Italy – artdiamondblog.com

Low Interest Rates Increased Zombie Firms After Economic Crisis of 2008

Source of graph: online version of the WSJ article quoted and cited below.

(p. A1) Italian clothing maker and retailer Stefanel SpA became famous for its knitted coats and cardigans.

Many economists, investors and bankers know Stefanel as something starkly different: a zombie company. It has posted an annual loss for nine of the last 10 years and restructured its bank debt at least six times, including several grace periods when Stefanel only had to pay interest on what it owed.
After booming during Italy’s post-World War II expansion, Stefanel and its lumbering factories were overwhelmed by Spanish fast-fashion giant Zara and then battered by the economic slowdown that hit Italy in 2008.
Stefanel is still alive but staggering. So are hundreds of other chronically unprofitable, highly indebted companies being kept afloat with new infusions from lenders and shareholders, especially in Southern Europe.
Economists and central bankers say zombies undercut prices charged by healthier competitors, create artificial barriers to entry and prevent the flushing out of (p. A10) weak companies and bad loans that typically happens after downturns.
Now that the European economy is in growth mode, those zombies and their related debt problems could become a drag on the entire continent.
“The zombification of the corporate sector and banks [is] a risk for future living standards,” Klaas Knot, a European Central Bank governor and the head of the Dutch central bank, said in an interview.
. . .
In some ways, zombie firms are an unintended side effect of years of easy money from the ECB, which rolled out aggressive stimulus policies, including negative interest rates, to support lending and growth. Those policies have been sharply criticized in some richer eurozone countries for making it easier for banks to keep struggling corporate borrowers alive.

For the full story, see:
Eric Sylvers and Tom Fairless. “Zombie Companies Haunt Europe’s Economic Recovery.” The Wall Street Journal (Thursday, November 16, 2017): A1 & A10.
(Note: ellipsis added.)
(Note: the online version of the article has the date Nov. 15, 2017, and the title “A Specter Is Haunting Europe’s Recovery: Zombie Companies.”)

No Known Maximum Life Span

(p. D3) Since 1900, average life expectancy around the globe has more than doubled, thanks to better public health, sanitation and food supplies. But a new study of long-lived Italians indicates that we have yet to reach the upper bound of human longevity.
“If there’s a fixed biological limit, we are not close to it,” said Elisabetta Barbi, a demographer at the University of Rome. Dr. Barbi and her colleagues published their research Thursday [sic] in the journal Science.
. . .
Dr. Barbi and her colleagues combed through Italy’s records to find every citizen who had reached the age of 105 between 2009 and 2015. To validate their ages, the researchers tracked down their birth certificates.
The team ended up with a database of 3,836 elderly Italians. The researchers tracked down death certificates for those who died in the study period and determined the rate at which various age groups were dying.
It’s long been known that the death rate starts out somewhat high in infancy and falls during the early years of life. It climbs again among people in their thirties, finally skyrocketing among those in their seventies and eighties.
. . .
Among extremely old Italians, they discovered, the death rate stops rising — the curve abruptly flattens into a plateau.
The researchers also found that people who were born in later years have a slightly lower mortality rate when they reach 105.
“The plateau is sinking over time,” said Kenneth W. Wachter, a demographer at the University of California, Berkeley, who co-authored the new study. “Improvements in mortality extend even to these extreme ages.”
“We’re not approaching any maximum life span for humans yet,” he added.

For the full story, see:
Zimmer, Carl. “What Is the Limit of Our Life Span?” The New York Times (Tuesday, July 3, 2018): D3.
(Note: ellipses added.)
(Note: the online version of the story has the date June 28, 2018, and has the title “How Long Can We Live? The Limit Hasn’t Been Reached, Study Finds.” The NYT article says the Science article was published on “Thursday,” but the citation for it that I found says it was published on Fri., June 29, 2018.)

The Science article mentioned above, is:
Barbi, Elisabetta, Francesco Lagona, Marco Marsili, James W. Vaupel, and Kenneth W. Wachter. “The Plateau of Human Mortality: Demography of Longevity Pioneers.” Science 360, no. 6396 (June 29, 2018): 1459-61.

