Why They Will Disintegrate Us: A Short Guide to Foreign Economists’ Prejudices

The problem Italy is suffering from is called foreign prejudice which then becomes Italian prejudice. I start from the example of a good economist economist, whom I usually read with pleasure because he offers interesting data and sometimes non-trivial analyzes. the problem is that, when it comes to Italy, it will be a language problem, it will be a problem of little interest in our outlet, there are very few who investigate the problem.

The starting problem is the spread: the end of QE, forced by inflation, is re-proposing the problem of the Spread not only for Italy, but also for all the other “Weak” Euro countries. Brooks rightly grasps this point, but he is speaking of a bad Italy, which “has not made the reforms” and which therefore comes to infect all other European countries with the increase in the spread with respect to the German Bund.

Here is the extrapolated graph

In reality, the graph proposed by the good economist highlights the real problem of the Euro area, that is…. the Euro. A currency that is too narrow for some and too wide for others, if an expansive monetary policy is implemented it creates inflation in some, if it becomes restrictive it creates excessive pressures on the interests of state debts in others. Indirectly it is Brooks himself who notices it: countries that have made "The reforms" as soon as the monetary policy is changed begin to dance, exactly as does Italy that would not have made these "Reforms".

The question then arises: what reforms would Italy not have made, which has technical, semi-technical and in any case not politically supported governments for over 10 years? Here is the cordial reply from the economist.

Monti proposed the property tax, which would have been positive for Italy, but vested interests in Italy prevented it and his government fell. I think the question to ask is: why should others in Europe continue to save Italy? It's right?

Here, unfortunately, otherwise good Brooks proves to be ignorant of two facts:

  1. that Monti has taxed real estate, and with devastating effects on values;
  2. that Italy is a net contributor to the ESM, to the EU, has not asked for bailouts from anyone and has not defaulted since 1861.

On point a) what foreign economists ignore is that Italy has a heavy patrimonial taxation that is hidden under the names of IMU, stamp duty, local taxes, various taxes. The IMU alone generates 20 billion in annual revenues. The weight, compared to the value of the properties, was such that the value of the properties on the market collapsed starting from 2011, as can be seen in this graph.

in the meantime the Italians have been impoverished and continue to be net contributors to the EU, they have not failed, despite the undoubted economic decline. But in one thing Brooks is right: it is time to start asking the Italians really, democratically, what they want to do when they grow up. Without preconceptions, without orders from above, without someone imposing a destiny written in the stars and not chosen democratically. Do the Italians want to be poor in a United Europe, and to undergo the orders of powers they do not choose, or do they want to take their own destiny in hand? This is the real and only question we should be asking ourselves, but they will not allow us.

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The article Why they will disintegrate us: a short guide to the prejudices of foreign economists comes from ScenariEconomici.it .

This is a machine translation of a post published on Scenari Economici at the URL https://scenarieconomici.it/perche-ci-disintegreranno-breve-guida-ai-pregiudizi-degli-economisti-stranieri/ on Thu, 19 May 2022 15:40:59 +0000.