A Crime Without Criminals

Nowadays Italians tend to complain that Italy does not give its youth a chance. This is so, but this is not the core problem. As a foreigner that worked for a foreign company in Italy, as a foreigner that tried to start a company in Italy, I can assure that the problem runs deeper. Italy has a severe case of neophobia, fear of novelty, of which xenophobia and ageism are just smaller bits. The way the business system in Italy works, it punishes any sort of innovation that is not coming from within the old system.

During the summer of 2002 we moved from The Netherlands to Italy. Working for a small American IT firm I was officially based from Milano, but since then I have worked in some twenty countries. Working as an IT consultant is probably one of the most knowledge intensive jobs around. Besides workweeks which easily added up to sixty hours and more, some additional twenty hours a week are spend on keeping up with the advances in the IT industry itself and the industry it is applied to. With the rapidly rising cost of living in Italy the choice to work as a contractor was inevitable and after some months as a ‘libero professionista’ early 2005 I started my own limited liability company, a normal thing to do in the Dutch-Anglican way of working.

Little did I know… not about the things done wrong, but about the right things left undone. It is not so much that Italians do not care about politics and shun getting involved. No, in fact, at every dinner table politics is a recurrent course. It is not so much that Italian people never made a fist to shake up a failing system, as no country in the post-war world has had so many successive governments. It seems to be that there is too much going on, and as marketing re-entered the mainstream of political scene in a big way during the seventies and eighties it looks like politics got stuck in analysis paralysis. Especially as political parties started outliving their members and tried to adhere to popular ideological catchphrases, the truths of a generation before may have grown outdated and did not resound with a newer generation, eventhough the underlying intend may be equal. What happens if things done with the best of intentions turn out to have negative side effects later on? Such as DDT which saved millions of people due to avoiding starvation, but at the same time lies at the cause of chronic toxicity leading to diabetes, cancer and even affect semen quality? For obvious reasons of efficiency in a delegate democracy we have created an illusionary personal responsibility which is embodied by politicians, but as a role similar to a theatre actor, not as a person. So it may very well be that some politician gets the blame for things they never did.
Better not be a moving target and keep a low profile most politicians must have thought. And so we get a political system that doesn’t clean up after itself. After a while this is going to stink. And at a further stage this is going to rot. But there is positive and negative liberty, having the power and resources to fulfill one’s own potential, and freedom from external restraint. When too many people shy away from, say, flushing the political toilet once in a while, beyond a certain threshold we get negative liberty controlling positive liberty. When trying to shield one’s personal and/or collective interests from others involves missing out on the realization of a potential. And so, averse of advocating ideologies with a limited shelf life, politicians turn to small opportunistic protective moves. However the guard that keeps outsiders out also imprisons the insiders, and the sumtotal of systematic neglect along with a large many defensive moves has resulted in a legal system that fears change. And slowly but surely what one may perceive as power politics turns out to be the gradual fragmentation of a civilization that turns to autocannibalism as the forces of disintegration get caught up in a downward spiral of competitive rivalry and relationships retract to shrink back a community and trade networks to a multicellular undifferentiated goo of battling tribes.
Of course I had read about Italy’s bureaucracy, although that was fairly similar to The Netherlands, which was a little annoying but not much more than that. I had read about ‘amoral familism’ and ‘campanilismo’, and I though Berlusconi was a funny man, unaware he had already died twenty years ago and his followers kept him running on a mix of cocaine, Viagra and Prozac. Of course nepotism happens everywhere, but in Northern Europe the ‘minimally exceptional’ offspring is promoted to the sideline, where their potential damage is minimalized. They get a role in the diplomatic service where they can call in the experts when needed, but you don’t give them a top management function in the idle hope they will live up to the challenge and grow back a missing brain. Italians will say that Italy is “special”, which is the Italian way to say that Italy is just the same like everywhere else. Yes, Italy is bursting with creative talent, but in many cases it is a latent capacity. Italians are superior artisans, craftsmen, engineers, scientist, designers, stylists… but in business and politics, Italy is overshooting the goal. Hello, furbi is not furbi at all. Everybody knows. Coming from Northern countries which are rather stiff and sober, wouldn’t you think that the Italian way is an abundance of power signaling? Look around… How many foreign companies have a big office in Italy? How much foreign investment is flowing into Italy? Italy has been isolating itself with this grasp for the old. And not only that, the double bookkeeping causes a shame-fueled rigidity which results in very uneasy and uneven business partnerships where some that go too far and some that don’t go far enough. It is not that other countries are not corrupt, in fact many Italians are delightfully honest, but it is inefficient.
But ok, back to my experiences. Not having a social or business network in Italy to support me, it was impossible to get any loans from banks, until earning enough which is the stage my company doesn’t need any loans anymore. With an international business sometimes the travel costs alone would max out the monthly allowance on the credit card. Also, the tax office assumes people are cheating, tries to compensate for that by over taxation, and so forces people to cheat. I can hardly make my commercialista cheat for me, can I? So, again, for an outsider trying to settle in, this means I ended up paying about 65% in taxes, IVA not included. And of course, the payment terms are nearly immediate unless one is prepared to pay ridiculous high fines. As far as vultures go, thumbs up, guys. Especially starting the first year with double taxes is a killer.
