again proposed the idea of a smaller Europe, as cohesive as the Carolingian Empire of old.

The 11000 Euros check   

In Italy, regions that resemble Greece (with all due respect to the Greeks) co-exist alongside areas which are potentially even more dynamic than Germany; and the border between these realities is purely geographic.
Technically, Calabria, Sicily, Campania and the entire Meridione (that is, the southern part of Italy), should, like Greece, be bankrupt, because public expenditure in these areas is now firmly established above 70% of GDP while, for example, in Lombardy (the region of Milan) this ratio is about 40% of GDP, more or less as it is in Switzerland.
What prevents this bankruptcy from occurring is just one single factor: every worker in Lombardy cuts an 11,000 Euros check, every year, to finance the southern regions. (Workers from other northern regions sign a check too, but for a much lower amount).
Nevertheless, even that, the most savage territorial redistribution of wealth in Italian history, is not enough anymore.
           The rehashing of the map of the Kingdom of Lothar  by the Financial Times illustrates to us a simple fact: faced with this crisis, the European unification process shows signs of weariness and, at the same time, it shows surprising similarities with Italian history.

Europe, in a sense, is like a scaled-up version of Italy with a small difference: the Germans seem to have no intention to play the part of the northern Italian workers. But the secret of the Kingdom of Lothar was precisely political fragmentation, not unity.
The geographic area that goes from Florence to Antwerp, passing through northern Italy, Switzerland, eastern France, south-western Germany, Belgium and Holland, was the motherland of the greatest revolution in the history of humankind: the revolution that created the capitalist market, which in turn produced an unprecedented increase of wealth. But the Europe of those days was like a giant Switzerland, with hundreds of political entities that were not sovereign or fully autonomous, throughout which exchanges and trade were disciplined by a higher authority.  
The glory and the wealth of Europe derive, in preponderant measure, by a political “non-event”: the failed “imperialization” of the continent. Charlemagne, Charles V, Napoleon, Hitler were defeated. Our relative freedom and the enormous well being we enjoyed derive from this fact.
The European Union is nothing but the democratic renewal, so to speak, of an attempt that failed in past centuries.
The Euro was born during a period of stall on the way to political unification. The intention, therefore, was to put politics in check using a tool which was only apparently economic.
And so it was.
The creation of a currency without a state should have been the flywheel to propel the creation of a super-state and to renew the process of unification.
Therefore, the Euro and its inevitable crisis present the European utopia with a fork in the road which can’t be bypassed: formally declaring the bankruptcy of the European idea and of its currency, or continuing towards the edification, once for all, of a super-state Europe, with clear borders and central authorities charged with the collection of taxes of every sort.

Europa. Queen or welfare queen?

Unifying Impulses

What some European rulers are attempting to do is exactly that: to rise above, so to speak, and to erect continental cartels to recapture the markets and bring them back to their natural place, which is to say, under their control.

In their mind, “Europe” is a continental-size welfare state, and it’s the last lifeline for the bloated welfare states created by the great European nations in the last few decades. The project is in tune with the interests of the European ruling classes, which by means of this elephantine continental apparatus hope to manage, without too many shocks, the economic decline of the continent. But the shocks are felt indeed, and it appears they are about to sweep away the plans of the “enlightened” bureaucracies.       

During the second half of the 19th century, the spirit of the time was the spirit of “unification,” of continental consolidation, with the creation of larger and larger political entities. Cavour, Lincoln and Bismark had the wind in their favor and their opponents were swept away.

A century later it sounds like the death knell is ringing for the nation states; but the zeitgeist of this time is pointing to a solution, political fragmentation with economic harmonization, which is very different from a continental mega-structure.

Which is to say: Europe will save itself only by becoming a large confederation (a sort of greater Switzerland), and abandoning the project which it is now pursuing: namely, to turn itself into a super-Italy.