The More Governments Tax, the Less Workers Work

(p. A17) European countries trail the U.S. in working hard and controlling taxes, and their economies have lagged in comparison. France has a tax-to-GDP ratio of about 44%, and in Italy it’s 43%. The French and Italians work almost 30% fewer hours per person than Americans. Notably, the French economy has flatlined since 2010 while Italy’s has contracted.
These patterns are not a coincidence: High taxes discourage work and capital formation. Data from the Organization for Economic Cooperation and Development suggests that a 1% increase in a nation’s tax rate is associated with a 1.4% decrease in hours worked per person in the working-age population. U.S. data dating to the 1970s also shows that higher taxes cause workers to limit their hours, reducing economic output.

For the full commentary, see:
Winkler, Rolfe and Justin Lahart. “Government Spending Discourages Work; The French and Italians pay higher taxes and put in 30% fewer hours per person than Americans.” The Wall Street Journal (Tuesday, Feb. 27, 2018): A17.
(Note: the online version of the commentary has the date Feb. 26, 2018.)

Italian Bureaucracy Leaves Innovative Restaurateur Feeling “Psychologically Violated”

(p. A7) ROME–The campaign leading up to Italy’s national elections on March 4 [2018] has featured populist promises of largess but neglected what economists have long said is the real Italian disease: The country has forgotten how to grow.
Take Gianni Angelilli’s pizzeria in downtown Rome. He uses an innovative dough mix and flexible cooking methods, drawing long lines and rave reviews. But Italy is too bureaucratic, the locals have no money and his ambition isn’t what it used to be, Mr. Angelilli said. If he opens more outlets, they will be abroad.
“Now, foreigners have more desire to eat well than Italians,” he said. “Italy is dead. Italy is finito.”
. . .
Italian politics have become measurably more chaotic since the country’s old party system–largely frozen during the Cold War–collapsed amid corruption scandals in the early 1990s. Data collected by Einaudi economist Luigi Guiso and others show that since 1992, coalitions have become more likely to crumble, lawmakers to defect and governments to need confidence votes in parliament. Politicians jostling for attention push more frequent, longer and more-complicated legislation.
“An excess has cluttered the bureaucratic machine,” says Mr. Guiso. “The country has become cumbersome.”
Yet the weakness of transient politicians has paradoxically made the public administration more powerful, at the same time as constant legal changes immobilize it, he says.
Mr. Guiso has practical experience. He is helping to set up a government-supported program to send young Italians to learn about entrepreneurship in Silicon Valley and at U.S. business schools, and he said Italian civil servants decided a tender offer inviting U.S. organizations to participate could be published in Italian only. After much persuasion, the civil servants agreed to publish the tender in English too–but insisted all applications must be in Italian, said Mr. Guiso. He said political friends apologized, saying there was nothing they could do.
Mr. Angelilli said his encounters with Italian bureaucracy while running his Pinsere pizzeria have left him feeling “psychologically violated.” He said he had to pay a fine recently because his oven’s air extraction, made to comply with European, national and regional laws, ran afoul of new city rules.

For the full story, see:
Marcus Walker and Giovanni Legorano. “The Real Italian Job: Rev Up Productivity.” The Wall Street Journal (Wednesday, Feb. 28, 2018): A7.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the article has the date Feb. 27, 2018, and has the title “Italy: The Country That Forgot How to Grow.”)

