Issues about the regional public debt

After translating the data about regional public debt I was following the issue on several blogs, mainly in italian florentine. I feel the urge to answer in an ordered manner to some rants I found in related articles. The data I showed in my previous article came from this report (in italian, here a local copy) that worked on the data available at 21 september 2011.

Castrese Tipaldi in “Debito e responsabilità storiche” (debt and historic reponsibilities) claimed that the public debt should be divided among the regions in a different way, recognizing that when the Reign of Sardinia conquered the Kingdom of the Two Sicilies in 1861 – an highly indebted state conquered one having (almost) no debts. This is true.

Then he proposes to leave 2/3 of the italian gold reserves to the regions of Magna Grecia.

Nice try. Magna Graecia (or the Kingdom of the Two Sicilies, if you prefer) has an yearly commercial deficit of almost 80 billion Euro. According to Wikipedia the italian state has 2451.8 t of gold quoted at 42,89 €/g (source: Il Sole 24 Ore of 25 august 2012 ) totalling almost 105 billions Euro. They wants 2/3 of it: 70,1 billions.

The current Reign of Two Sicilies will burn their little treasure in few years….

Italian public debt since its founding

Italian public debt since 1950

The main share of italian debt has been made since 70ties, you can read about its growing since 1861 on knowstar.blogspot.it.

While it’s true that That obsession with the prosperity of the kingdom of two Sicilies is pityful. Ok it had no debt. But its economy was abysmally small. Here you may read some data compiled by Adriano Balbi in 1830 (in Annali universali di statistica economia):

State	Surface (sqm)	Population	GDP (francs)	GDP per capita
Kingdom of Two Sicilies	31.800	7.420.000	84.000.000	11,3
Kingdom of Sardinia	18.180	3.800.000	60.000.000	15,8
Pope state	13.000	2.590.000	30.000.000	11,6
Tuscany granducate	6.324	1.275.000	17.000.000	13,3
Parma state	1.660	440.000	4.600.000	10,5
Modena state	1.571	379.000	4.000.000	10,6
Lucca	312	143.000	1.900.000	13,3
S.Marino republic	17	7.000	70.000	10,0
Monaco	38	6.500	400.000	61,5
Austriac italy	17.800	4.930.000	122.000.000	24,7
Helvetic italy	1.250	126.000	550.000	4,4
French italy (corsica)	2.852	185.000	1.169.000	6,3
Malta	128	96.000	2.900.000	30,2

There is also a really interesting article from Stéphanie Collet – “A Unified Italy – Sovereign Debt and investors scepticism” – that explains the dynamics of public debts in pre-unitary states (there is an interesting review of this article in italian of Il Sole 24 Ore)

I may argue that Cisalpine Gaul may claim damages for the roman invasion. How far do you want to go in the past? By the way Collet’s study shows that even Kingdom of two Sicilies did actually emitted bonds, i.e. it did had some debts, 32,8 millions francs versus 55,3 of the conquerors.

Let’s be serious, the Magna Greece has benefited from the italian debt. But today, I can list several economic stats showing that today Magna Graecia will sink even with all those gold:

• Regional expenses for statal employees.
• Ivalidity pensions by region
• Invalidity pensions by region
• Regional import export balance

These are all official indisputable data showing the copious, constant money bleeding from the regions of the kindom of two Sicilies.

With such a commercial deficit all those gold will be spent in few years. Then what? I wonder where all the billion Lombardy pays in fiscal surplus go….

Ciccio argued that they took the fantastic italian public debt and divided it by capita, saying that it’s obvious that that debt is too high for the regions of south italy – well he was actually quite more colorful in his florentine. He claimed that Lombardy and the other regions of the valley of Po river shall get most of the debt.

Even in that case, the worst for Lombardy and their neighbors they will shine compared to other countries, like Germany. 

The study cited above proposes four different scenarios:

1. distributing the debt accordig to regional deficit in the 1996-2009 period (before 1996 it is difficult to get really sound data)
2. evenly spread on the entire population
3. evenly spread by regional Gross Domestic Product
4. an average of the first three scenario.

	Billion €
	According to 1996-2009 deficits	By population	By regional GDP	intermediate hypothesis
Piemonte	0	132	144	92
Valle d’Aosta	14	4	5	8
Lombardia	0	294	371	222
Trentino-Alto Adige	50	31	40	40
Veneto	0	146	169	105
Friuli Venezia Giulia	51	37	42	43
Liguria	63	48	51	54
Emilia Romagna	0	131	159	97
Toscana	0	111	123	78
Umbria	22	27	25	25
Marche	0	46	47	31
Lazio	141	170	200	171
Abruzzo	40	40	32	38
Molise	29	9	8	15
Campania	311	173	110	198
Puglia	255	121	79	152
Basilicata	53	17	13	28
Calabria	210	60	40	103
Sicilia	408	150	100	220
Sardegna	148	50	39	79
ITALIA	1798	1798	1798	1798
NORD	179	823	981	661
CENTRO	164	354	395	304
SUD	1455	620	421	832

	€ per capita
	According to 1996-2009 deficits	By population	By GDP	intermediate hypothesis
Piemonte	0	29655	32302	20652
Valle d’Aosta	108782	29655	38649	59029
Lombardia	0	29655	37413	22356
Trentino-Alto Adige	48692	29655	38649	38998
Veneto	0	29655	34296	21317
Friuli Venezia Giulia	41637	29655	33845	35046
Liguria	39185	29655	31514	33451
Emilia Romagna	0	29655	35867	21840
Toscana	0	29655	32693	20783
Umbria	24533	29655	27599	27262
Marche	0	29655	30344	20000
Lazio	24683	29655	34957	29765
Abruzzo	30149	29655	24020	27941
Molise	91438	29655	23470	48188
Campania	53261	29655	18933	33950
Puglia	62238	29655	19409	37100
Basilicata	89924	29655	21702	47093
Calabria	104533	29655	19702	51297
Sicilia	80852	29655	19863	43457
Sardegna	88589	29655	23279	47174
Italy	29655	29655	29655	29655
NORD	6457	29655	35341	23817
CENTRO	13693	29655	33084	25477
SUD	69573	29655	20147	39791

Let’s compare the average scenario with other countries:

	Public debt over GDP (2010 estimates)
ITALY	120,7
Trentino-Sud Tirol	117,7
IRLANDA	112
Lazio	107,7
PORTOGALLO	101,7
BELGIO	97
Central Italy	96,1
Euro Area	87,7
France	84,7
Piemonte	84,4
United Kingdom	84,2
Germany	82,4
U.E.	82,3
Po Valley (North italy)	82,1
Marche	80,9
Toscana	78
Hungary	75,2
Veneto	74,8
Austria	73,8
Emilia Romagna	73,3
Lombardia	71,9
Spain	68,1

Pretty neat feat, isn’t it? Germany does not look so good anymore, compared to Lombardy…. I do recognize things have changed since 2010.

I will soon compare the best scenario for the Kingdom of Two Sicilies (aka Magna Graecia): it will be quite interesting to show public debt sharing by regional Gross Domestic Product even keeping in count that fiscal evasion is much more widespread in the south….