Italy’s Economic Problems Under The Spotlight

As Manuel points out in the accompanying post, Romano Prodi’s resignation as Italy’s Prime Minister is a rather sudden and dramatic, but scarcely unexpected, development. The immediate political crisis may be resolved as rapidly as it appeared, but again as Manuel indicates it may only serve as a prelude for further things to come, and the fragility of any government coalition which may be put together only underlines the difficulties Italy will almost certainly have in addressing what are important ongoing economic problems. The present post will simply attempt to outline some of the main economic problems Italy faces, in order to contextualize the political problem a little.
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Premature Evaluation: Albion’s Seed

Why is America the way that it is?

Wrong question, the author of Albion’s Seed would say. America isn’t any one way, and hasn’t been since the very beginning of European, particularly English, colonization. David Hackett Fischer puts the core of his argument straight into his subtitle: Four British Folkways in America. He identifies four distinct migrations from Britain, and to a much lesser extent Ireland, that shaped American culture and regions down to the present day. These migrations were fairly coherent in origin, destination and religion. Understanding these origins will help understand cleavages in the contemporary United States, and it will help understand America as a whole.
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Serbia: That Incredible Shrinking Country

This weekend’s election results in Serbia, and in particular the gridlock state of the political process and the resilience of the vote for the nationalist Serbian Radical Party (as ably explained by Doug in the previous post), pose new, and arguably reasonably urgent questions for all those who are concerned about the future of those European countries who currently find themselves locked outside the frontiers of the European Union. What follows below the fold is a cross-post of an entry I put up earlier this afternoon on the new global economy blog: Global Economy Matters. I don’t normally like cross-posting, since I would prefer to put up original Afoe content, but my time is a bit pressed at the moment, and I feel the issues raised are important enough to merit a separate airing on this site.
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La Febbre

A couple of weeks back I had the pleasure of seeing Alessandro D’Alatri’s recent film La Febbre (Fever). As the reviewer says (Italian link), this is a ‘normal’ (everyday) film, not a great one, even if it does include one or two memorable moments, like the scenes shot along the river bank, which were (and I imagine this is not entirely unintentional) rather reminiscent of some which are to be found in the unforgettable L’Albero Degli Zoccoli from that giant of Italian cinema Ermanno Olmi.

La Febbre è il classico film italiano, che vuol raccontare una storia normale, di tutti i giorni, e che per farlo non trascende dai canoni della buona creanza del plot, e da quel pizzico di amara critica sociale che lo rende molto politically correct.”

(La Febbre (the fever) is a typical Italian film, the kind of film which tries to tell a simple, ‘normal’ story – an everyday one – and which in order to do this stays well within the bounds of what is normally thought to be an acceptable plot structure, and then, following the recipe, there is added just enough social criticism to make the film a highly politically correct one.)

My point of interest in this post, however, is not really the film itself, but rather the film as a reflection of something else: the disenchantment and frustration that many young Italians seem to feel with contemporary Italian society, and the impact that the evident failure of Italian civil society to adjust to Italy’s contemporary social and demographic reality may have on the future evolution of Italian economy and society.
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Immigration Under The Microscope

With the arrival of Romania and Buglaria as full members of the EU the issue of migration is once more attracting a lot of attention. Stefan Wagstyl recently had an FT piece which gave a fair overview of the kind of debate which is presently going on in the UK, where the substantial (and largely welcomed) movement of large numbers of migrants from Poland and other Eastern Accession countries has now lead to an ongoing reflection over whether a repeat performance with its origins in the latest member countries would be considered so desireable. Immigration obviously has the capacity to bring out both the best and the worst in us, often at one and the same time.
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State of the World Population

I’ll keep this brief since there are some excellent guest posts just a little bit further on down the page just waiting for you to read and comment on. I’m not sure whether this is more about form or content, but the UN has a supremely interesting and readable report out today, as part of its State of the World Population programme, entitled A Passage to Hope, Women and International Migration, and whatsmore the report is presented in an extremely blog-like format, as I say highly readable and with the content readily available. And as if that wasn’t enough, the ‘traditionalist’ Financial Times (traditionalist in terms of content, not in terms of format) actually has a hyper-link to the report itself inside its article (bravo FT!). People often ask what kind of importance and influence blogs have, well sometimes I feel you only have to cast your eyes around a little bit.

