“It’s not a matter of “how can they tolerate it” – that’s a question implying the assumption they can DO something about all that.”

Of course, this is the problem. But imagining they can’t do anything is really, really depressing. Personally I started blogging. I know that doesn’t sound like much, but at least it’s a start.

OK I think it is time to leave this one here.

I have however two proposals:

Firstly I would like to lift your last comment straight out, and post it as a main post,with a short intro by me giving background. Then we can start all over again .

No seriously I think these are the issues. Not the economic ones, but the political ones, and they have a wider application than just Italy.

So let me know here if you are agreeable.

Secondly, I am about to start a cultural ‘sister’ to Fistful called Living in Europe, which will be similar to Living in China etc (www.livinginchina.com) and I would just *love* you to do some posting there. You will see my philosophy isn’t that everyone has to agree, but that multiple perspectives can help us understand a complex reality (vattimo?).

So please mail me at say:

edward@livinginchina.com (oops spam!) and we could talk.

Lastly (I know I said two – but there is always one more). I do hope that whatever you decide you will hang around at Fistful and help us understand better the Italian Job: as you indicate I am sure there is plenty more to come from whence Parmalat emerged.

I have no real objection to most of what you wrote above. I did read some of your articles, yes, very interesting one on demography. It’s true, I don’t have knowledge of theories there so I can’t really comment. I’m only giving you a few first-hand impressions, from me personally and people I’ve spoken to about this in Italy. I too think it’s absolutely true that we’re hooked on growth, like you say, but we have to find a way to adjust to the new trends, or correct them as far as possible. There is an article in the main Italian newspaper today about the “kindergeld” scheme in Germany, with monthly subsidies from 140 euro for each kid until they’re 18 for families making under 30k euro a year – which sounds a LOT better than the one-off 1,000 euro the Italian government hands out for the second child. The latter was a populist move, whereas the kindergeld – or subsidy schemes like in Scandinavia, as you noted in your article – sound to me like much cleverer measures.

I just want to add another thing to make it clearer what I meant about the Parmalat case, when I said everyone must have known, banks included: you may have heard, the magistrates interrogated a comedian who said two years ago that he’d spoken to one of the Parmalat managers who said they were hugely indebted and “in a normal state of affairs, we should close business tomorrow”, but they were still keeping it all running with financial tricks. Now, when a comedian doing theatre knows more about such stuff than banks… its tragicomic really. And not just him, some newspapers – notably the Sole 24 Ore, the main financial newspaper in Italy – had written about concerns about the financial state of Parmalat, that there was something wrong. Why did banks take so long to realise? Again, the only feasible explanation is they knew, and joined the scam.

The one thing I really keep objecting to – and I apologise if I took it personally and responded aggressively on this at first! – is your insistence on the responsibility of the people, customers, buyers, workers and… couch potatoes.

Really, Edward, in any country in the world, couch potatoes cannot control the financial movements of big corporations or the stock exchange or football clubs.

It’s not a matter of “how can they tolerate it” – that’s a question implying the assumption they can DO something about all that.

Now tell me, what can a construction worker, a secretary, a teacher, a mechanic or a nurse do about it, if Juventus FC for instance (but it could be Manchester UTD or Chelsea) wants to pay Ronaldo or Beckham or you name it 28 billion in three years?

What could they do, short of a working class revolution? ;D

Seriously. Those are markets that are partly inflated – and there’s talk in Italy about the upcoming “exploding” of Parmalat-like cases in the football world too, so, keep an eye out for that one! – but it’s also true they make huge sums of money flow, from advertising, from broadcasting licenses, from all the activities connected to one of the most lucrative sports worldwide.

They pay footballers huge sums in Brazil too, and that’s a country with a bit more problems with poverty than Italy.

Who can stop that? No one! It’s a free market, and the downside of it is you can have that sort of excesses.

That, in general. Then, in Italy, the football clubs are deeply linked with banks too, there you go again, sometimes some banks and clubs belong to the same owners or groups, so there’s a whole lot of financial tricks.

