Thursday, July 23, 2020

Italy and France Need More Capitalism"

So, for that matter, does the U.S., but that's a story for another post.
From The European Financial Review, July 19:
The coronavirus pandemic is not the reason for France’s and Italy’s current poor economic health, it simply exposes pre-existing conditions that have been around for a long time. In these countries, the state has too much influence, market forces are not given enough freedom. The French president Emmanuel Macron was apparently well aware of the problems, which is why, when he took office in 2017, he set himself the goal of introducing a raft of free-market economic reforms, similar to those implemented in Germany by the Social Democratic Chancellor Gerhard Schröder in the early 2000s. In the years since his election, however, Macron has regrettably capitulated. He has surrendered to the intransigence of French society, which always trusts the state more than the market.

Anti-capitalists have the upper hand in Italy and France
The Edelman Trust Barometer 2020, based on a survey of 34,000 people in 28 countries which was conducted towards the end of 2019, reveals the extent of distrust in capitalism around the world. The statement “Capitalism as it exists today does more harm than good in the world” elicits agreement from 61% of Italian respondents; only France, a traditional hotbed of anti-capitalism, registered greater distrust of capitalism, with 69% of respondents agreeing that the negatives associated with capitalism outweigh the positives. Every year, the Heritage Foundation measures levels of economic freedom in every country around the world. France and Italy are in a very poor position compared to their European peers. According to the 2020 ranking, the United Kingdom ranks 7th, Denmark 8th, the Netherlands 14th, Germany 27th, France 64th and Italy 74th. In terms of economic freedom, Italy thus ranks between Guatemala and Oman.
The German example

The example of Germany shows what positive effects market-economy reforms can have. Today, Germany is in a healthy economic position, but this is not a result of Angela Merkel’s policies, it is thanks to the reforms introduced by her predecessor, Gerhard Schröder. Given the strength of the German economy today, it’s quite easy to forget that the situation was dire in the early 2000s.

Following decades as Europe’s economic powerhouse, Germany had been reduced to bringing up the rear and hampering growth. The unemployment rate was 11.3% and more than 4.7 million people were out of work. After stagnating in 2002, gross domestic product declined in the first months of 2003. The state’s centralised pension fund was threatened with collapse in the face of dramatic demographic change, private consumption was falling, ancillary wage costs rising...

p.s. I still want that desk.