In what seems to be a great development in Italian politics, 37-year-old mayor of Florence Matteo Renzi is roaming around Italy, visiting 20 cities in 2 days, in order to promote himself as the Democratic Party (PD) candidate for the Italian presidency. In the eyes of the young Italians, disgusted from numerous scandals, trials, bribes and overall incompetence of the previous generation of politicians, many of which are still key players in the country's political scenes, Matteo Renzi is the hope for the future.
Renzi's most controversial view is that politicians which have been around for more than 20 years should retire from the scene. Although this has been accepted with enthusiasm by his supporters, the politicians who are going to be affected by this, as expected, do not share that enthusiasm. This has always been the norm in both Italian as well as world politics. When new contestants appeared, willing to perform important changes in a nation, resistance to this kind of progress was always evident to those who would be affected, i.e. politicians, policymakers and policy-beneficents.
This has long been evident in both economics and business. As many business fight for their survival, governments, under political pressure, arrange for subsidies and other benefits so that those firms should continue to exist, without any regard to whether the time for that business to perish has come. This resembles the case where a patient has already died and the doctors keep pumping him with drugs. Job destruction is an unavoidable fact which means that the time has come for an industry to die and for another to take its place. For example the last company which produced typewriters in the world (located in India) has closed down about 2 years ago.
What many do not understand is the economy's everlasting change of leading companies. Thirty years ago Microsoft was a miniature of a firm. So was Apple. Yet today they one of the largest companies in the world. The same holds for Altavista which was once the world's best search engine and was taken down from the web in 2011. (It has again reappeared, however, using the Yahoo! search engine).
In the US, from March 1999 until March 2000, as many as 90,000 establishments were closed. If the amount seems extremely large then one should also note that during the same period 106,000 new establishments opened. (for details click here). During the same period, the labour market grew by 383,000. Thus, many more people were employed during that year than the previous one. What is true is that the situation now does not resemble the one in the US during 1999, when the dot-com bubble was at its peak. Nevertheless people should never forget that ups always follow downs and vice versa.
The message I intend to pass here is not that every business should be allowed to collapse (and I need not remind you that a bank is not like any other company). It is that many companies are not worth saving while some others are. The same holds for the politics of Matteo Renza. Not every politician who has been in the stage for more than 20 years is incompetent (for example Mario Monti would be one although his career is not exactly one of a politician). However, if one is presented with the choice of keeping or discarding them all, being either politicians or companies in distress, in my opinion, one should be better off in discarding them.