Why NO is Good for Greece

A supporter of the No vote waves a Greek flag in front of the parliament after the results of the referendum at Syntagma square in Athens, Sunday, July 5, 2015. Greeks overwhelmingly rejected creditors’ demands for more austerity in return for rescue loans in a critical referendum Sunday, backing Prime Minister Alexis Tsipras, who insisted the vote would give him a stronger hand to reach a better deal. (AP Photo/Emilio Morenatti)

Dear Blog Readers — my blog buddy Adri Barr Crocetti of www.adribarrcrocetti.com asked me to ask my husband, Gustavo Piga, an economist who teaches at the University of Rome Tor Vergata, to give his opinion on my blog about the Greek referendum.  Gustavo’s response is below.

Some American readers asked me to shed some light on the unlikely turn of events in Europe these days. I thank them for this opportunity. I will ask them to be patient with me if it seems I am taking the long road to reach my point.

It turns out that another country, the USA, involved in creating a credible and long-lasting monetary union, handled a similar situation better, much better. By understanding how it worked it out, we might in the process figure out more clearly the reasons of the current standstill.

Some United States financial history is therefore needed, so please bear with me. One has to travel back more than a century ago, in the first century of the United States’ monetary union, we might call them the “early years” of a United States Monetary Union, just like in Europe today: many different states, with very different cultures and beliefs, much more so than today.

So let us go back in time, to … Tennessee, 19th century, a state certainly neither too rich nor productive, yesterday like today, within the borders of the United States. We will go to a specific point in time, 1872, when the State of Tennessee was facing tough repayment problems with its public debt. It would actually take 12 years to sort them out and this is the short tale of what happened and why and how it ended.

To understand why the problems of Tennessee’s government budgets arose, let us go back even further, to 1850, quite a bit of time before the crisis erupted. Just like many other States in the US, Tennessee launched itself in a heavy program of public investment to sustain productivity in its local economy, mainly through the development of railroads. Differently from other States, however, it went at it by borrowing money on the market and lending it back to private railroad companies in exchange for collateral such as stock, bonds and contracts of those same companies.

Until 1865 everything was running smoothly: loans were largely well-allocated and the cost of debt was compensated by interest revenues from companies.

Minor parenthesis and a first parallel between Greece and Tennessee: for those who say that Greece has always been an underperforming economy, a shameful black sheep in the honest family of European countries, think again. Indeed, the management consulting firm McKinsey reports that between 1999 and 2009 annual productivity growth was: USA +2%, EU +1,1%, Continental EU +1,6%, Southern EU +0,7%, Northern EU +1,6%, Greece +2,4% !

Woman getting money from bank machine in Greece with NO written on wall. Credit: The Telegraph

Let us go back to growing–Tennessee. In 1865, suddenly, everything unraveled: following the first crisis due to the end of the Civil War and a series of loans to the wrong companies, fraud and corruption, the State of Tennessee found itself to be the owner of valueless paper credit and collateral.

Notice: we are talking about a crisis that was born both from internal mistakes and external circumstances, a parallel that again allows us to compare Greece today and Tennessee back then. (Greece was hit by the consequences of the 2007 financial crisis and also by the discovery of its window-dressing of public accounts during the entry in the Euro in the early 2000s)

Cumulated debt in Tennessee rose to very high levels. All of a sudden, however, between 1872 and 1883, it halved from 40 to 20 million dollars. What had happened?

Tennessee defaulted. The State declared it could not repay its debts. Yes, a default, contrary to what has happened so far in Greece. Ah ha! A first difference here emerges, you might say. Indeed. How did this Tennessee default come about? It came about after a lengthy but democratic process.

The Democratic Party of the time – dominant across Tennessee – was divided across two party-lines: the State Credit Wing – favorable to debt repayment to creditors (internal and external to the State) and the Low Tax Wing – favorable to save a heavy burden to local taxpayers. Well, it turns out that taxpayers won and default occurred, with a loss for the creditors, including New York bankers and all those United States citizens that had taken the risk to lend to Tennessee.