On the substance front the contents of the report are obviously very relevant to our recent debate about Sub-Saharan migration to Spain. Indeed on the SotWP homepage you can find a link to a fascinating first person account by a Burkinan migrant (Adama) of his convoluted 3 year journey up through Mali, Algeria and Morocco, before finally reaching Spain via the Canary Islands. Clearly in migration terms people like Adama are the pioneers (anthropologists tend to call them the ‘heroes’, those who blaze the trail) who struggle against all adversity to find land and establish themselves (and tragically many do not make it all the way). What the arrival of Adama means is that many more will inevitably come behind, following a network logic which I have attempted to describe in the previous post.

But the new UN report isn’t about Adama, it is about the relatively new phenomenon of female-lead migration. Obviously the report highlights the situation of sex workers et al, but I would like to underline the fact, which is absolutely evident here in Spain, that the welfare services in Southern Europe at least simply cannot handle the rapid population ageing which is taking place without the massive arrival of female care-workers from outside the EU. The later economic development of Southern Europe and the comparative underdevelopment (not to say virtual non-existence in many cases) of institutional care make this inevitable.

One last thing while I am here, we have often talked about the economic growth imbalances which comparatively small migratory movements are causing between and within countries. The outward migration of skilled and highly educated workers from Germany is one such case, while the regional tensions which might arise inside Spain is another. Well today Randy McDonald has a timely and very interesting post about how oil revenues and subsequent economic growth differential in Alberta have produced a migration and fertility phenomenon which may well change the face of Canadian politics as a linguistic divide becomes a growth-model and socio-political one. Finally (the last thing after the last) anyone interested in looking into earlier European ties with Senegal (now being renewed) might like to glance at this link that Randy sent me on Senegalese participation in the European revolution of 1848, or read about the fate of one group of Senegalese soldiers who fought on the allied side in WWII, as described by Senegalese director Sembène Ousmane in his film Camp de Thiaroye (my input). And for those who still want to ask what all these Senegalese may have to offer the future Europe we are collectively building, maybe I could recommend the little known but excellent work of the Senegalese group Orchestra Baobab.

A Face That Launched A Thousand Ships

An unlikely Helen, Spain’s deputy prime minister, Maria Teresa Fernandez de la Vega, that’s for sure. Yet outside a few thousand years difference in timing the two seem to have been cut out for one and the same the same historical role: urging the boats to go back. Indeed the only thing which really separates them might be the magnitude of the problem to hand, since Coalición Canaria president Paulino Rivero suggested this weekend that what might be involved were not a mere 1,000 ships, but anything between 10,000 and 15,000 currently being built along the Mauritanian and Senegalese coastlines.

Joking aside this post is about tragedy, a human tragedy. According to the NGOs who are involved some 3,000 people have already died in attempting to make the hazardous crossing, a crossing which was actually completed over this weekend by a record 1,200 people in 36 hours.

As well as tragedy the post is also about folly, the folly of those economists who think low fertility isn’t an important economic issue. This opinion was recently expressed by respected US economist Greg Mankiw, (on his blog) who described the very idea that it might be as ‘wrong headed’ and, to boot, suggested that a poll of the world’s top ten economists would draw a blank on names who thought that low fertility was among Europe’s major economic problems. I am sure Mankiw is right about the poll, and this is why I use the expression ‘folly’. So what do I mean?
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Migration And Reform

Well today is obviously immigration day, as thousands of Latinos take to the streets in the United States to demand some kind of ‘regularisation’. I have been posting on Demography Matters about the changing pattern of Latino migration in the US, and on the not entirely unrelated topic of whether it is the arrival of the Latinos or the presence of religious belief which is primarily responsible for the fact that US fertility is still hovering round the replacement mark (especially the comments, and here, and here and here).

