The answer to Italy’s economic problems is not, as Berlusconi advocates, an exit from the eurozone and a return to the flexibility of its own currency, which in the past allowed policymakers to boost competitiveness through irresponsible devaluations. Italy needs to learn how to live with the euro and within the eurozone, which means adopting policies that ensure that productivity growth and innovation, not currency devaluation, are the main drivers of competitiveness.