The then President of the United States, Ulysses Grant, did not care that much for the internal drama of Tennesseans nor of the markets. He actually did the right thing: he left it up to the citizens of Tennessee to decide what to do with the debt, even if a potential default would have somewhat endangered the already full pockets of a few rich bankers in the state of New York.

This did not happen in Greece. Europe got involved in the relationship between foreign investors and Greece and decided to contradict its initial constitutional rule of “no-bail out”. It bailed out (reckless?) banks that had lent to Greece at the beginning of the 21st century, and took charge of the Greek debt. All of a sudden Greek creditors from private actors had become European taxpayers.

Graffiti on wall in Greece of funeral procession with a 100 Euro bill Credit: www.ekathimerini.com/resources/2015-07/

And European governments started asking Greece to do all the wrong policies: extreme austerity was ordered from above (something Tennessee citizens would have never allowed then), Gross Domestic Product and employment in Greece collapsed and, guess what, public debt over GDP skyrocketed, making public finances unsustainable.

While you will hear that Greece has done nothing to fix its own problems, one might argue, to the contrary, that it has done too much, following the wrong advice of European creditors. In just 5 years pension cuts amounted to 48%, public employees declined by 25% while the deficit shrank from 15,6% of GDP to 2,5%, and as a result unemployment rose to 27% and the debt over GDP ratio to 180%. Reforms were implemented (Greece rose in the World Bank indicator “Doing Business” from the rank of 109th in the world to the 61st position), but as we know these take time to change growth performance, while austerity hits immediately and painfully. This is probably why Greeks voted two days ago to stop austerity imposed from outside: they knew better than to repeat for a sixth consecutive year the same mistake that had been forced on them without advantage.

Two additional lessons here are to be drawn to make the case, today’s Greek case in the euro area, that looks similar to the case of Tennessee in the 19th century: letting democracy work, however imperfectly, is the only solution that keeps societies united. Intervening from above, with little electoral mandate, is bound to make disaster more likely, as it did in the European case. Much of the desire of Greeks to vote was indeed due to a sense of political imposition, and how can you imagine proceeding without debate when you are dealing with the country where democracy was created?

Man biking past graffiti showing YES in Greek Credit: http://cdnmo.coveritlive.com/

 

Oh, and by the way, let us not forget lesson number two.

You might have not noticed but it is also true that the thought never crossed the mind of President Grant to “ask” for small and unproductive Tennessee to leave the dollar union, as instead a growing number of Europeans are today!

He probably knew better than that: as my colleague Prof. Whelan has aptly reminded us for Greece (“pushing the Greek government further than their current position will generate infinitesimally small financial gains for European citizens while risking a Greek exit threatens unquantifiably large potential costs”) the cost of a political disruption would have largely outweighed any small gain for a few rich lenders. He kept Tennessee in the (ultimately) successful project of the US since he was aware of a basic truth: that a union becomes a Union with capital U only when you keep the weakest part of the chain linked to the rest.

But it is never too late to listen to the desires of Greek citizens, who insist that they want to remain in the euro but at a pace that is compatible with less disruptive, less abrupt and painful change. Paying heed to their clear desire might prove to be the key to saving Europe and Greece alike, pushing us ahead in the construction of the United States of Europe.

A graffiti on the wall of an old house shows an EU flag on one side and a desperate expression on the face of an elderly person on the other in Athens, Greece, 24 June 2015. Greek Prime Minister Alexis Tsipras is set to conduct yet another round of crisis talks with representatives of the country’s creditors, ahead of a crucial meeting of eurozone finance ministers where all sides hope a solution can be found to save the country from bankruptcy. EPA/SIMELA PANTZARTZI

But how can an agreement among countries that seem so stubbornly to resist it come about?