But this post is not about migration in the United States. Rather it is about migration inside the frontiers of the EU itself. As populations age, and our economies come under increasing strain, some societies will prove more able to reform than others. Now one conjecture I have been making is that in this process some societies will attract population (and get that famous win-win dynamic going) while others will lose even that which they have (sounds a bit like the biblical parable now doesn’t it). Actually economists have terms for all this. You might say that the ones who attract are experiencing an increasing returns process, while those who lose are suffering from negative feedback.

Claus has already touched on how Denmark is suffering from a lack of immigration (and me here), in the sense that more people are now leaving than are arriving, but perhaps more importantly for the future of the entire EU, Germany is very near to becoming a net exporter of people (and here).

Pperhaps a bit more spice was added to this already simmering cooking-pot last week by a sudden, and rather unexpected, bout of finger pointing from Peer Steinbrück, Germany’s finance minister, in the general direction of Vienna. Now according to Steinbrück, Vienna’s recent decision to cut corporate tax rates from 34 per cent to 25 per cent has led to an increasing number of German companies investing across the border in Austria. In other words, not only are people leaving, companies are now also leaving, and to less than anticipated destinations, and of course, on the backs of the companies will go even more people. Are we really so sure that that recently heralded sustainable recovery is as sustainable as some are suggesting? Morgan Stanley’s Eric Chaney understandably still has his doubts.

The real issue is this: as the FT says “Mr Steinbrück has limited room for manoeuvre in the tax field because of Germany’s high budget deficit”. All these issues interlock. So, on a day when Jaques Chirac seems to have taken a step backwards in the French reform process, it might be just worth asking ourselves whether, at the end of the day, there won’t be a price to pay for all this ‘no rush now is there’ style delay.

Hot Labour Anyone?

This post has one sovereign virtue: apart from in the current sentence it will not refer, either directly or indirectly, to the Catalan Statute. The topic it does deal with however is probably equally vital for the future of Spain. The issue is Spain’s housing boom, and the role of immigration in fuelling it. Two facts above all others stand out: Spain is currently ‘enjoying’ the longest and deepest housing boom (in the current round) among all the world’s developed economies (see this useful article from the Economist, or this one from Business Week), and Spain is also enjoying sustained rates of immigration which – at around 2% of the population per annum, may well be the most intense ever experienced in a developed economy. For purposes of comparison I could point out that Spain’s net migration rate of 17.6 per thousand in 2003 contrasts sharply with that recorded for the old European Union 15 for the same year – 5.4 per thousand – and is even well above the level recorded by Germany in the early 1990s – a maximum of 9.6 per thousand in 1992 – or by France in the early 1970s. So there is a housing boom, and there is immigration, the question is, what is the connection?
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Go West Young Man

My preocupations about the impact of demographic change on German society are already pretty well known. Well if Germany as a whole has a sizeable problem, the former East German Lande have a huge one. The state-owned KfW development bank project in a report out today (German only unfortunately, an English version of the press release is here) that the while the population of the old West Germany will drop by six percent between 2002 and 2050, that of the six eastern states will decline by a whopping 25%. Not to mention the fact that those who remain are likely to be even older on average than their Western counterparts. As a consequence the available workforce is likely to fall by a staggering 55%.

The issues raised by this research are large and important. Is, for example, East Germany now in irreversible decline? Can this process repeat itself elsewhere (including between rather than within nation states) as younger, more highly skilled and more mobile workers leave ageing and relatively more depressed areas etc?

The issue of migration from East to West Germany been receiving attention for some time now. Frank Heiland in a survey “Trends in East-West German Migration from 1989 to 2002” (follow the link and go to Volume 11 article 7) argues that there have been two waves of East-West migration The first one, 1989-1990, was triggered by the opportunities and uncertainties before the Reunification; the second one, since 1997, coincides with economic stagnation in the East and improving job prospects in the West.
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