Bill Emmott’s new book Good Italy, Bad Italy: Why Italy Must Conquer Its Demons to Face the Future is a depressing read, and I’m not Italian. But I do appreciate better now why there are so many terrific Italian economists and other professionals working in London. One of my Italian friends, now well into what he intends to be a lifetime career in the UK, last night confirmed to me one of the claims in the book: appointment to jobs in Italy depends wholly on personal connections. Merit counts for nothing. While there are some good universities, most are poor quality because there is no return to having a good degree. Mediocrity and opportunism abound, not only in the south. Not only is the illegal economy worth 20-25% of GDP, there is widespread acceptance of “what needs to be paid, to whom and for what, almost as if a catalogue or guidebook had been drawn up.” (p47)
Emmott cites some terrifying figures. At a Fiat plant near Naples – one with reformed working practices despite the opposition of the national unions – 5,200 employees produced 36,000 cars in 2009, whereas 6,100 employees in Poland produce 600,000 cars a year, and 9,400 workers in Fiat’s Brazilian plant produce 730,000 cars a year. Not surprisingly, hearing about productivity under-performance on that operatic scale, Italy ranked 167th out of 179 countries in its average annual change in GDP per capita from 2001-2010, declining by almost half a percent a year. There was a worse performance only from countries like Haiti and Zimbabwe.
There’s a bit of a puzzle in this – anybody who travels to Italy will appreciate the quality of life and the affluence of at least the parts a tourist or business visitor sees. Last month I was in Trento, right in the north, where local government clearly functions well, civic life is vibrant, the people are affluent and the food is outstanding. The answer to the puzzle seems to lie partly in the high level of savings of older Italians, which they are now being forced to spend supporting the younger generation.
The book looks for specifically Italian reasons for slow growth and dismal productivity. Emmott argues that adverse demographic change and the financial crisis have been affecting many countries. Although true, this underplays Italy’s unusually rapid population ageing and shrinking – the central UN (‘medium fertility) estimate has the population 25% smaller than in 2000 by 2050. But there are plenty of special factors. Among them, as well as the clientilism described above, labour laws that discourage any business from hiring more than a handful of employees, a catastrophically slow judicial system, and the pervasive presence of organised crime.
I would have called this book, Bad Italy, Bad Italy. It is a business version of The Dark Heart of Italy by Tobias Jones. Emmott tries valiantly to be positive, describing the achievements of the municipality of Turin in encouraging business, the Slow Food movement, and the brave Addiopizzo movement to resist extortion by the criminal enterprises that have carved up the country. But each anecdote – say, about a plucky little manufacturing firm managing to lead the world in some niche product even though the owner has had to have a carabiniere escort for refusing to pay protection money – only highlights the wider economic and cultural catastrophe. When NATO forces invaded Afghanistan, I heard a commentator on the radio say: “You’ve heard of state-sponsored terrorism, but this is a terrorist-sponsored state.” To read the courageous Roberto Saviano’s first book Gomorrah or his new book of essays, Beauty and the Inferno, is to understand the the description could be applied to Italy without much exaggeration.
Bill Emmott’s book is a compelling read, a tour of Italy’s economic and business landscape by a thoroughly knowledgeable Virgil. He concludes that under Mario Monti’s technocratic government, trying to implement reforms, Italy’s future lies in the balance, in Purgatorio if you like. At the risk of offending Italian readers, by the time I got to the end, I thought that was far too optimistic a conclusion.