Contrary to what is generally thought, it will be very hard to convince the Germans to reduce the Greek debt. Not because Germans are “selfish”: just two decades ago they implemented one of the largest transfer of resources ever made in a country. Yes, to their East German brothers who had just emerged from decades of communism. But, indeed, these were brothers, unlike Greeks who are today at most distant cousins.

Now, however, here is the potential miracle of the European Union family: it works opposite to a regular family, where each generation becomes ever more distant: first brothers, then first-degree cousins, then second-degree etc. We have built this European project to make sure that over time each generation gets closer: from cousins of sixth degree to… brothers.

But to arrive there you need time. The United States became a federalized system in the 1930s, following more than a century of slow social convergence where each State was very jealous of its own prerogatives to begin with, not allowing Washington DC to decide how much to spend, how much and what to tax. It took a Civil War, the invention of the train that increased mobility, a First World War that increased the awareness of the USA of being a global power and, finally, a President, Franklin Delano Roosevelt, who managed to unite a country in the face of hardship in the 1930s.

Europe is facing the same problems of slow convergence of very different cultures that the USA faced in the 19th century.

So to go back to debt cuts, hard to believe that German will allow a transfer to Greek citizens. But less austerity everywhere, in Germany like in Greece, might have a higher chance of being accepted by all parties. It is not an explicit transfer and it benefits everyone. Lower taxes in Germany (that can be spent in nice vacations in Greece) and higher public investment in Greece that can sustain recovery of competitiveness, will go a long way in restoring growth and hope across all of Europe, and stabilizing at the same time the public finances of the weakest countries.

This is what Greeks voted upon with their NO.

Now only a minor matter remains: agreeing on such measures. The alternative? Letting Tennessee, I mean, sorry, Greece go out of the euro area and the European Union. Of course, formally what I say is incorrect: Greece, even if were out of the Euro, would remain in the European Union, like the United Kingdom (for how long?) or many other Eastern European and Scandinavian countries. But it would remain in a very different position from the others: as a country expelled from the euro union, not as a country that initially exercised its democratic will not to join it. This difference that would make Greek citizens feel humiliated and unwanted, and thus cause them to look around, not only in terms of new and different economic policies but also of foreign policy and strategic alliances.

This is not science fiction: the democratic and secular Turkey, which only 10 years ago was refused entry into the European Union, was humiliated and decided to look elsewhere becoming rapidly a less secular society, much closer to Islam and distant from the West.

Losing Greece in the euro, then, means to risk losing Greece in Europe, bringing it closer to other geopolitical spheres of power such as Russia one with which Greece shares, among other things, a greater closeness of religious belief.

After Greece will have gone, somebody else’s turn will come about. Nobody realizes that once the weakest link is let go, another weak link will take its place and will be attacked by markets and ignored by richer neighbors. What is needed is a Constitution that specifies clearly that when a State is in trouble, in some way the others are going to give a helping hand. Otherwise, why unite? It is this Constitution, different from the current one, that many people, not just the Greeks, are seeking to obtain.

One last thing. When we will look, I hope not, to this disastrous outcome, to a European failure of voting for another Europe of the euro, please do not blame the euro. The single currency will have been just that: a symbol, a mere symbol, of a willingness to stay together for a long-term project. Just like a ring in a wedding. If the marriage does not stand up, do not blame the ring, but the lack of a project based on mutual solidarity and sustainable development. And if the ring slips off, please do not expect the two divorcees to go back living together.

Information on Tennessee taken from “A Financial History of Tennessee Since 1870” by James E. Thorogood

Post by: Gustavo Piga, Professor of Economics, University of Rome, Tor Vergata

(and the husband of Mozzarella Mamma)

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Trisha Thomas
Trisha is a TV journalist working for AP TV News in Rome. She is married to an Italian and is a Mamma of three.