I don’t see how you can blame that on the “couch potatoes” – for which I have a lot more respect than for the banks, personally! It’s not a question of “exonerating”, it’s a question of WHO has the direct responsibilities here.

I work with the internet so have time to read and follow news a bit more deeply. But I can’t do anything about those things that enrage me either! Apart from voting. But that doesn’t affect those things we’re talking about, either. So…

I can’t blame people who work all day in an office or factory or anything, and have to spend hours commuting, and only want to watch some silly tv show or movie when they come home, instead of reading pages and pages of reports about the Parmalat case or the Hutton enquiry or anything else – an activity which will leave them just as clueless and definitely just powerless as before.

Democracy doesn’t mean people’s control on big finance, or intelligence, or media. So instead of “what did you do when we had democracy”, the question should be a lot more precise: what are the responsibilities of those who did damage to a country and how can they be brought to responsibilities. We elect politicians to take care of that, in theory, at least. And of course, it’d be great if there was more pressure on politicians and on media too, since they hold such power. So of course people need to be more aware and involved and protest what they can and should protest, but democracy is never direct, it’s a mediated business. And say, if my banks was involved in the Parmalat scandal, and I have my miserable 5000 euro on one of their bank accounts, what do you think, that me withdrawing that money will be a strong statement of disapproval that will affect them? Again, it’s those who are directly responsible that are responsible. hose with the most power and involvement, are expected to behave even more responsibly. And you can say, in a democracy it’s all connected, yes, but there’s levels where the connection is broken, and some levels of power act outside of democratic (people’s – not politicians) control – esp. with financial institutions.

Perhaps there are also identifiable faults in the mentality of Italian people in general, that allow politicians or bankers or “the elites” to get away with murder. OK. But I tend to think that, in any country, if the “powers” want to get away with murder, they can. People have to lead their lives, work, play, get married, have kids and keep the whole engine rolling.

It seems like a reversal of role to me, to expect more reaction and responsibilities and duties from people above what their possibilities and responsibilities are, than from the top level which is directly involved.

I can’t say about France or Spain, as I really don’t think there’s too many similarities in this respect – maybe more with Spain, at the social level, yes, even with Argentina, it’s “Latin” countries so there’s something common at the mentality level. But at the level of political, financial organization, power structure, I don’t know. I think it’s best not to generalise there. Italy has its peculiar political and financial flaws. And they do have roots in peculiar Italian history.

I just would keep very separate the social level from the political one. There is really too wide a gap there. In Italy, as long as there is such a hugely centralised system, with such huge privileges on those governing, and a parallel non-elected class of highly paid burocrats, and institutions that are unaccountable, and a state media that thrives on nepotism and political favours and scamming people and wasting public money, trade unions that are only political branches serving bigger interests instead of the workers’, and the Vatican involved in such a big slice of political and financial life in Italy – to mention just a few things that are seriously wrong – things are not going to improve. No matter who is at the government. It’s the same, left or right, the system is still upheld as is. It’s the foundation that needs some serious shaking. But when have you heard of a system shaking itself into losing privileges? It’s easier for it to implode.

So perhaps Italy will go the way of Argentina; we joke about that too, to exorcise the thought. I apologise for reading some “you deserve it” implication in your original statement about that, Edward, I hope you understand that being here, in Italy, with people so enraged about all this, it just doesn’t sound fair to hear the “heavy” questions about responsibilities directed at working citizens who are the first to suffer the consequences of bad government or financial wrongdoings.