Italians Learning to Eat the Jellyfish That Thrive with Global Warming

(p. A8) MARINA di GINOSA, Italy — As a small boat loaded with wet suits, lab equipment and empty coolers drifted into the warm turquoise sea, Stefano Piraino looked back at the sunbathers on the beach and explained why none of them set foot in the water.
“They know the jellyfish are here,” said Dr. Piraino, a professor of zoology at the University of Salento.
While tourists throughout Europe seek out Apulia, in Italy’s southeast, for its Baroque whitewashed cities and crystalline seas, swarms of jellyfish are also thronging to its waters.
Climate change is making the waters warmer for longer, allowing the creatures to breed gelatinous generation after gelatinous generation.
The jellyfish population explosion has blossomed for years, but got a special boost since 2015 with the broadening of the Suez Canal, which opened up an aquatic superhighway for invasive species to the Mediterranean.
The jellyfish invasion has now reached the point where there may be little to do but find a way to live with huge numbers of them, say scientists like Dr. Piraino.
. . .
Convinced that climate change and overfishing will force Italians to adapt, as they once did to other foreign intruders, like the tomato, his team has launched the Go Jelly project, which roughly boils down to, if you can’t beat ’em, eat ’em.
The study, which officially gets underway in January, will attempt to show that the enormous and increasing jellyfish biomasses can be the inexhaustible Jell-O of the sea.
While overfishing, warmer seas and pollution may wipe out ocean predators, they are allowing jellyfish to thrive — and reproduction comes easily enough to jellyfish.
. . .
Dr. Piraino has plumbed the mysteries of the creature, more than half-a-billion years old, for its possible uses. Those include the potential to fight tumors, and also using collagen-heavy species as a source for more voluptuous lips.
Then, there is food.
Antonella Leone is a researcher at Italy’s Institute of Sciences of Food Production, and since about two months ago, Dr. Piraino’s wife. At their wedding this summer, the couple celebrated with a tiered cake dripping with confectionary jellyfish.
A leader of the Go Jelly project, she thinks that Italians, with their zeal for locally sourced regional ingredients, might just find a taste for jellyfish.
Others already have. The Japanese serve them sashimi style in strips with soy sauce, and the Chinese have eaten them for a millennium.
. . .
Dr. Piraino cut a piece that he said was full of protein and omega-3 fatty acids.
“It’s great,” he said, as it slipped out of his hand.
The chef marinated a piece in garlic and basil for the grill. He prepared another on a bed of arugula next to a sweet fig to balance out what everyone agreed was an intense saltiness.
At the end of the tasting, there were several untouched specimens on the table. Dr. Leone packed the foodstuff of the globally warmed future into a jellyfish doggy bag.

For the full story, see:
JASON HOROWITZ. “As Jellyfish Swarm the Seas Off Italy, a Fix Emerges: Try Ragu, or Sashimi.” The New York Times (Mon., SEPT. 18, 2017): A8.
(Note: ellipses added.)
(Note: the online version of the story has the date SEPT. 17, 2017, and has the title “Jellyfish Seek Italy’s Warming Seas. Can’t Beat ‘Em? Eat ‘Em.”)

More Evidence that Once-Dynamic Florence Is Now Stagnant

(p. C1) New research from a pair of Italian economists documents an extraordinary fact: The wealthiest families in Florence today are descended from the wealthiest families of Florence nearly 600 years ago.
The two economists — Guglielmo Barone and Sauro Mocetti of the Bank of Italy — compared data on Florentine taxpayers in 1427 against tax data in 2011. Because Italian surnames are highly regional and distinctive, they could compare the income of families with a certain surname today, to those with the same surname in 1427. They found that the occupations, income and wealth of those distant ancestors with the same surname can help predict the occupation, income and wealth of their descendants today.

For the full story, see:
JOSH ZUMBRUN. “Florence’s Rich Stay Rich–for 600 Years.” The Wall Street Journal (Fri., May 20, 2016): C1-C2.
(Note: the online version of the story has the date May 19, 2016, and has the title “The Wealthy in Florence Today Are the Same Families as 600 Years Ago.” Where there are minor differences in the two versions, the passages quoted above follow the online version.)

The Barone and Mocetti working paper, is:
Barone, Guglielmo, and Sauro Mocetti “Intergenerational Mobility in the Very Long Run: Florence 1427-2011.” Bank of Italy Working Paper #1060, April 2016.

A More Dynamic Labor Market May Be the Answer to Italy’s “Quo Vado?”

