The biggest problem, however, is structural: Italy’s thousands of family-owned companies, the secret to its export success in the 70’s and 80’s, appear ill-suited to the demands of globalization. They make products that can be easily replicated in Asia, using cheaper labor.
“Look at these valves,” Mr. Bonomi said, plunking down a matched set. “This one is mine; this one was made in China. It doesn’t work as well as mine, but it’s close enough.”
The Chinese one costs half as much.
Economists offer plenty of remedies for this situation: Italy needs to move into more sophisticated high technology manufacturing. It must bolster its service economy, starting with the tattered tourist trade, which has also lost ground to China. It must shake up its rigid labor market, the main culprit for its high costs.
Well, I did not comment really this piece of news, because I was too busy. There is one thing in this article that stroke me, when reading it, and it’s this part:
Italian voters ousted Prime Minister Silvio Berlusconi last month to a large degree because he did not fix the economy. But then they elected a new center-left government with a parliamentary majority so slim that it may be hobbled before it even takes power.
“I’m not very positive,” said Alessandro Profumo, the chief executive of Italy’s leading bank, UniCredit. “We have a lot of issues to manage, and the government needs a larger majority to manage these issues.”
It is clear why economic fears dominated Italy’s recent election, and the epithet “sick man of Europe,” conjuring images of the tottering Ottoman Empire, has become shorthand here.
Even knowing the bias of NYT (very liberal newspaper) it stroke me really. I mean, perhaps Berlusconi has not done what he should have done to fix the economy. But they are clearly saying that if the new leftist Government cannot fix the economy, it’s just because they do not have the sufficient majority. They are just “curing the Government before the wound it’s done” and that is really stupid. If the center-left Government does make a sound economic policy they can have the support of most of the people. If they do not, then they would be to blame and not the majority.
There is another thing though: Looks like the Italian production has risen (in Italian) this year 6.8% in comparison with last year’s. As Orpheus says in her blog, then the right wing Berlusconi was in power -and every leftist was just worried about the economical statistics-, but now that the center-left has reached it, everything seems OK… well, marvellous, in fact.
But if the information that NYT is giving is right, Prodi&Co. would do very well just worrying about the future and working for it. Ehhh, no, the culprit is the Italian people who has not given them an ample majority….