I still think Argentina had bigger, deeper problems, and more widespread poverty even before the collapse. So I hope the big catastrophe won’t happen. But somehow, it may be worse if things stay the same, while someone pretends they are changing…

Well, I’ve written too much now, hope I haven’t bored you all. I don’t know a thing about economics so I trust you’re more knowledged than me there! I have no idea how things will go with the euro. It all looks schizophrenic. On the one hand, prices have gone up, and families who managed ok a few years ago are having problems, on the other, say, for Christmas holidays everything was booked out, restaurants were packed, airports invaded… ironically, the prices for, say, a 2 week trip to Mexico have gone down, but a two-month shopping at the supermarket will make you spend about the same… A cell phone costs less than four steaks or a kilo of mussels. A plane ticket to London, less than a pizza. It’s crazy, isn’t it?

I am optimistic because there’s lots of small and medium companies doing fine or new ones opening, and that’s what’s always been driving the economy in Italy really. There’s problems there too, but I think the big trouble affects more the big corporations, those who substituted production with financial recklessness. Apparently, Fiat and Telecom Italia are about to go the Parmalat route too, since they’re hugely indebted, and said to be involved in similar frauds with banks.

So you’ll likely have lots more to chew on there, soon

Thanks again for the interest, and for your kindness in replying. My apologies if I was a bit rude at the start. (And for not using my real email, but I’ve had to close two accounts for spam lately so I’m reluctant to leave my new, pristine, spam-free one on websites!)

Cheers,

Laura

On Italy leaving, i take your opinion as a valid one, it puts the demagogy in perspective.

Of course I have an altogether separate argument that the euro can’t continue as it is up my sleeve – but we’ll leave that for another day.

I agree entirely about decentralisation.

“Between those working, producing, creating something – and those acting at a level where the money can be faked and financial tricks played. Italy is still strong in the first level, because of people working. That is the “mentality” of people. If the latter level can bring down the first, it SURE has nothing to do with society or culture, but with leaders using the work of other people to scam as much as they can, instead of creating more working and production opportunities.”

Look I am hearing all this, and I sure appreciate the tragic element here. I felt deeply sorry for all those people who lost their money in the bank ‘lock-in’ in Argentina too. But, unfortunately, we still come back to the problem of why the people ‘tolerate’ all this.

Why do they sit round night after night watching all those singing contests on TV, or the girls in swimsuits, or all that football, and why do people want so many highly paid footballers in the South of Europe. What is wrong here?

Why, whatever his corruption and his faults, does someone like Chirac seem to think about the needs and future of the entire French people, whilst here in Spain the ‘Caciques’ – which is what we call the elites – have a motto which seems to go ‘que se joden’ (f**k them).

Part of me says you have to go back to the feudal system and the evolution of reciprocity and mutual servitudes to understand this. Why for eg did we have Watt Tyler and the ‘levellers’ in the UK?

I don’t know, and there is no easy answer. But what I feel is it is too simple to exonnerate all those inveterate couch potatoes from the fact that they are couch potatoes. What did you do in the war mum, could also be rephrased ‘what did you do during all those years when we had democracy’?

And hi Laura, nice to have a name to talk too. Also I apologise if we got off on the wrong foot. I can imagine you were irritated, it is part of my way of saying things, to try and provoke discussion. Seems like I was successful .

Even if not many are commenting, others are watching, and reading, and thinking about Italy and its problems, and this is all to the good.

“There is a power structure in Italy that is completely opposed to the slighest suggestions of reform.”…………”The mentality and behaviour of those in *power* needs to change, not just the structure of the state. And it’s not something likely to happen.”

I think we are not too far apart on this. It is what worries me. So if we write the absence of change into the equations, what do we get? And believe me Spain, which I do know well, isn’t so very different.

“From a social point of view, I think it’s more than normal that the fertility rate went down. It’s also a good thing.”

This may well be right, some people even argue that the planet is ‘over’ populated, but seeing that you’re high on heroin is one thing: getting off it is something else.

We have an economic system which is hooked on growth. Maybe we should have thought about all this before, but it is the one we have, and I am concerned with the consequences of throwing the switch the other way, and having sustained economic contraction, which is what you will get if the number of working people begins to fall year by year.

Of course all this is complicated, because some people argue that this tendency can be overcome by making the remaining ones more productive, but here we hit the problem of large scale outsourcing of information services, and the impact of this on the so called ‘value added’ activities.