(p. A19) ROME — A balding government clerk in his late 30s has one true love: “il posto fisso,” a job for life. He doesn’t want to compete in the labor market; he has no urge to move on. He doesn’t even want to earn more. Give him a desk, a chair and a 9-to-5 job in the “pubblica amministrazione,” and he’s happy. Clocking in late, chatting with colleagues, accepting small bribes from taxpayers (most favored: quail), a regular salary — that’s life!
And, of course, there are rubber stamps. The clerk loves them. Slam! Slam! Slam! When his boss, who wants to get rid of him, asks angrily: “What have you contributed to this department?” he shows her his stamping prowess, and almost demolishes her glass table.
This is, more or less, the story of “Quo Vado?” a new comedy that has smashed Italian box office records. It had its premiere on Jan. 1, and in its first week made $39 million; “Star Wars: The Force Awakens,” in three weeks, reached just $23 million. According to The Hollywood Reporter, “Quo Vado?” — or “Where Am I Going?” a modern spin on the Latin question “Quo vadis?” (“Where are you going?”) — is on course to beat the box-office record for an Italian film in the country, currently at $56 million, set by 2013’s “Sole a catinelle.”
. . .
Italians aren’t afraid of a more dynamic labor market. There is still the dream of making it in the private sector, even if it is less secure than the public-sector jobs that have long been the backbone of the Italian work force. Two out of three workers, according to a recent survey in the Turin newspaper La Stampa, wouldn’t mind taking a risk, as long as it meant the prospect of career advancement.
To foster this more proactive mood, Prime Minister Matteo Renzi — who has seen “Quo Vado?” with his family — last year introduced labor-market legislation known as the Jobs Act (in English, mysteriously). It makes hiring and firing easier, but only in the private sector. For state jobs, like Checco’s, things stay the same. Once you’re in, you’re in.

For the full commentary, see:
Severgnini, Beppe. “More Popular than ‘Star Wars’.” The New York Times (Sat., JAN. 16, 2016): A19.
(Note: ellipsis added.)
(Note: the online version of the commentary has the date JAN. 14, 2016, and has the title “The Secret Behind Italy’s Favorite New Film.” Where there are minor differences between the print and online versions, the version above follows the online version.)

The Filth, Slaughter and Disease, That Was Rome

McCloskey’s “Great Fact” says that life was very bad for tens of thousands of years until the capitalist industrial revolution started to make it better. The tens of thousands of years can be thought of as a horizontal hockey stick handle, with the capitalist industrial revolution represented by a sharply ascending blade. Rome was a bump on the hockey stick handle, but as the last paragraph quoted below suggests, not too much of a bump.

(p. C4) . . . Ms. Beard is competent and charming company. In “SPQR” she pulls off the difficult feat of deliberating at length on the largest intellectual and moral issues her subject presents (liberty, beauty, citizenship, power) while maintaining an intimate tone.

“In some ways, to explore ancient Rome from the 21st century is rather like walking on a tightrope, a very careful balancing act,” she writes. “If you look down on one side, everything seems reassuringly familiar: there are conversations going on that we almost join, about the nature of freedom or the problems of sex; there are buildings and monuments we recognize and family life lived out in ways we understand, with all their troublesome adolescents; and there are jokes that we ‘get.'”
“On the other side, it seems completely alien territory. That means not just the slavery, the filth (there was hardly any such thing as refuse collection in ancient Rome), the human slaughter in the arena and the death from illnesses whose cure we now take for granted; but also the newborn babies thrown away on rubbish heaps, the child brides and the flamboyant eunuch priests.”

For the full review, see:
DWIGHT GARNER. “Early Rome: Its Warts and Wonders.” The New York Times (Weds., Nov. 18, 2015): C1 & C4.
(Note: ellipsis added.)
(Note: the online version of the review has the date Nov. 17, 2015, and has the title “Review: In ‘SPQR: A History of Ancient Rome,’ Mary Beard Tackles Myths and More.”)

The book under review, is:
Beard, Mary. SPQR: A History of Ancient Rome. New York: Liveright Publishing Corp., 2015.

On the hockey stick, see:
Diamond, Arthur M., Jr. “McCloskey’s Great Fact; Review of: McCloskey, Deirdre N. Bourgeois Dignity: Why Economics Can’t Explain the Modern World.” Journal of Entrepreneurship and Public Policy 1, no. 2 (2012): 200-05.

Resilient Italian Entrepreneur Planned to Build Trattoria and Ended Up Building Museum

“Luciano Faggiano and his sons were digging to fix a pipe in Lecce, Italy. They found a buried world tracing back before Jesus.” Source of caption and photo: online version of the NYT article quoted and cited below.

