SJS4 - Can Italy's Monti Save the Euro?

Source: Hopkin, Jonathan. "Can Italy's Monti Save the Euro?" Current History, vol. 111, no. 743, Mar. 2012, pp. 94-100.

Author's Credentials: Jonathan Hopkin, the author of this article, "Can Italy's Monti Save the Euro?", studies comparative politics at the London School of Economics, and works with others to learn more about international economies at the Bologna Institute for Policy Research at Johns Hopkins University's School of Advanced International Studies. Based on his vast experience/knowledge on economies and politics, he is very well versed on how to discuss the Euro and its current state in Italy, as well as Europe as a whole.

Summary: Jonathan Hopkin's primary focus when discussing the current situation of Italy's economy is evaluating the European economy's recent history, Italy's particular economic misfortune and its political shifts in struggle, and what must be done to maintain peace and order in their contention on the world market. Over the past several years, unlike other countries which have had tough economic times like Ireland, Greece, Spain, and Portugal, Italy has not had any "booms" of improvement. Rather, they have been on a constant small decline. While their situation may not seem as dire compared to Greece, who have had to borrow much more money, it is in fact much worse for the Italians that it seems, as they have the 3rd greatest GDP in the area, making their lack of success particularly important to the relevance of the region as a whole. In recent years, despite the stagnation, the Italians have continued to spend an excessive amount of money, which has led to no growth, which makes their stagnation even worse. Italians then made the mistake of electing highly fiscally conservative prime minister Berlusconi, who promised lowered taxes for everybody. This proved to be disastrous, as they continued to spend, and spend, and spend, with less money coming in from ordinary people to fund this spending. The country needed a new leader, and Mario Monti proved to be the answer. A popular technocrat, (supporter of those with knowledge/technological prowess to have decision making powers), he promised to increase taxes and decrease government spending, so as not to lead to further economic catastrophe. His entry into power has been largely accepted by the Italians, as they have become aware of just how crucial their lack of economic success actually is. At that point, the Italians were forced to wait and see if this attempt to reverse the stagnation will succeed. Otherwise, Italy may have to rely on what so many of their neighbors have had to, which is desperately requiring the help of those countries around them which may also experience economic stagnation due to a snowball effect caused by the Italians.

Analysis: Most of the author's points made throughout the article are fairly straightforward, but I do have some concerns with the way that he thinks. Obviously he is more well versed on the topic than I am, but I question the effectiveness of high taxes and low government spending during a time of economic stagnation. Based on my knowledge of economies, to be able to recover from such a deficit, Italy would have to actually make actual positive moves in terms of the global economy, which would certainly require increased government spending. Going into debt is manageable, as long as they are able to recover from it. The author's discussion of the topic, however, is fairly accurate, because in all actuality, given the information available to him, the success of the Italians under Mario Monti is a toss up. The author also adds his own personal idea on how Italy should go about reforming their economic process, but his ideas do not stray too far from what Mario Monti has in mind for the country.