I don’t expect you to be in a position to take a view on this, the thing is so technical and complicated that few are, but all I can ask you to do is pay attention to what is happening and form your own opinion over time.

“People are having kids later in life than in older generations, definitely, but still they’re having them, and not just one each.”

This is an interesting argument, and important, but first I want to do a bit of self pubicity. You should go to my site here:

http://www.edwardhugh.net/demography.html

and check out:

the arguments by Wolfgang Lutz about the consequences of delaying age at mariage and first child.

the ‘surprising’ explanation of economic historian Greg Clark for the industrial revolution in the UK based on the lowering of the marriage age and the subsequent population explosion.

my article: what can be done about declining fertility.

and anything else that takes your fancy.

What we have on our hands is the unwinding of a process that has been going on for a couple of hundred years. Really we can’t do much about it, but we should try to live it as best we can, we should try to think of the plight of those elderly people who may be impoverished if there is a big problem in the pension systems. And we should try to work towards the proverbial ‘soft landing’.

You are obviously an extremely intelligent person, so if you are interested in trying to see just what the interlocking set of problems lying behind this really is you could go over to this post on my blog and read through the thread:

http://www.livingontheplanet.com/bl/archives/000108.html

There you will se that we are not a bunch of yes people, and I personally would welcome your active participation in the debate we are about to have.

My favourite is still the Tartar Steppe.

I’ll get back on your others points later when I have a bit of time.

- Buzzati is one of my all time favourites too. If you ever read the short stories, there’s a very kafkian one where the protagonist is moved from one floor to the next of the hospital, without explanations, and he doesn’t even get told what his illness is, the doctors keep reassuring him, and he keeps getting moved further and further away from the real world… It has something so very Italian…

Well, reform has little to do with the Parmalat case and such. Or rather, it’s not something that can be solved by new laws or political reforms, not in the short term. There is a power structure in Italy that is completely opposed to the slighest suggestions of reform. See the ideological and rhetorical opposition to the proposals of decentralising the system. The mentality and behaviour of those in *power* needs to change, not just the structure of the state. And it’s not something likely to happen.

The ageing problem is also used rhetorically precisely to push the interests of those in power. All Italian governments pushed the deficit into stellar figures by protecting only their own interests and spending and robbing the state, and then they tell you Italy needs more immigrants to pay Italians’ pensions, because the population is declining.

So, have more kids, people. So that we can suck more money out of you to fill in those holes we (politicians) created. Ugh.

From a social point of view, I think it’s more than normal that the fertility rate went down. It’s also a good thing. If Italians are having less children, it’s because a) only fifty years ago, they were having too many (before the economic boom of the fifties, sixties, seventies, etc, a large part of Italy was still rural, uneducated, strictly Catholic; our grandparents had families of 12 each…!); b) the density of population in urban areas is becoming unsustainable; c) the cost of living is also becoming unsustainable for many people with ordinary jobs.

Still, I sometimes get suspicious on figures about the fertility rate. People are having kids later in life than in older generations, definitely, but still they’re having them, and not just one each. You have to book your kids in kindergarten years in advance or you won’t get a place. In primary schools, there’s more teachers than decades ago, that’s what’s changed the ratio. Where before you had one teacher for a class of forty, now you have five for a class of twenty.

But even if it’s true that the population is declining, the politicians are only exploiting that for propaganda, not doing anything real to fix the economic consequences. You don’t just come up with some silly “1,000 euro for your second child” scheme, or get the Pope to have a speech encouraging people to make more children. You go at the root of the problem, ie. public spending, the deficit, the elephantiac structure of this centralised system. IF ONLY they fixed that, we wouldn’t need to worry about the fertility rate for another 200 years. But since centralisation and public spending and privileges for the elites is what interests them, they won’t do it.