(p. A1) LECCE, Italy — All Luciano Faggiano wanted when he purchased the seemingly unremarkable building at 56 Via Ascanio Grandi was to open a trattoria. The only problem was the toilet.

Sewage kept backing up. So Mr. Faggiano enlisted his two older sons to help him dig a trench and investigate. He predicted the job would take about a week.
If only.
“We found underground corridors and other rooms, so we kept digging,” said Mr. Faggiano, 60.
His search for a sewage pipe, which began in 2000, became one family’s tale of obsession and discovery. He found a subterranean world tracing back before the birth of Jesus: a Messapian tomb, a Roman granary, a Franciscan chapel and even etchings from the Knights Templar. His tratto-(p. A8)ria instead became a museum, where relics still turn up today.
. . .
If this history only later became clear, what was immediately obvious was that finding the pipe would be a much bigger project than Mr. Faggiano had anticipated. He did not initially tell his wife about the extent of the work, possibly because he was tying a rope around the chest of his youngest son, Davide, then 12, and lowering him to dig in small, darkened openings.
. . .
Mr. Faggiano still dreamed of a trattoria, even if the project had become his white whale. He supported his family with rent from an upstairs floor in the building and income on other properties.
“I was still digging to find my pipe,” he said. “Every day we would find new artifacts.”
. . .
Today, the building is Museum Faggiano, an independent archaeological museum authorized by the Lecce government. Spiral metal stairwells allow visitors to descend through the underground chambers, while sections of glass flooring underscore the building’s historical layers.
His docent, Rosa Anna Romano, is the widow of an amateur speleologist who helped discover the Grotto of Cervi, a cave on the coastline near Lecce that is decorated in Neolithic pictographs. While taking an outdoor bathroom break, the husband had noticed holes in the ground that led to the underground grotto.
“We were brought together by sewage systems,” Mr. Faggiano joked.
. . .
“I still want it,” he said of the trattoria. “I’m very stubborn.”

For the full story, see:
JIM YARDLEY. “Home Repair Opens a Portal to Italy’s Past.” The New York Times (Fri., APRIL 15, 2015): A1 & A8.
(Note: ellipses added.)
(Note: the online version of the story has the date APRIL 14, 2015, and has the title “Centuries of Italian History Are Unearthed in Quest to Fix Toilet.”)

Italian Traditional Family Stunts Individual Enterprise

(p. 15) Hooper’s book, both sweeping in scope and generous with detail, makes persuasive arguments for how geography, history and tradition have shaped Italy and its citizens, for better and sometimes for worse. Roman Catholicism, for example, has indelibly conditioned Italian society, even as the Vatican’s restrictions are widely ignored. Catholicism’s great allowance for human frailty has translated into a great propensity for forgiveness, as evinced in the Italian justice system, but also resistance to the notion of accountability. It’s a word, Hooper adds, that has no counterpart in the Italian language.
. . .
There’s . . . mammismo, the propensity of young Italians to remain too closely tied to the maternal apron strings. But while “the traditional family has been at the root of much of what Italy has achieved,” Hooper writes, dependence on the family can infantilize, and lack of individual enterprise has held the country back. Indeed, various sections of Hooper’s book return to Italy’s economic decline and its underlying causes.
He notes that the paperwork and formalities of Italy’s cumbersome bureaucracy rob the average Italian of 20 days a year. And he wonders what other country could ever have had a Minister for Simplification to deal with its plethora of often conflicting laws and regulations.
Circumventing some of that bureaucracy partly answers another common question: Why is Italy so prone to corruption? After all, Italians are masters at sidestepping regulations, or, as the saying goes, “Fatta la legge, trovato l’inganno” (“Make the law, then find a way around it”). It’s no wonder foreign investment in Italy is so low.

For the full review, see:
LISABETTA POVOLEDO. “Under the Italian Sun.” The New York Times Book Review (Sun., March 1, 2015): 15.
(Note: ellipses added; italics in original.)
(Note: the online version of the review has the date FEB. 27, 2015, and has the title “‘The Italians,’ by John Hooper.”)

The book under review is:
Hooper, John. The Italians. New York: Viking, 2015.