See
Europe's soft underbelly by Scott Sumner of EconLog.
"When Americans think about inequality, it is often linked to ethnic
differences. Sometimes that's also true in Europe (as with the Roma),
but more often the inequality is regional. Perhaps the starkest example
lies in Italy, where even in 2007 the south lagged far behind the
north. Since then, things have only gotten worse:
According to
the Economist, in some respects the mezzogiorno is doing worse than Greece:
The country is, in effect, made up of two economies. Take
that 2001-13 stagnation. In that period northern and central Italy grew
by a slightly less miserable 2%. The economy of the south, meanwhile,
atrophied by 7%.
This is partly because the south grew more slowly than the north
before the financial crisis. But the main source of the divergence has
been the south's disastrous performance since then: its economy
contracted almost twice as fast as the north's in 2008-13--by 13%
compared with 7%. The mezzogiorno--eight southern regions including the
islands of Sardinia and Sicily--has suffered sustained economic
contraction for the past seven years. Unicredit, Italy's biggest bank,
expects it to continue this year. The Italian economy is both weaker and
stronger than it appears, depending on the part of the country in
question.
Of the 943,000 Italians who became unemployed between 2007 and 2014,
70% were southerners. Italy's aggregate workforce contracted by 4% over
that time; the south's, by 10.7%. Employment in the south is lower than
in any country in the European Union, at 40%; in the north, it is 64%.
Female employment in southern Italy is just 33%, compared with 50%
nationally; that makes Greece, at 43%, look good. Unemployment last year
was 21.7% in the south, compared with 13.6% nationally. The share of
northern and southern families living in absolute poverty grew from 3.3%
and 5.8% respectively in 2007, to 5.8% and 12.6% in 2013.
Downward pressure on demand is exacerbated by the south's lower birth
rate and emigration northward and abroad. The average southern woman
has 1.4 children, down from 2.2 in 1980. In the north, fertility has
actually increased, from 1.4 in 1980 to 1.5 now. Net migration from
south to north between 2001 and 2013 was more than 700,000 people, 70%
of whom were aged between 15 and 34; more than a quarter were graduates.
Marco Zigon of Getra, a Neapolitan manufacturer of electric
transformers, says finding engineers in Naples, or ones willing to move
there, is becoming ever harder. According to Istat, Italy's statistical
body, over the next 50 years the south could lose 4.2m residents, a
fifth of its population, to the north or abroad.
In one important respect southern Italy is different from Greece.
Like
eastern Germany, southern Italy is part of a larger and more prosperous
fiscal union. For many decades, Italy has been doing the things that
American progressives would recommend, pouring lots of fiscal stimulus
into the south, to build up the economy. But nothing seems to work.
Indeed from Greece to Italy to southern Iberia, the entire southern tier
of Europe is doing quite poorly. But why? And what can America learn
from the failure of Italian policies aimed at boosting the mezzogiorno?
American progressives will sometimes argue that we have much to learn
from the successful welfare states in northern Europe. Perhaps that's
true. But I'd have a bit more confidence in that claim if they could
explain what we have to learn from the failed welfare states in southern
Europe. Indeed I'd have more confidence in progressive ideas if they
even had an explanation for the failed welfare states of
southern Europe. But I don't ever recall reading a progressive
explanation. Indeed the only explanations I've ever read are
conservative explanations, tied to cultural differences.
PS. The mezzogiorno has roughly 1/3 of Italy's 60 million people,
making it almost twice as populous as Greece. In absolute terms,
incomes there (17,200 euros GDP per person in 2014) are far lower than
among American blacks or Hispanics. In contrast, GDP per person in
northern Italy was about 31,500 euros in 2014. And while the gap
between eastern and western Germany is narrowing, the gap in Italy is
widening. Why?"
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