Compare what the governor of the Central Bank in Italy earns to what Greenspan is paid, and you’ll see what I’m talking about. Compare how much MP’s are paid in Italy to what they get paid in the US Congress. Compare what any minister makes to what the President of the US is paid! It’s incredible Italy is still standing, with all the money these bastards are sucking.

That’s where the problem is, not ageing.

That is a political mentality I just don’t comprehend, because it doesn’t correspond to reality.

The perpetrators of this fraud were Parmalat managers, auditing companies, banks, and their political counterparts covering up for them. You tell me, what on earth do “people” in general have to do with that? How come it’s so much easier to let the Italian Central Bank and Bank of America off the hook, when they were the ones to deal with Parmalat’s finances, while somehow chastising Italy in general for this, it seems like turning it all on its head to me.

You say you didn’t mean to exonnerate those directly involved, ok, but you surel spent more time writing about how the source of the problem is the Italian social and cultural (no less!) mentality in general… Perhaps we mean something entirely different. Social and cultural mentality to me is something largely separate and independent from politics, because it happens at daily level, at personal interaction level, whereas politics (and big finance) is a system that feeds itself and acts within a very small sphere, even as if it affects a country hugely because of the power it has.

About the “freemasonry” thing – I’m not bringing that in myself! I’m merely explaning what was being referred to by Bossi’s statement, what that reference means in an Italian context.

I honestly don’t know about the comparison to Argentina, but even there, I’d have never dreamt of explaining what happened in terms of the country’s society or culture.

About the meddling with Argentina’s debt, this may be interesting in case you missed it:

Washington Post – 3/08/03 – Argentina Didn’t Fall on Its Own: Wall Street Pushed Debt Till the Last

And also this letter.

The strongest similiarity there to me seems that everyone (among the bigger players) knew what was going on, and exploited the situation. That’s what banks, Italian and foreign, clearly did with Parmalat. They can’t have been fooled so easily by balance sheets so faked they wouldn’t even fool your local bank into lending you 4,000 euros to buy a new car…

In Italy there’s tons of checks at small and medium level for companies and individuals, but the big corporations with the “right” political support can get away with anything, especially if banks can join in the profits.

I was not accusing you or anyone here of being anti-Italian – I’m not the kind of Italian that gets all nationalist like that and can’t stand criticism of my country, believe me. I live here, I’m the first to see what is wrong with it.

But what I can’t accept – not just for my country, but also for Argentina, for the UK, for any place in the world we may be talking about – is that confusion of different levels, that kind of generalisation, that tendency to blame ordinary citizens for things they could not be responsible for in a million years.

I can see you didn’t exactly mean that, but still, I don’t understand what a “cultural mentality” has to do with the topic here. Except if we’re talking of the culture of big financial and political groups, which is not “the” Italian culture! It’s two different, separate worlds.

We’re not talking of small habits that confirm clich?s about Italians always trying to ignore or fool the law, you know, like driving recklessly over the speed limits or not paying the tv licence. We’re talking of a 14bn fraud involving huge financial and politican connections. The Parmalat helicopter was used by the Vatican for diplomatic missions. If that’s not an elite thing, I don’t know what is.

And in any country, the elites can have their good and bad parts, but they sure don’t live on the same planet that ordinary citizens live in.

Everyone is outraged not just at the corruption, but at the way this is being handled by the Central Bank (and by the government, who’s been very contradictory, and very split, on this) and the banks that pressured buyers into trusting Parmalat. You should have heard the first-hand accounts of people who invested. There was clearly a huge pressure into pushing Parmalat bonds above all others, which is another hint that the banks knew and wanted to get rid of the mess by unloading it on customers.

The sad thing is, Parmalat has good products. I hope the farmers and workers don’t get to suffer the consequences of the managers financial tricks. See, that to me represents clearly the gap between the people and elites (I use these terms for easier reference, not for populism). Between those working, producing, creating something – and those acting at a level where the money can be faked and financial tricks played. Italy is still strong in the first level, because of people working. That is the “mentality” of people. If the latter level can bring down the first, it SURE has nothing to do with society or culture, but with leaders using the work of other people to scam as much as they can, instead of creating more working and production opportunities. That’s the tragedy of these cases like Parmalat, Cirio, etc. When the big managers care more about financial games for their own gain, and even in spite of the law, than about creating wealth for everybody. These are the people that can ruin any country.