30 Comments

  1. Nancy Rockwell
    2015/07/07

    This is brilliant, Gustavo! And thanks so, so much for writing to us about it. Gustavo, why don’t you send this to the NY Times and Boston Globe as an op-ed submission? So many would be edified by reading this. And, how about sending it, through Trisha, to NPR? She has the connections, and her position at AP could be the edge that would get you accepted, onto what has become the most heard radio station in the entire US.
    Trisha, I’ve been wondering how to ask for Gustavo’s opinion, and here you have given it to us – brava! I think he should submit it, pronto!, even today, by email, and I think you need to brush up a bit of his English. The arguments are fine, but the transitions are a little confused.
    Thanks again, so, so much, for this post.

    Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/09

      Hi Nancy — I can ask Gustavo if he would like me to submit his article to “The Boston Globe” or elsewhere. And yes, I suppose I would need to brush up the English a bit (see reponse to Barbara Landi’s comment above.) I know he is often asked to be interviewed by the BBC and British papers and writes frequently in Italian papers, but I am not sure he has ever written for an American newspaper. I will ask him. Thanks for your enthusiastic support.

      Reply
    • Adri
      2015/07/09

      Great idea, Nancy!

      Reply
  2. bonnie melielo
    2015/07/07

    Wow – awesome explanation!!!! Thank you so much Gustavo for taking the time to write this!! Now if we can just get LOTS of people to read it and think about it!!!

    Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/09

      Yes, do need to get lots of people to read it and think about it. Nancy Rockwell in an above comment is suggesting I submit to an American newspaper as an op-ed. I suppose I should. I will ask Gustavo if he wants me to.

      Reply
  3. Alan
    2015/07/07

    . . the vileness of the system and the bankers that control and operate it to their benefit was never better illustrated than the way in which the Greek people have been treated. The concept of a monetary union without central, federalised control was ever a non-starter – even a layman like me could see that individual economies move in and out of their cycles at various rates and times. How could these countries hope to have any control without the ability to manipulate interest rates as circumstances dictated? The Euro-zone was, and remains a joke!
    As for Frau Merkel and her obstinate hatred of Greeks, I invite your readers to have a look at this: http://archersofokcular.com/beware-the-greeks/

    Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/09

      Thanks Alan — heading straight over to your blog now to read your post on the Greeks.

      Reply
  4. Alan
    2015/07/07

    could I just add this:
    The point being that as companies have transcended the state, the state remains a means of commonly managing physical assets, mainly their workers; and imposing a debt from capital onto the state is a means of disciplining those workers. What happened in 2008 was not a crisis for capital; it was a power shift, leaving us even less of our product.
    The current estimate is that Greece needs a bailout of around 370 billion. No one wants to know. Meanwhile, look at some of the bailout figures for banks that had no problem getting their snouts in the trough:
    Citi Group: $2.513 trillion; Morgan Stanley: $2.041 trillion; Merrill Lynch: $1.949 trillion; BoA $1.344 trillion; Barclays PLC: $868 billion; Bear Stearns:$853 billion; Goldman Sachs: $814 billion; Royal Bank of Scotland: $541 billion; JP Morgan Chase: $391 billion; Deutstche Bank: $354 billion; UBS: $287 billion; Credit Suisse: $262 billion; Lehman Bros: $183 billion; Bank of Scotland: $181 billion; BNP Paribas: $175 billion; Wells Fargo:$159 billion; Dexia: $159 billion; Wachovia: $142 billion; Dresdner Bank: $135 billion.
    . . and, essentially, these same parasites refuse to wipe out the illegally incurred debts of Greece!

    Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/09

      Alan — I couldn’t agree more. We bailed out the banks, we can bail out Greece.

      Reply
  5. Mura D'Angelo
    2015/07/07

    Thanks for shedding some light on the confusing politics and recent vote on the fate of Greece. As an American, some times what goes on in Europe seems far removed from us Yankees on the other side of the pond. Your explanation helped bring things into focus.

    Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/09

      Thank you Mura — you are right. Sometimes we feel so removed from what is happening on the other side of the Atlantic. I often feel in Italy that not enough attention is being paid to what is happening in the US and some days when I read the Italian papers and see pages and pages on Italian politics I get frustrated. However, in this globalized world, where everything is so interconnected, I think what is happening in Greece and to Europe is very important for the US. Also, I was interested in Gustavo’s point that if Europe rejects or pushes away Greece, Greece might move into Russia’s sphere of influence which would not be good.

      Reply
  6. Joan Schmelzle
    2015/07/07

    Thank you. This helps me understand the problem beyond what I have read in papers here and in bits and pieces on the Internet!
    A presto

    Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/09

      Thank you Joan. It helped me understand a bit better too. I did not know about the Tennessee case before reading this post.

      Reply
  7. Walter Pressey
    2015/07/07

    Terrific post. Very thoughtful and well written. Excellent teaching point and one Americans, in particular should read. Let’s hope that Angela Merkel also reads it!

    Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/09

      Thank you Walter — I am guessing Angela Merkel does not have much time to read the Mozzarella Mamma blog, but perhaps she is getting the idea that something in the strategy is not working so well. Thanks for your comment.

      Reply
  8. Adri
    2015/07/08

    Thanks so much for this Trisha and Gustavo – and thanks for the shout-out too! I loved the parallel to American history. Your commentary brought this one home in a uniquely effective manner.

    I am both amazed and mystified by this crisis because it does not seem like anything new. Frankly, austerity and timidity have never seemed the best course to pursue in these situations. It is almost as though folks want to punish people. I’d think that a generous slashing of debt would do more than the most draconian of austerity policies to stimulate the economy. In fact I firmly believe that our own stimulus package here in the US should have been a good deal larger. But I diverge.

    In this day and age, with our interconnected world we ought to be able to solve this.I am particularly perplexed by what I can only describe as the hypocrisy of Germany. After defaulting on their WW I debt and then having their own WW II debt halved, I do not see why Germany is not more generous. Germany’s economy benefited greatly from debt relief in the early fifties, and Greece should be given the same opportunity. I am not saying they could undergo the same extraordinary economic growth and transformation as Germany, but they ought to be given a chance to survive. As Gustavo writes there will always be a weak link. Is it not incumbent on us all, as the stronger links, to help those weaker than ourselves?

    Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/09

      Adri – you are so intelligent, perceptive and thoughtful — your comment is so interesting to read. Thank you so much for asking for this post and sharing your own analysis. I really appreciate it.

      Reply
  9. Barbara Landi
    2015/07/08

    I believe Gustavo is very smart I really understands the Greek issue. But i wish the translation was better, especially the last 3rd of it. I read it over and over and I’m not getting the understanding I need because the English is so convoluted toward the end. The whole piece could be made more concise by a good editor.

    Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/09

      Well Barbara — I guess that is my fault. I should be the good editor of my husband’s post but I am on vacation in the US and have promised my family that I will not spend all my time on my computer working on my blog — so perhaps I did not edit the English properly. I will add that the Italians write in a very different style than Americans do — long, convoluted sentences with erudite allusions that I have always found very irritating to read. Reading Italian newspapers can drive you crazy — they give you a long pompous paragraph showing off their knowledge before ever getting to the lead. For someone raised in the Anglo-Saxon writing tradition it is aggravating. Journalist John Hooper wrote about this problem in his book “The Italians.” When we get Italian interns in our office I have tell them — “subject, verb, object and then PERIOD, please.” I tell them to “think Hemingway.” I have noticed that all the Italian journalists when writing about the Greek crisis in recent weeks have to show off in their articles by quoting all sorts of Greek philosopher and Greek myths before getting on to what the news is. But I think Italians like reading articles like that. You are correct in saying that Gustavo is very smart and does understand the Greek issue very well.

