Still on the decline
Remember the "shame graph", the one presented at #goofy4?
I'll report it here:
A few days ago Branko Milanovic tweeted a similar graph :
where there are two differences: the reference is the world GDP, and Poland is added. The message, however, is the same: the stopping point of the recovery and the starting point of the decline roughly coincide.
I wanted to repeat the exercise, and I did it using data from the World Development Indicators :
Here we can actually see a difference between the ratio to global GDP per capita and that of the Eurozone. Compared to the Eurozone, the stop (the point of relative maximum, the one where a long series of growth stops) is in 1988, while compared to world GDP slightly later, in 1992; conversely, the beginning of the decline, i.e. the other point of relative maximum (the one where a long series of decline begins) is in 2001 in both cases.
At this point, given that here we want to stay ahead of the curve and that we had been authoritatively reached, I felt like taking a step forward, which surely others have also taken somewhere, by calculating the ratio between the Eurozone's GDP (EMU stands for Economic and Monetary Union) and the world one. The result is this:
and we see some interesting data: for example, for the Eurozone the period of the credible EMS (from 1987 onwards) is a moment of great acceleration, while we stopped in that period, which means, essentially, that Germany at the time gained more than we lost, or at least so it seems. At the same time, the Eurozone has also been in decline since the beginning of the century, with a relative peak in 2001.
It would seem to be possible to say that what did the harm to the parts did not do the good to the whole.
I anticipate an objection (in reality, there are several: even if 2002 was the first year in which we had the euro in our pocket, it is also true that the exchange rates between European currencies had been irrevocably fixed since 1999 and substantially since 1997, for example): in 2001, more precisely on 11 December, another thing also happened, the entry of China into the WTO :
Undoubtedly an event that marked an increase in China's weight in trade relations, and consequently in the distribution of world GDP:
A significant confounding factor, if we want to ascertain the responsibilities of the single currency, and the consequent need for a fratricidal war on wages between European Union countries, in the decline we have documented.
Two considerations remain: the first is that China's progression had begun before our decline, and that the United States, as well as the rest of the world, have "held up" much better than us with respect to this progressive affirmation of China, which clearly means that we have done our part by equipping ourselves with institutions that have made us more fragile, not stronger, in the panorama of globalization.
The second is that, as far as I'm concerned, I didn't particularly want either Italy's entry into the euro or China's entry into the WTO, and at the time I didn't feel particularly involved in a debate about the opportunity to encourage these entries. Simply, these things happened, and only a small number of experts asked any questions (and among these I was not included, who at the time was not yet concerned with China and did not participate in the public debate, nor could I aspire to create it where it did not exist, as it was ten years later).
The point remains that perhaps the last graph explains to us better than many speeches what is happening today (see for example the interview of the much-reviled Giorgetti on Libero), and that if we continue like this in about twenty years our weight on the world GDP will be well below double digits.
We will have condemned ourselves to irrelevance: the "economic giant, political dwarf and military worm" will have become an economic dwarf for having been a political worm (obviously remaining a military worm).
Curtain!
(… and have a good day! …)
This is a machine translation of a post (in Italian) written by Alberto Bagnai and published on Goofynomics at the URL https://goofynomics.blogspot.com/2025/04/ancora-sul-declino.html on Mon, 14 Apr 2025 08:04:00 +0000. Some rights reserved under CC BY-NC-ND 3.0 license.