Alberto Mingardi on Europe’s “Hamiltonian moment”

I thought this was quite perceptive:

In short, we see a profound institutional transformation of the nature of the Union, with the main aim of kicking the can down the road. It is profoundly paradoxical that Italians are so happy about that. Italians have evidence in the South of their country that showering a territory with aid won’t do much for economic development. And yet they seem determined to become, for the whole of Europe, what the Mezzogiorno is for Italy.



22 Responses to “Alberto Mingardi on Europe’s “Hamiltonian moment””

  1. Gravatar of Michael Sandifer Michael Sandifer
    25. July 2020 at 08:30

    I had similar thoughts when reading that some members of Congress, like this Republican, want to start to subsidize US chip manufacturers, like Intel:

    ‘“We’ve seen how vulnerable we are,” John Cornyn, a top Senate Republican, said in June when U.S. lawmakers proposed an estimated $25 billion in funding and tax credits to strengthen domestic semiconductor production.’

    This, from Republicans…

    I thought we learned decades ago that subsidies make industries less competitive, domestically and internationally, particularly when paired with trade restrictions. Are ISI policies going to come back into vogue?

  2. Gravatar of ssumner ssumner
    25. July 2020 at 09:36

    Michael, Economics is cyclical, We repeatedly learn, unlearn, learn again, unlearn again, learn again . . .

  3. Gravatar of Christian List Christian List
    25. July 2020 at 11:14

    If I could at least understand the morale and motivation behind the Italian position. Does anybody understand that? I don’t understand the rationale of the majority of Italian politicians and their voters.

    Would you really beg or blackmail other people for money? These people really think they are entitled to do this. They seem to think that this is their right, even their duty.

    You can say what you want about countries like the US, Japan, Canada, Brazil, Switzerland, Singapore, Australia, the Scandinavians, even Russia and CCP China, but I can hardly imagine that these countries would ever beg other people for money in such an undignified way.

    There are more than enough people in this world who would rather shoot themselves in the head, in a really desperate situation, rather than begging other people for money.

    And the situation in Italy isn’t even desperate, it’s one of the richest countries in the world. They just need to carry out a few reforms, instead they prefer to go on this completely undignified blackmail begging tour, which is so absurd that even professional Romanian begging gangs embarrassingly blush.

    And why is this not an issue at all in all the media I read? How low does Italy actually want to sink? Is it even possible to sink any lower than this?

    These politicians and their voters have no dignitiy and no honor. A state that acts in such an undignified way will not survive and must not survive.

  4. Gravatar of D.O. D.O.
    25. July 2020 at 11:47

    Christian List, I would say that the opposing point of view is that ECB is captured by Germany and other strong euro/low inflation countries. The optimal monetary policy for the whole of Europe is probably much looser. As a result, the transfers are necessary. That’s what many macroeconomists predicted when euro project launched. You have unified monetary policy, you should have a unified fiscal policy.

  5. Gravatar of William Peden William Peden
    25. July 2020 at 12:21

    There is also the argument that Italy suffers from an artificially high exchange rate for its exports towards Germany and the other more prosperous Eurozone countries, plus that it faces restrictions on its ability to “invest”.

    I don’t think that either are good arguments: having lived there for nearly 12 months, I think that what Italy needs is a more efficient, less bureaucratic, and more enterprising economy, not devaluation or more government/corporate debt. However, that is the rationale I’ve heard from some Italians – though not, I should say, most of the Italian economists I talked to, who would love structural reforms to make Italy more like Germany. Even making most of Italy more like Milan/Turin/Florence/Bologna etc. would be a huge improvement.

  6. Gravatar of Christian List Christian List
    25. July 2020 at 13:08


    At first glance, your statements have some merit.

    – But I don’t think Italian politicians argue that way. Worse still, they don’t seem to use any (rational) arguments at all. They just see it as given that other countries have to pump as much money to Italy as possible.

    – The ECB is clearly not controlled by Germany, Draghi was even Italian. He had to fight quite some skirmishes with Germany, that’s true, but in the end he always came out on top, and rightly so.

    – A common fiscal policy would be organised in Brussels Brussels would have much more control. That’s just what the Italians don’t want.

    – Italy’s problems are clearly structural.

    – Thanks to the ECB policy, the Italians can get into debt rather cheaply, their interest rates are kept really low, thanks to the ECB, without the euro and the ECB Italy would have completely different interest rates. But even that is not enough in their eyes.

    – It is true that ECB policy should have been a bit looser at certain points in the past, but since Draghi was its leader, they have usually been much closer to southern European monetary policy than to the wrrong German monetary policy.

    – An even looser euro policy would not do much for Italy. Italy’s most important trading partners are in the euro zone. Italy urgently needs to devalue in relation to the other countries in the euro zone, but they can’t because they still use the euro, and ECB policy can’t change that.

