Two down, how many more to go…?

As we wave (slowly) goodbye to both Papandreou and Berlusconi, it’s worth reflecting that neither departure solves the current eurozone crisis in of itself.  Instead, it merely removes some barriers (both real and imagined) to salvaging something from the whole sorry episode.

There was an interesting programme on the radio this week, about how we tend to overestimate the importance of individuals in all aspects of our lives.  The point that was made, was that modern society (and politics, and economics, for that matter) are far more complex than we appreciate, and individual agency is very limited.  It’s not to say that there is no role for the individual, but rather that if we only engage with things at that level, then we are liable to miss out on the main part of any understanding.

And so it is in this case.  No one could sensibly pretend that the current state of the Italian economy is the ‘fault’ of Berlusconi by himself, or of his government(s), or even of Italians by themselves.  Instead, we need to appreciate that Italy sits within a European and global economic system that incentivises particular actions by economic agents, all of which contributes to the current situation.  To take one example, Italian debt was – until recently – sustainable, despite its high level, because it had credible means to service it and financial markets bought into that (both metamorphically and literally): it was in the increasing uncertainty about the Greek bailout that this credibility was tested.

This is not to say that Italy’s government and people do not have any responsibility for the situation, but rather that their attempts to resolve it have to be played out in that wider context.  Italy’s problems are Europe’s problems, just as Greece’s problems are Italy’s and Europe’s are the world’s.  As we sometimes unhelpfully tell students, everything is connected, but we would all do well to remember this when watching the removal vans pull out of the official residence.