The Italy Eurozone crisis part 1 – Introduction and latent prejudice

Certainly it’s not fun times for those who possibly will be affected if (as some doomsayers are stating) Italy will be responsible for the end of the financial system as we know it.  However for someone like me with an Italian background, who knows the language, is interested in politics and is so far relatively secure in the economic haven of Australia, it is fascinating times.

The events that are now involving Italy have made me think of a number of issues.  And of course this has lead me in thinking about the blog.  However the choice was writing about everything that I am thinking in a huge blog that no one would read or write a series of shorter blogs, so I am going to the latter.  In this first blog I am writing about something that has somewhat irked me.  Especially from supposedly ‘left wing’ commentators that I thought should have known better.

Latent prejudice – the stereotype of the lazy Southern European vs the virtuous Northern one.

The circles where I roam are of my kind. Pinko latte sipping inner suburban left. And in the main I feel comfortable with that.

Still there is deep inside some of them an undisclosed sense of anglo prejudice that like a type of original sin cannot be erased.

I have encountered this on a number of occasions. One common example is when people hearing my accent ask me ‘where I am from’. After my response many exclaim “But you don’t look like an Italian” (I am 6’1″ had fair hair – now mostly white – and have green/blue eyes). So if I feel mischievous I ask “How does an Italian look like” and watch them wrestle with the realisation that their progressive mind set had actually a stereotype of Italians being all short and dark.

And now with the European Crisis, some of the commentary coming out of some left leaning commentators are leaving me with a sour taste in my mouth.

It was an article by John Weeks in the Social Europe Journal that echoed my thoughts succinctly. He writes that much of the commentary, including from centre left newspapers such as BBC Business Reporter Laurence Knight recognised this fact.

The Italian government’s debt, at 118% of GDP (annual economic output) is certainly high, even by European standards.

But dig a little deeper, and the picture changes.

Unlike their counterparts in Spain or the Irish Republic, ordinary Italians have not run up huge mortgages, and generally have very little debt.

That means that according to the Bank of International Settlements Italy as a country – not just a government – is not actually terribly indebted compared with other big economies such as France, Canada or the UK.

Moreover, the large debts of the Italian government are nothing new. It has got by just fine with a debt ratio over 100% of its GDP ever since 1991.

The main reason is because – unlike Greece – Italy is actually quite financially prudent.

The government spends less on providing public services and benefits to its people than it earns in taxes, and has been doing so every year since 1992, except for the recession year of 2009.

So all this lazy analysis of lumping Italy and Greece is just inaccurate. Instead Knight properly analyses the situation. The economy is so weak. And Italy is plagued by poor regulation, vested business interests, an ageing population, and weak investment, all of which have conspired to limit the country’s ability to increase production. Not a great picture but at least accurate.

A more direct attack on the Lazy Italian stereotype was given by John Weeks writing  in the Social Europe Journal He states that the narrative has been that…

Italy is in trouble because of greedy, lazy and over-paid workers, and the pay they have been awarding themselves ill suits their southernly station in life (and the European Union).  In the context of this feckless working class behavior, one would expect to go to the statistics and discover that wage costs in Italy have “over the past 10 years” been rising faster and above those in Germany, the home of hard work and employee discipline.

Alas, one would be disappointed, as the table below shows.  In 1997 unit labor costs in Italy stood at about eighty percent of those in Germany, and ten years later, they were, well, about eighty percent.  Through the late 1990s and early 2000s the ratio actually declined, before returning to slightly above four-fifths.

But, of course, even if Italians were not paid more, they should not have been because they were “doing less work”.  Again, the statistics disappoint, because Eurostat (the EU database) reports that in 2009-2011 Italians in full time employment, public and private, worked a lazy average of 38 hours per week, compared to a robust 35.7 for the industrious Germans

Of course all this perception has been fuelled by Berlusconi extravagant lifestyle that will be remembered for years after he has departed the scene. His behaviour just confirm the stereotype of Italians being only interested in hedonist pursuit and not being really serious.  Berlusconi was portrayed in the Angloshere as a sex mad corrupt PM. Why would Italians vote for him?

One of the great benefits of the web is that we can now read stuff written elsewhere that wouldn’t be seen on a daily in Australia.  Two of the best journalists that can explain Italy to the Anglosphere are Gianni Riotta and Beppe Servegnini as both have lived, studied and worked in the USA and the UK for a considerable amount of time (you can follow them on twitter: @riotta; @beppesevergnini) Riotta writes :

Voters were captivated by Berlusconi’s anti-establishment war cry: “I am a self-made man, not a politician!” They loved his unbridled optimism, his populist style…..Berlusconi’s lifestyle was frivolous and excessive. The leftist papers regularly trashed him and his sex parties. (Indeed, it was how the world came to learn the meaning of “bunga bunga.”) There were the groupies, the prostitutes, the shiny dancing poles in his villas. The scandals never impressed his supporters, but they did not hurt him, either. At last count, Berlusconi and his staunch ally, Umberto Bossis Northern League, enjoyed 35 percent support in the polls — not bad after a 20-year run.

Another good analysis of Berlusconi’s popularity was very well explained by the English historian Paul Ginsborg  who now lives and teaches in Florence (This is the Italian article translated from the original German) where he explains that :
In a country, where small business is a very large proportion of the economy, Berlusconi represents tha self made man, someone to be admired, someone that started his raise from the lowest steps. The small business person, even the most insignificant is typical of Italy. In their eyes the state is an ‘enemy’ that prevents them to make money.  Then there are many women working at home that sit in front of the TV more than three hours a day and tend to vote en masse for Berlusconi.  And in the north is not only small business people that vote for him, but also factory workers and employees of micro firms. Then there also conservative Catholics that while don’t like his moral indiscretions, vote for him because they see him ‘better than the Communists’.
So ti conclude there are a complex series of reasons why Italy is in the current situation.  And not because of a glib stereotypical idea of  Mediterranean southern Europeans. Now THAT’S lazy.

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