France, Italy, listen, there is something more important than “liberalization of closed products and labor markets”

Sir, You correctly refer to “the need to take aim at exactly the right problem…the bureaucratic sclerosis that chokes of innovation and growth”, “The struggle for reform in France and Italy” December 13.

And thereafter you also rightly argue that “demand-side boosts and supply side reforms are complements not substitutes”, and lend your support to structural reforms like the “liberalization of closed products and labor markets” because that would help to overcome “stagnant productivity” which was “a chronic problem well before the global financial crisis”.

But the most fundamental structural reform needed in France and Italy, and at the least in all other Western world economies, is to get rid of the distorting credit-risk-weighted capital requirements for banks, and which block bank credit from reaching where it is most needed in terms of helping the real economy to grow… productively.

And Sir, since you steadfastly keep ignoring that, I guess all those countries would be much better off listening to little me, than to big and so important You.