Learning from Italy

The wise avoid problems by learning from the mistakes of others.  I pick Italy as the teaching point, although it could be Greece or any of several other counties.  Italy is on the verge of bankruptcy; their country is going out of business, so to speak.  Our country is facing a similar problem, but we are not as deeply in trouble as some of those in Europe.

When we look at Italy we find from one article that it “has financed years of lavish social benefits by borrowing and borrowing.”  From another we learn “that 93 percent of Italians consider cutting the country's huge public debt a top priority but few are willing to make personal sacrifices to do so.”  (Isn’t it refreshing that magic-money-tree thinking is not confined to the US?)  It may be easy to scoff and say that they dug themselves into this hole and are now unwilling to pitch in to dig themselves out, but I’m sure most of them were unaware of the development of the problem or didn’t see it as serious.  They enjoyed their social benefits, which soon became expectations, and that only now, in hindsight are described by outsiders as lavish.  They felt that they had earned, worked for or fought for those perks.

Later in the second article it states that although “there is some hopefulness about the future of the economy -- 55 percent anticipate a better situation five years from now -- the longer-term picture is gloomier: Only 35 percent of Italians think children born today will be better off 20 years from now, while 43 percent anticipate a harder life for the next generation.”  This should not be surprising.  As disinterested observers we can easily see that the lifestyle they were enjoying was not, after all, worked for or fought for or earned.  It was borrowed, supported by debt that their children must someday repay.

Perspective and Economic Understanding are crucial to our success.  America is not yet in the position of Italy, but every day we are moving closer, borrowing from our children to support our lifestyle that we have become so accustomed to that few would be willing to describe it as lavish.  Nonetheless, if lavish means you couldn’t really afford it in the first place, that’s exactly what it is.  When the time comes for all to sacrifice, I hope we are wise enough to learn from Italy and others, and to understand that the pain will be less if we begin sooner.