THE GERMAN WAY IS NOT OUR WAY
di Manuel Santoro
Nations like Italy and France are frozen in a dangerously flat economic status, without, it seems, any idea how to get out of it. I mean, there are two main possible paths to follow. One, already taken by Nations like Spain which closely follows the philosophy of austerity, internal devaluation and pro-export foreign policy dictated by the European bureaucrats, and the other, “enemy of the German way”, which is based on the strength of the internal demand, higher salaries, internal growth. Differently from Spain, Italy and France didn’t (and don’t) have the courage to go the first route with a massive internal devaluation. Luckily.
Both Italy and France are, indeed, reluctant to dramatically change the social structure of both Nations by a radical decrease of salaries and labor costs, and, consequently, to rapidly increase their exports. Spain, instead, has gone down this dangerous road by listening to the ECB, the Troika, the Bundesbank and, at last, Angela Merkel, and today, with a -20% in salary value compared to the beginning of the financial crisis, it has scored an impressive unemployment rate (25,1% compared to 12,6% of Italy and 10,4% of France) with a tremendous 20% (together with Greece) of population being in rough poverty.
Is this the road that Italy and France, as well as other “weak” European Nations, should follow? I do not think so. It would be a strategic political mistake and a disastrous social departure from what Europe’ welfare philosophy once was.
No, then, to the German pro-export way of life. No to keep depress and weak the internal demand for goods. No to internal devaluation processes with the goal of becoming depress internally while being competitive abroad. No to an exponential growth of the unemployment rate and poverty throughout the European Nations.
What road, then, European Nations must take? Surely, the second one outlined at the beginning of this writing. Investments. Public and private investments to revive the abandon industrial platforms, in an ecological manner. Investments to increase the internal demand for goods, growth of salaries which will boost internal demand and which will create more jobs. And, if needed, go over the 3% deficit/GDP of the Stability and Growth Pact. Rules are useful if they help millions to live a better life, not to dig their own graves.