    @William Peden

  7. Gravatar of D.O. D.O.
    25. July 2020 at 13:55

    Christian List, I don’t dispute that Italy can benefit from the structural reforms. I just don’t know enough. All I am saying is that money transfers may be not as irrational as you suggest and that the European politicians were simply perplexed by Italian begging. As for politicians providing a coherent and meaningful argument, good luck with that.

  8. Gravatar of Christian List Christian List
    25. July 2020 at 14:20


    So what’s the rationale that is given? I just wonder where the arguments are, you don’t read anything about it in the press, and you don’t hear anything from the politicians either. Actually, one would think that these arguments would be everywhere if they were sound and rational.

    There are even these statistics on average and median per capita wealth data, where countries like Italy, France, Spain are very clearly ahead of countries like Germany, Sweden, and the Netherlands.

    I do not know whether the figures are perfectly accurate, but this seems so be all we have, and the gap is really huge.

    So it could just as well be argued that Italy and Spain have to channel huge transfers to the North until per capita wealth is similar.

    More transfers, because monetary policy is allegedly not loose enough, in a zone where all important trading partners have the same currency anyway, makes no sense to me.

    If at least the press and politicians would tell this story, then I would say yes, okay they at least try to give an explanation. But do they? The German press at least doesn’t. Okay, I concede we’re going in circles now.

  9. Gravatar of D.O. D.O.
    25. July 2020 at 14:53

    According to Wikipedia GDP per capita in the Netherlands is 1.5 that of Italy.

    Anyway, I have no idea what rationale German press or politicians give for the lately agreed upon giveaway, but privately, I guess, they see that the conditions they imposed on Greece in a previous crisis haven’t worked out. Since, it seems, most Europeans are soured on the EU project as a good thing in itself and now only think about what it is good for, European politicians lost the ability to create anything long-term and meaningful and are just trying to prevent a crisis du jour. Now there is a crisis and they are preventing it. That’s the whole explanation. Otherwise, there would be some sort of agreement where Southern Europe commits to some sort of economic reform and Northern Europe helps to pay for it.

  10. Gravatar of Benjamin Cole Benjamin Cole
    25. July 2020 at 15:56

    On the other hand, the Greek economy contracted by about 25% under the EU austerity program after 2009…and has never recovered.

    There has to be a better way. We need new totems in the Temple of Orthodox Macroeconomic Theologies.

  11. Gravatar of Christian List Christian List
    25. July 2020 at 16:02


    Your explanation sounds about right now.

    According to Wikipedia GDP per capita in the Netherlands is 1.5 that of Italy.

    That supports my point. The Dutch, on average, produce so many more goods and services per year. And for what? Should this money really be used in order to protect the wealth of the median Italian?

  12. Gravatar of D.O. D.O.
    25. July 2020 at 16:25

    I am not sure what the data in that table mean. Mean wealth per adult in Netherlands is 280k and in Italy it’s 234k (I am not sure how you calculate wealth. Explanation in that article doesn’t explain anything). These numbers are suspiciously large, but not crazy. But the median numbers are ridiculous, Netherlands 31k, Italy 92k. There is no point in trying to make sense out of it.

  13. Gravatar of Christian List Christian List
    25. July 2020 at 21:01


    maybe it can be explained in parts with homeownership rates for example. Germans (have to?) rent more, Italians and Spaniards tend to buy.

    Maybe these are not just cultural preferences, maybe it simply reflects the market and the financial means of the mean population. Buying a house in Germany is expensive and is becoming increasingly difficult for people with a normal salary.

    Anyhow, the ability to own your own house is wealth, perhaps even the most important one.

  14. Gravatar of Postkey Postkey
    26. July 2020 at 01:09

    “Economics is cyclical,. . . ”

    “This paper has suggested a simple model that can account for the key anomalies of the traditional monetary approach. It disaggregates the quantity of credit into a ‘real’ and a financial circulation.“

    ‘“One of the best accounts is to be found in Keynes’s 1930 Treatise on Money, which differentiates between transactions in “the industrial circulation” (roughly speaking, those in the income–expenditure–output circular flow) and “the financial circulation” . . . ‘

  15. Gravatar of Ray Lopez Ray Lopez
    26. July 2020 at 12:52

    Dr. Ben Cole has it right ( Greece never recovered after EU imposed austerity, despite Greeks voting twice to leave the EU (rumor has it the anti-EU Syringa party PM Tsipras had a hardon for Merkle and also was bribed, ironically a pro-austerity party, New Democracy, is in power now). I am neutral about leaving the EU: I would have lost a ton of cash that I had in the bank at that time, on the other hand real estate does well with inflation and I would have won it back that way.

    PS–does anybody know why the Euro is so strong lately despite this news? It was 1.1 USD/Euro a few months ago and it’s 1.18 now. It’s killing me since I want to build some rental properties here and pay off a large bribe/fine (they are the same thing, you bribe to avoid a fine, but the fine is so they can get a bribe. To illustrate: selling a token widget for 1 Euro without a VAT invoice can land you a 25k Euro fine, and so, if a tax policeman says, ‘where’s your invoice for that old widget in the corner of your store’? he’s in fact asking for a bribe, since like jaywalking everybody does it. It’s Straussian!)

