Tuesday, January 13

Sideswiped by Supply Side Economics

Italy has always had a long and turbulent relationship with Economics. After all, here is a country that has given us the best scientists, researchers, inventors, architects, artists and designers on earth, right up to today, and yet it is the Greeks and Arabs who win the math prize since Pythagoras on down. In fact, when it comes to basic Economics, I’m afraid Italy isn’t that much smarter than a 5th grader.

The examples of Italy’s hate/hate relationship with Adam Smith or Milton Keynes are endless: You need only to look at the price fixing of days of yore, when everything cost exactly the same price everywhere. Or hear the basic complaint from generation after generation of retailers lamenting over “la crise” – all of whom shut their doors at lunchtime and on weekends, the only time when people are free to shop. Or, see how exporters, with a strong dollar, raise their prices instead of riding out the heyday and selling more items – at their already acceptable margins -- than they ever possibly imagined. And then there’s my personal favorite, when business is down, restaurateurs and companies actually raise prices in order to make up for their losses; something I’ve yet to comprehend with my own basic knowledge of supply and demand. It’s no wonder so many Italians like the idea of Marx. He took the math out of the equation.

And so here we are, with the new and improved ‘stimulus package’ introduced the other day -- with an added amendment by the xenophobic Lega party -- which takes the only entrepreneurs who are opening businesses at a very fast clip, who are keeping thousands of their countrymen employed, who are the only ones supposedly preventing Italy's wholesalers from going under, and deciding to levy a 10,000 euro "money guarantee" on them when they open their shop doors. Let’s ignore the fact that these immigrant businesses have managed – beyond all expectations – to take the equivalent of something like 60 years’ salary in their homelands in order to leave their countries and open up a shop in a foreign land in the first place. Or, the fact that with rental agreements, notary fees, lawyers and other costs will practically cost another 60 years' pay...(in euros this time, though). And while I exempt from my basic analysis the illegal Chinese businesses which are making money hand over fist, this tax will be like taking a fire hose of ice water to a lonely match, the only part of Italy’s economy that is arguably on fire.

It’s no wonder that Italy’s own emigrants went out to the four corners of the earth. After all, these people were economic migrants, probably facing certain persecution in their own country had they remained.

3 comments:

Dave514 said...

Italian economics is just another part of "Italian Chaos."

In some churches and museums you can take photographs, others video only, still others photos but no flash, finally no photos of any kind.

It all goes back to the 7th Cent BC, when there were 20 major and different languages in Italy. It's when Italians learned to talk with their hands.

This is the defining point of Italian Chaos.

Well, I know, I know, but it makes perfect sense to me.

Irreverent Italy said...

So true, I will need to blog about that!!!

Anonymous said...

Well, can't say the government is not an "equal opportunity stifler". They have already made it hard for their own citizens to be legal entrepreneurs, so they need to make the foreigners just as welcome! What's bad for the goose is bad for the gander.