You are not wrong, but it’s also true that Italy’s high debt / high inflation economy of the second half of the century hit a brick wall when inflation controls were added without a consolidation of debt EU-wide.
The Italian economy sort of worked, because the high inflation of years past ate away the debt load and fixed payments (like pensions). Once that wasn’t possible any longer, the automatic “adjustment” of loads ended and the political class of the time was unwilling, unable, and uninterested in solving a problem for the distant future (spoiler alert: ten years ago was the distant future).
The rational thing to do was to complement the inflation anxiety from the German, British, and Nordic economies with a consolidation of debt at the EU level, say 50% of the national debt taken over as shared debt. That would have given Italy, Greece, Belgium, and Spain room to breathe while they transitioned the setup of their economies.
I am pretty passionate about this, because the same identical problem is starting to pop up now, with COVID debt and resulting interest payments crippling government action and forcing higher and higher taxation burdens, mostly in secondary form (fees, fines, etc.). So we need to look at Italy (and Greece) as examples of what can happen today.
You are not wrong, but it’s also true that Italy’s high debt / high inflation economy of the second half of the century hit a brick wall when inflation controls were added without a consolidation of debt EU-wide.
The Italian economy sort of worked, because the high inflation of years past ate away the debt load and fixed payments (like pensions). Once that wasn’t possible any longer, the automatic “adjustment” of loads ended and the political class of the time was unwilling, unable, and uninterested in solving a problem for the distant future (spoiler alert: ten years ago was the distant future).
The rational thing to do was to complement the inflation anxiety from the German, British, and Nordic economies with a consolidation of debt at the EU level, say 50% of the national debt taken over as shared debt. That would have given Italy, Greece, Belgium, and Spain room to breathe while they transitioned the setup of their economies.
I am pretty passionate about this, because the same identical problem is starting to pop up now, with COVID debt and resulting interest payments crippling government action and forcing higher and higher taxation burdens, mostly in secondary form (fees, fines, etc.). So we need to look at Italy (and Greece) as examples of what can happen today.