      Reply
  10. Ciao Chow Linda
    2015/07/09

    Thank you Gustavo, and Trish.
    Gustavo has laid out the situation in a way that even us non-economists can understand. I found it interesting to see the statistics on what Greece has already done to tighten its fiscal belt in terms of pension and public employee cuts It is also particularly interesting (and worrisome) to ponder the geo-political implications of how this can affect the U.S. and the rest of the world. We surely don’t want to lose Greece as an ally.

    Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/09

      I agree Linda — I think the two most interesting aspects are the article for me were 1) the Tennessee comparison, which I knew nothing about, and 2) the geo-political question — would Greece be pushed into the hands of Putin following a rejection by the Eu? Interesting and a bit scary to contemplate.

      Reply
  11. Silvia
    2015/07/09

    Hi. I always read your blog, but sadly I cannot agree with your husband, who, I suppose, is Italian like me. I come from a little town in Brianza… Someone could call it the deep north of Italy. I follow local politics, because this is a strange passion of mine. In my town, Cantù, in the last twenty years, the local stadium for basketball ( “Pallacanestro Cantù” is the local old glorious team ;) ) has been built, demolished, and then they tried to rebuilt it the second time, always wasting the money of the taxpayers. Luckily someone invented a thing called “Patto di stabilità”, that is law that forces municipalities not to waste anymore money in this way. Now we have a new mayor, and the citizens have created a Facebook group that follows and analizes him and his decisions, so that he knows that the citizens keep a constant watch. We have to keep him in line. Now things are improving, little by little. Greece is like Italy, but ten time worse. At least Italy has industries in the north, fashion, design, tourism, a strong agriculture, the sector of services.. The Italians until now have kept their country afloat with their own money, and they have helped others ( Spain, Portugal, Greece and Ireland ). Mr Renzi is reforming a bit this country. You cannot ask the Italians to retire at 67 and use their taxes to finance the “baby” pensioners in Athens who retire at 58. I am totally in the corner of Ms Merkel. Someone cannot live a life where he waste someone else’s money: nurses in Slovakia or bartenders in Estonia have to pay the bill, while there is a big amount of shipowners in Greece that live the “good life” and are total tax evaders. To keep Europe going we need rules and fairness, not only solidarity. Robin hood stole from the rich to help the poor: here the retired German worker has to pay for rich Greek tax dodgers. How is this fair? Tell me!! I am sorry for being too verbose, but the sad little story “poor innocent Greeks bullied by the nasty Ms Merkel” is a fantasy. It is time for the Greek people to act like adults and not like children This can be said about Italians too. I invite you to watch the speech of Guy Verhofstadt at the Eu Parliament on Youtube. He is a liberal His words are very brave.
    https://www.youtube.com/watch?v=P84tN0z4jqM

    Ciao and have a nice holiday! ;) ;)

    Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/10

      Thank you Silvia for your stimulating comment. I am so interested about the story of your own small town. Believe me I know about the problem of Italian politicians and businesses and corruption. I live in Rome, home to Mafia Capitale, where our local park has become a garbage dump where people throw trash everywhere, homeless people sleep and use as their toilet, and trees fall on the children’s playground and no one comes to remove them. This is all becomes city government officials made a deal with local corrupt businesses to maintain the parks and have ended up up skimming off all the money. All this to say I agree with you on the importance of fighting corruption in Italy and in Greece. I also agree that Italians should not be working until 65 to pay for Greek baby-pensioners, or cover for Greek shipping magnates who are evading taxes. However, I don’t feel capable of responding in the overall picture — I will ask my husband if he would like to reply. Thank you for your fascinating comment. I am always pleased when I see Italians are reading my blog.

      Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/12

      REPLY FROM GUSTAVO PIGA
      I wish to thank all of Trisha’s readers for their nice comments and encouragements. Trisha asked me if I had any additional comments. Only one, on the relevant reply by Silvia, who disagrees with my post, basically arguing that Greece is like Italy but 10 times worse and that Europe should have rules and fairness not only solidarity.
      I agree with many of Silvia’s points: I spend my life as a teacher in fighting against corruption and for effective public procurement in Italy (I even chair the Master in Procurement at my University where Silvia’s ideas of good public governance are at the center stage) and best practices like Cantù where Silvia lives in Northern Italy are what we are trying to suggest the whole time that the whole of Italy should switch to. Ironically, the politician that Silvia praises was the leader of the coalition in which I ran for the European elections last year.

      Having said this, I think the point of Greece is a totally different one. Nobody disputes what Silvia recommends: better government, who wouldn’t?

      But, as Silvia says for her town “things are improving little by little”.This is the point: reforms like the one Silvia asks from Greece require time, cultural change, they cannot be implemented realistically in a short span of time. And when they are started their impact will be felt after a decade or so. Austerity, instead, works immediately and harshly. It affects people’s way of living abruptly and this disruption leads to insecurity, fear and resistance to change (and to reforms). Politically, it reinforces populistic and extremist parties that push for radicalization in society and ultimately extreme nationalism which is often a precondition for violence and wars.

      Why should we then push for blindless austerity if it cannot improve the chances for reforms, worsens life conditions, increases public debt and financial instability? I always say that Europe should strongly push Greece to do reforms once it has saved it, especially since the best loan that is always repaid is the one of solidarity received.

      One last comment to Silvia: her arguments, if applied strictly, would require “her” Northern Italy to 1) secede from “wasteful and corrupt” Southern Italy, incapable of reforming itself quickly and 2) adopt its own currency. The North has not done that over the past century and has instead transferred massive amounts of money to the poorer and less productive South. It did so because Italy wanted to be a Union, with the “corrupt South” bringing to the peninsula important bits of what Italy is today: its sun and food, its culture, its philosophy of life, for which the Northerners have agreed to pay a price.
      If Europe wants to be united it should aim at doing what Italy did between North and South, or what the USA did, as I argued. If it does not want to do that, insisting on national interest, it is welcome to try it and kcik Greece out. It is a choice that I understand but disagree with, not last because of the risk that this would entail for our future generations of more likely European wars like the ones our parents remember too well and that are always ready to explode if not discouraged by pragmatic compromises among sovereign nations.

      Reply
  12. Kelly
    2015/07/10

    I was thinking about this in relation to the US a few days ago. To me Greece is similar to the poor southern states like Mississippi and Alabama. They get more back in federal dollars than they put into the system and have little financial growth. But we aren’t going to go and kick them out. The wealthy states subsidize the poorer states, for better or for worse. And if they do want a union then you have to take the bad with the good.

    Reply
    • Trisha Thomas
      Trisha Thomas
      2015/07/11

      I think you are right Kelly and it is interesting to compare the US to Europe. (You are not by any chance related to my talented AP photographer colleague Antonio Calanni based in Milan but originally from Sicily??)

      Reply
      • Kelly
        2015/07/13

        I have seen his name online for many years and wondered the same thing! My grandfather was from Tortorici in Sicily and I still have cousins there.

        Reply
        • Trisha Thomas
          Trisha Thomas
          2015/07/14

          Yes, I believe that is where he is from. How funny. I will mention it to him.

          Reply
          • Kelly
            2015/07/14

            Wow, what a small world! If he is ever in NY I would be happy to meet him.

  13. Silvia
    2015/07/14

    Thank you Mr Gustavo for you reply. Changing Italy will take half a century.. Greece even more.. However here we are and now let’s pray that Greek and German Parliaments approve the deal. ;) ;) ciao
    Ps Mr Gustavo, the “virtuosity” of Northern Italy is a thing of the past. There is a big “magna magna” ( waste ) of public money even up here. Keeping the eyes open is the only thing possible ;)

    Reply

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