Because of that i could not build up reserves, pay for training, or even slow down for a month or two for business development as this takes costs before revenue… and ending up in an endless spiral of payments that is simply not possible. That meant non-stop working, although, as my kidneys started failing I was alert enough to add the occasional day for a long weekend. Finally, after six years running to keep in the same place the financial crisis hit and the company i used to do most business with was bought by a competitor. This froze up both the company network and the customer network. Badly managed acquisitions lead to many redundant functions, especially if it concerns a multinational and the European branch is primarily a sales outlet. Fearing their perceived obsolescence, people shrink back to try protect their own turf, shield their position and business relations as the thing that makes them exclusive and end up autocannibalizing their potential. Customers are fed lies pending conclusive answers to the obvious questions they are dealing with as suddenly the future outlook of their big value-add strategic investment changed to cost-cutting a rebuild as a form of damage control.
The effective consequence is bankruptcy… Although, not in Italy, as there do not seem to be mature bankruptcy laws besides a small but cunning theatrical show of public humiliation that Mussolini thought up during one of his fictional insomnia attacks. So the company froze up “in liquidazione”, awaiting an eternal occurrence of a second chance. With the European crisis spreading problems not entirely unlike Italy’s political struggles, national and international intermediary bureaus systematically exclude senior professionals as they don’t provide enough revenue margins for easy work but are too incomprehensible to put in the extra effort to try differentiating on anything beyond price and availability. Mediating seniors messes up a customer’s expectations as they are often an order of magnitude more productive than juniors. The next time the customer wants someone with similar experience for the same price, which in most cases is statistically unlikely and so the customer may turn to another agency. So their offering is artificially commoditized to keep expectations low. Yet the competitive rarity is such that in times of cost-cutting austerity such activities are seen as a luxury, ignoring the ongoing bloodletting which is hollowing out any opportunities and gradually suffocating many European companies. A bizarre Catch 22 where one gets punished for doing one’s best.
Many companies end up in such a situation, and that is because their business network lost cohesion and the connections shrank back into isolation. This doesn’t go overnight… this fragmentation goes gradually, because most business relations try to offer a little hope, but are also afraid for their own position and career. Especially as Finance Managers try to keep the balance sheets clean to position the company for a profitable exit. Italy is not unique there. Italy is full of talent that is locked in by a system that stopped working two generations ago. And these people, like me, don’t have any savings anymore because they tried and tried again, and they couldn’t make ends meet… and now they are locked in by debt, which means that for the time coming every step forward will involve two steps back.
Without any money of my own, my family or the remains of a dysfunctional business network, it is impossible to meet up with the ‘hug and feel’ factor that is needed for solid relationship building. Italy’s answer doesn’t lie with a dramatic diaspora, sending a small percentage of students to move abroad while Italy itself is dying. Yes, obviously international cooperation is key, like with massively growing economies like China. Obvious no-brainer. But that doesn’t mean “cut & paste” Italian business to China. These times are over, because the ‘enemies’ of today are not participants in a geopolitical juggling act, but our own productivity. We are fighting our own efficiency, and we don’t have to. Stimulating students to become entrepreneurs is a luxury solution to a problem which is much, much bigger. Long-term international studies have repeatedly shown that the most successful start-up entrepreneurs are in their forties and fifties, and not in their twenties or early thirties. This is not a few percentage points; this is several times more successful. This success is largely unrelated to the socio-political system… It may be simply because man and wife work as a team. Although obviously in times of growth and luxury people are much more willing to help each other. But in times of crisis, it does come down to “the system”. A system that due to the corporatist State-owned enterprise system was focused on the home market so much it turned into navel gazing.
But that is not where Italy’s strength lies, it is not in some big unity or strong competition, but in its diversity; the large number of small and medium sized enterprises. Resilience by diversity is a much stronger evolutionary force than competition. New forms of adaptive cooperation and collaboration need to be sought so that Italian companies can avoid fighting against their own government and fighting against their own neighbors, but fight for realizing the potential of what they have to offer. When I moved to Italy I thought there was a big market for this… the technologies are there and I have been working with such electronic commerce networks for more than a decade. Is it so hard to see that there is actually little wrong with Italy apart from its biggest mistake of neglect? That the biggest hurdle is due to ignoring opportunities which is gradually breeding total ignorance, which only feeds the ‘horror vacui’, the fear of the unknown, the fear of novelty? Is it only me that thinks there is more than trying to “beat the system” of a game we got trapped in?
After two decades of fiddling around with the Italian Lire to make a rich country seem poor to crank up its competitive value for mass production based economic sectors, since the “mani puliti” action in the early 90’s the Italian economy has been declining. Government spending, incomprehensible inefficient business laws, a suffocating tax system and medieval banking don’t seem to make Italy rise on the global competitiveness indices. In fact in these areas Italy performs worse than Guatemala. It is time to move this system, Italy’s parliamentary governance system and public administration, forward several centuries and make it land in the present. Maybe in the end I do feel Italian as well. As I feel equally ashamed for not trying.
No discussion. No excuse. Just do it.