Rather like the Euro itself, the word ‘Grexit’ is a misleading coinage. As with ‘Brexit’, it suggests that the country in question might choose to leave the Eurozone and/or the European Union. Most Greeks, however, are desperate to stay, which is why their government agreed to such a humiliating deal this week. If they do finally quit one or both clubs, it’ll be because they’ve been kicked out, not because they’ve walked out.

We need a more truthful name for this eventuality. ‘Grexpulsion’ is one option, ‘Greuthanasia’ another, but I’d go for ‘Hellenectomy’ – the surgical removal of the Greeks from the single currency.

Clearly, the Eurozone elites were prepared for a safe and painless operation (safe and painless for them, that is). Indeed, the first stage has been underway for some time: cutting off the flow of vital nutrients to the affected area to bring the angry red inflammation under control. If, however, the problem flares up again it’ll be scalpels out for a swift amputation.

Unfortunately, the sickness isn’t limited to Greece; other parts of Europe are also ailing. A prime example is southern Italy – a part of the world once known as Magna Graecia or ‘Great Greece’. The facts are set out in the Economist:

“Of the 943,000 Italians who became unemployed between 2007 and 2014, 70% were southerners. Italy’s aggregate workforce contracted by 4% over that time; the south’s, by 10.7%. Employment in the south is lower than in any country in the European Union, at 40%; in the north, it is 64%. Female employment in southern Italy is just 33%, compared with 50% nationally; that makes Greece, at 43%, look good.”

The horrifying statistics go on and on, describing a disastrous economic divergence within the Eurozone’s third biggest economy:

“…the south’s… economy contracted almost twice as fast as the north’s in 2008-13 – by 13% compared with 7%.” 

As Scott Sumner points out in an EconLog post, southern Italy – the mezzogiorno – is a far from insignificant chunk of Italy and, therefore, the Eurozone:

“The mezzogiorno has roughly 1/3 of Italy’s 60 million people, making it almost twice as populous as Greece. In absolute terms, incomes there (17,200 euros GDP per person in 2014) are far lower than among American blacks or Hispanics. In contrast, GDP per person in northern Italy was about 31,500 euros in 2014.”

If Greece is a threat to Eurozone stability, then southern Italy is an even bigger one. However, size isn’t the only difference between these two basket-cases:

“Like eastern Germany, southern Italy is part of a larger and more prosperous fiscal union. For many decades, Italy has been doing the things that American progressives would recommend, pouring lots of fiscal stimulus into the south, to build up the economy.”

Italy, unlike the Eurozone as a whole, is a transfer union. The mezzogiorno is in receipt of the long-term financial support denied to Greece – but contrary to the money-is-all-you-need school of economics it hasn’t worked:

“American progressives will sometimes argue that we have much to learn from the successful welfare states in northern Europe. Perhaps that’s true. But I’d have a bit more confidence in that claim if they could explain what we have to learn from the failed welfare states in southern Europe. Indeed I’d have more confidence in progressive ideas if they even had an explanation for the failed welfare states of southern Europe.”

Sumner wonders why it is that the gap between western and eastern Germany is narrowing, but not that between northern and southern Italy. It’s almost as if culture matters as well as money.

One also has to ask how long Italy can bear the burden. The country’s debt is growing, but it’s economy isn’t. And while the Eurozone could conceivably dump Greece without falling apart, the same doesn’t apply to Italy and all points south of Rome.