No, that is pointless in terms of stimulating the economy or improving people's lives. It may even be counterproductive as the wealthy will invest more into asset speculation leading to increased rent extraction from the rest of the population, as they seek returns.
But I disagree because of the above, not because "deficits are bad" according to the EU's holy writ.
Also, regarding Italy's economic history,
this recently published piece is very much worth reading.
Italy can be the poster boy (girl?) of austerity, and has been so ever since the Euro was conceived, beginning in the run-up to it in the 1990s. The consequences is what the italians are living with now.
The way out does not require merely deficit spending, it requires directed investment by the state. An industrial policy, a development policy. And this is something the EU rules forbid.
1. that is imo in general a good article, fitting a lot with what I think as well... whereby they put imo too much weight on the financial-economic aspects of an economy
(A), and (still) not enough weight on the industrious-business-economic aspects of an economy
(B), and do not mention intrinsic economical differences from geographical-cluster effects
(C) (only North Italy at adequate level, but drained by lack of clusters in the middle and south of Italy, also at the periphery of the continent).
The Eurozone only functions well for countries that have a similar
kind of economy.
Whereby noted that Italy is a manufacturing country.
A. On those financial-economic effects.
As mentioned by me more than once: Italy should never have joined the Euro, and the negative effects from converging to the Deutchmark were already visible since the early 90ies. 1992 was a bad decision, 1998 was confirming that bad decision and writing it in stone. That decision was politics all over, colored by the arrogance of the economical makeability culture of politicians having no clue what happens on the ground. The general disconnect between politicians governing on financial economic top indicators, and the industry & companies doing their magical own thing. When a government forces itself to develop and maintain an industrial development policy, it exposes itself to inconvenient realities, but oh so needed realities to allocate public money better and steer their country. Countries with good geographics and clusters are less vulnerable for not having good industrial policies in place. Chinese exports now exposing that caveat, up to in limbo effects.
But the Italian population tired of the volatile inflation waves of the past (!) sought together with their political elites refuge and security in the Euro, as if that would solve the causes. And yes, France did not want to be the only country in the Eurozone with a history of strong inflation waves. Neither would France like bordering to countries (Italy, Spain) that would be very competitive to their domestic economy, because of continuous devaluations of the Lira and Peseta.
As minor remark: although it happened everywhere, the article does not mention that the Italian govt debt, the bonds, were in the post WW2 era owned by Italian wealth. Over time that % decreased strongly. Interests paid by the govt did not flow back anymore to Italian wealth, but flowed more and more out of the country.
B. The article outlines that Italy got stuck in a cheap labor, low grade product spectrum. And great that the article does describe that !
Adding to that: this diverge from NW European countries already happened in the 60ies, and in the 80ies they are imo already past the tipping point. Only plan-economy like measures would be able to reverse that diverge, to change that economical profile. But the opposite happened. More and more low grade products were "conquered" by Italian companies, snatched away from NW European companies. The lower transport cost, better motorways, etc, were on the one hand an opportunity for Italy, but on the other hand it encouraged NW EU companies to defend their turnover by improving their productivity with capital, capital utilisation and innovation. This part of the process happens throughout the 80ies and 90ies.
This also means for Italy that having lower grade equipment and cheaper labor becomes a perk... and a pitfall at the same moment. A profile is a profile... for good and for worse.
In the late 90ies and the years until the GFC
the intiative of Italy is overtaken by the NW EU companies.
No longer Italy is a threat to their turnover, but Italy is a nice industrial pocket to dump their low grade products, freeing up their more expensive labor and capital (equipment) for higher grade products. Partially complete products, partially components that go back in the value chain of products completed by the NW EU companies. That outsourcing of components is always tricky for the party that is the middleman. The business cycles, especially in the car industry, become more extreme. When the GFC did hit, components were withdrawn from Italy to protect the turnover from NW EU companies. As parallel development Turkey comes into the equation since the late 90ies. Turkey, being even cheaper than Italy, now in the role to snatch the lowest grade components and products from Italy, and NW EU companies doing directly capital investments in Turkey for part of their outsource spectrum. Italy in the sandwhich for the in between spectrum of components and products.
When China comes more and more in the picture, especially completed products of Italy get a further hit. Both for export as domestic.
It would be nice if you would give economy students standard a project to describe of some goods how their production (and their supply chain) wandered all over Europe during 1945-2018 up to Asia. Such case studies could be illuminating.
Not cars.. but products like corkscrews, transmissions for tractors, footwear (like cheap Italian shoes from the 60ies, looking great, but made from more paper as leather), clothing buttons, etc, etc. What Italy has as permanent perk is "Italian design". But that did not stop Turkey taking over a lot of high end leatherware and textile. After all you can buy "Italian design" and use it to produce in your own country.
This diverge is reality. The gravity effect ongoing. And saying in glossy govt papers:
"more innovation to higher end, and higher value" is great. But is there enough market for an Italy to produce also Swiss watches ? And can it push out market share from Switzerland ?
Economy at the company level, including all interactions and effects, is a very complex animal. And macro ideologies from the Right and the Left seem imo both not to know how that animal ticks in reality. Neither do the Harvard Economists (so far).
C. The intrinsic economical differences from geographical cluster effects. I made already a post on that here in this thread. It is like the economy of scale effect of a certain product. For producing and selling paperclips (mostly packaging) you need not much, and not much scale size to be close to the max effciency potential. For producing cars or aircraft, you need a whole big high productivity cluster around you... with high spec manufacturing equipment and to utilise optimally the sinergy potential from that automotive cluster you need a whole range of other industrial and service activities closely connected (proximity). => you get a free ride for max effeciency of a whole range of other products.
And that means simply that countries like Italy are not able to follow countries with better clusters and cluster potential with the current set of techs and the techs going to be there in the next decades.
Each country in the EU has a max potential GDP per capita driven by history and geography. With some bandwidth from exceptional perks (like the Swiss watches, like Belgian-Dutch ports to big clusters, like London City services, etc).
That max GDP of Italy was in 1960, from the other set of techs available, at a smaller distance to for example Germany, than the max GDP and distance now with the set of techs of now.
If you want to determine how big the effect of the Eurozone is, you have to filter out the effect of
C. And there are ofc second order effects as well like C influencing A and from there the degree you can mitigate effects of A.
A good industrial policy can do a lot of good there. But if the analysis is overwhelmed by shallow explanations of type A, and causes avoiding real truth seeking because of difficulty and inconvenient conclusions... I do not have much hope for Italy.
It is like playing the game CIV, and you have no access to iron or oil.... and blame other causes, instead of acknowledging where you are and adapt your strategy.