That’s why it’s irritating to mix the two levels. The second is screwing the first, and doesn’t even care about the possible financial collapse of a whole system.

In the end, the ‘people’ get the kind of outcome they deserve.

No, Edward, it’s the exact opposite. Try saying that “you got what you deserved” to one of the Parmalat workers risking their jobs because of Tanzi & co, or one of the people who were “warmly encouraged” by their banks to invest their 20 or 30 thousand euros in Parmalat bonds.

Do you understand what I mean now?

I accept what you are saying here in the sense that I may have given the impression of trying to exonnerate these people, this was not my point.

In a way the whole thing is circular, since the the problem is where do you start. i may have been too provocative, since my concern here is not to score points but to avert disaster.

My specialism is ageing and its economic consequences, and this is my real concern for Italy’s future, without that backdrop I would find it much more plausible to consider the reform possibilities.

This is the point, the whole thoery of central banking is ‘we’ (since I too am a person) shouldn’t control it. It is meant institutionally to be beyond politics.

But the quality of institutions is a reflection of a society and its culture. I don’t see how you can separate the two. And I don’t see how you can exonerate the ‘people’ from the society they have produced: whether actively, or by omission.

I think incidentally I do know just a little, since Spain suffers from the kind of clientism and corruption you describe. In the end, the ‘people’ get the kind of outcome they deserve. And my BIG question is that if Italians haven’t had the capacity to resolve these – as you yourself admit – lamentable issues when Italian society was young and in its prime, what hope is there for a elderly Italy (a gerontocracy?) to get to grips with the situation?

The big danger, in my mind, is that you get some kind of ‘radical demogogic’ government promising to clean all this up, with the hidden agenda of eliminating a big slice of the costly aged.

The other scam I fear, is that the ‘boys who brought you Argentina’ (people like Menem etc) in Italy could mount a – for them profitable – operation by taking Italy out of the euro, while salting their own money in Euros, declaring a Feria Bancaria of say one week, and then converting the money back into New Lira at the rate of say 3 to 1. Quite an operation, but not entirely impossible given what you are explaining. I mean what happened in Argentina was the fault of the currency peg, but there were also plenty of people in there egging it on, and taking profits.

On the identity thing, and BTW you can find my links in the sidebar here, I just think that it is more friendly to have a conversation with a name, even an invented one. Something about personalisation.

Also this kind of thing is normally associated with ‘trolling’.

Now as we get to the end of your comments I hear a more human voice, and it’s that voice I’d be interested in having a dialogue with.

You are right, none of us here really know enough about Italy, and we would be interested in learning more, but it is hard to see whether you just want to run some hackneyed ideas (like elites as freemasons) or really want to explore what could be done about your country, all of us together, since that is what Europe (as an ideal) is about, all helping each other. So I am concluding this not by trying to score points (you will notice I am not replying to some of your references to me which might be considered rude), I am trying to open the door. Having someone from Italy around here commenting, and debating – and who knows one day even guest posting – would be definitely a good thing.

In the end my biggest difference with you would be over the distiction ‘people’ and ‘elite’: for me the two go together, culture is something organic, not something imposed.

And please, I am not anti-Italian. Dino Buzzati is one of my favourite writers (along with Pavese, and Moravia, Calvino etc), and Visconti one of my favourite film directors (along with Bertolucci, Olmo, Moretti, Rosselini etc etc). On my website I have music from Gianmaria Testa and I could go on and on (I did share some of my younger life with an Italian girlfriend, learn to speak a batterred and broken Italian etc etc).

What I don’t like is ideology, from whichever end of the spectrum it may emmanate.