Managing the Decline

I was very pleased to read Romano Prodi’s editorial in Il Messaggero on May 29th, in which he elaborated on my reflections expressed during the Piazza Pulita episode earlier that week. The editorial was then relaunched by Ansa:

Double punch from Romano Prodi in Sunday’s editorial published in Il Messaggero. “Innovation and investments to not end up like Mexico,” he wrote commenting on the annual Italian Industrial Federation’s assembly, explaining that emergency measures are needed to avoid “an increasingly anomalous Italian economy compared to those of other European countries.” […] With regard to the risk of paralleling Mexico, Prodi cites a recent interview with Alberto Forchielli, president and managing partner of the equity fund Mandarin Capital Partners, according to whom the danger comes from the fact that Italy is “orienting itself toward a structure similar to Mexico’s, where three different economic organizations coexists.” Here they are: “The first is formed by excellent small businesses that challenge international markets, a second that operates in informal markets taking advantage of market imperfections and utilizing unskilled labor,” and a third represented by “a significant part of the country” that “lives in the evasion of the rules and illegality.”

Despite this, keep in mind that Mexico is ahead of us in many respects: taxes are much lower than ours, the Mexican state costs much less than ours, their debt-GDP relationship is 43% compares to our 133%, and their unemployment rent is 2/3 less. The only way to face Italy’s “Mexicanization” will be if we know how to manage this enormous three-headed country, keeping it balanced; the problems are obviously upstream, as Prodi emphasizes in his editorial:

“I believe that the tendencies that are leading us to this fate need to be fought with every means possible, affirming the rule of law in every circumstance, and operating on the development of human talent that is the foundation of success of every modern country. The reality is not comforting because challenges to our educational system’s efficiency are causing it to fall more and more behind, entire parts of the country are increasingly operating in the shadows, and the data concerning the diffusion of crime and the penetration of criminality in the economic and administrative systems are alarming.”

Human resources and the educational system, here’s one of our biggest problems: Italian schools are destroyed! I graduated from the University of Bologna in 1978, and I returned to teach in the early 2000s for three years, before the crisis in 2009. I found the same lecture halls, only more decrepit. The students were ten times better than before, but the available positions for new graduates were one tenth of what they were in the past, because in the meantime companies had failed.

There are no miracle solutions to reverse our course. We need long-term solutions. We need to invest in research, but it’s a twenty-year commitment. Note that there’s nothing new to invent. The indicative example is Bologna’s industrial center, where the best companies are the same as when I was a kid: it was built thanks to the constant flux of human resources arriving from the Aldini Valeriani professional schools. On the other hand, Silicon Valley was born in Stanford’s vicinity and Boston’s biotech hub resides next to MIT and Harvard. These are not coincidences, because this is how it works: scientific universities are always at the center of innovative ecosystems.

We need concrete strategies, but I’ll make it even more simple. All we need to do is work harder and better. This is the solution, but no one wants to apply it. When I return to Bologna people always ask me how we can escape from there crisis. My answer: we need to make sacrifices. Then they respond: “Get lost, Forchielli, enough with the sacrifices!”

I’ll also throw unions into this flawed anthrolopoligical narrative, as they have slowed us down absurdly. There are behaviors and benefits in Italy that are taken for granted that instead need to be reexamined due to globalization. Therefore, if I was “forced” to get involved in politics today, I would create a party called “Managing the Decline,” because in order to have a hope of uplifting our country, we need to resign ourselves to hard years of lowering our living standards and we need to fight a growing tide of crime big and small. After forty years of hearing the same things, let’s focus on those few that we really need. To survive globalization, to “Mexicanize” Italy as little as possible, we need to unite to defend our communities, and reappropriate a sense of duty, and resign ourselves to working harder and better.

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