  16. Gravatar of Benjamin Cole Benjamin Cole
    26. July 2020 at 16:20

    Ray Lopez: I wish you the best of luck in Greece. Do you happen to know Achilles Risvas? We works out of Athens, is investing in real estate, though on the institutional side.

    Yes, austerity does not seem to work.

    It appears better to judiciously cancel out debts, as done in mainland China and Japan (and maybe now the US—will the Fed ever shrink its balance sheet)?

    Perhaps it is better to never incur debts, but to reach NGDPLT through money-financed fiscal programs.

    Greece, of course, cannot do that, having lost control of their central bank.

    Yes, I know “money is neutral,” but then why lengthy depressions?

    Also, how can fascist China keep their economy growing through the 2009 and 2020 global busts? All do to monetary policy? A very flexible price system, which means wages and price decline and real output goes up (this seems unlikely). The way PBoC cancels out corporate debt?

    Inquiring minds want to know.

  17. Gravatar of Goergio Goergio
    27. July 2020 at 00:03

    This is the problem with the left.
    They are little soft babies who get reelected for promising free things.
    PC culture and cancel culture keeps people from addressing important issues. When a right wing person uses rational common sense arguments like maybe we shouldn’t be providing the beautiful ponzi scheme of social security we get called racists.
    Public education is also a scam. We don’t need any of that. If you want to write a check, put it in the hands of the person you want to subsidize, let them decide. And if a person is too much of a loser to save money for retirement, then let this idiots family worry about him. He can live in the kiddy bedroom of his sons or daughters place, like every other country in the world. But no, americans are too selfish for that. Godforbid someone might live with you until they day, instead of alone widowed and sitting in a chair.
    Americans are killing their country with niceness. Stupid officials want to control our lives. VOTE REPUBLICAN!

  18. Gravatar of Ray Lopez Ray Lopez
    27. July 2020 at 06:56

    @Ben Cole- I never heard of this guy Achilles Risvas, but with a name like that, it’s Greek to me. Apparently he did well buying distressed GR assets in 2014 (up 160%), says a Bloomberg article.

    To answer your question, fascist China did not use monetary policy to grow through 2009 and 2010, but fiscal policy, since the Chinese economy is pretty much 100% controlled directly or indirectly by the government. China, INC. can grow at will since they’re starting from a low base. Time will tell if they crash like fascist and modern Japan (your favorite country).

  19. Gravatar of Benjamin Cole Benjamin Cole
    27. July 2020 at 16:45

    Ray Lopez:

    Not sure Japan “crashed.”

    Japanese now work less hours per year than Americans. They used to work a lot more. One chart above goes back to 2000, but the Japanese worked even longer hours back in the 1980s and 1990s.

    Japan has managed to maintain living standards, while working a lot less. Orthodox macroeconomists do not count leisure time in GDP.

    A one-bedroom apartment in Sapporo runs about $450 a month. In L.A. about four to five times that…and your wife can walk around Sapporo at night.

    Until C19 there were about 152 job openings for every 100 job hunters in Japan. They largely solved the unemployment problem, without inflation. Housing is affordable.

    I do not know if I would call the Japanese economy “fascist”

    One definition: “Fascism operated from a social Darwinist view of human relations and their aim was to promote superior individuals and weed out the weak. In terms of economic practice, this meant promoting the interests of successful businessmen while destroying trade unions and other organizations of the working class.”

    A definition of fascism: “Fascism is a form of far-right, authoritarian ultranationalism characterized by dictatorial power, forcible suppression of opposition, as well as strong regimentation of society and of the economy.”

    My take: like all Far East economies, the Japan government is “pro-business but only conveniently pro free-markets.” This model works well enough, and I think will outlast the US model.

    Interestingly, Japan has avoided the trap pf Hong Kong, the US and some other nations, where there is de facto collusion among property owners and government to keep housing supplies tight.

    Well, in theory Japan is my favorite country. I never lived there. I am beginning to think a Portugal would be a nice place—cheap, good weather, a language that can be learned.

    Also, any place with cold weather looks nice after a while….

  20. Gravatar of Postkey Postkey
    28. July 2020 at 02:05

    From an ‘expert’ on the Japanese economy?

    ‘Princes of the Yen: Central Bank Truth Documentary’

  21. Gravatar of janice janice
    28. July 2020 at 03:28

    Italy and the USA have a lot in common these days. Spend to appease the mob, ensure your election, enrich yourself, and let the next generation inherit the mess. Homer probably said it best when he told Marge – as he drank a bottle of mayonnaise and vodka – “that the consequences were for future homer to deal with” 😀

  22. Gravatar of ssumner ssumner
    30. July 2020 at 11:39

    Janice, You said:

    “Italy and the USA have a lot in common these days. Spend to appease the mob”

    So you don’t like the Trump stimulus? I guess you aren’t the same Janice who in the next post said the GOP believes in liberty and responsibility.

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