Thursday, October 19, 2006

Culture – Is it ever too late to appreciate the works of mankind?

One of the advantages of living in Italy, or the rest of Europe for that matter, is that just about any time of year, in just about any city, there are opportunities to visit museums or shows of the great artists. On many an occasion, I would arrive several hours early in a city or have several hours to kill before leaving. A quick call to the city hall, or in later years through SMS concierge services, and a list of possible adventures was readily available.

An important part of my profession is to be able to talk, with relative understanding, about a wide range of topics. Unfortunately, I cannot say that I acquired this capability from my US based education. Instead, over the years, a couple of hours here and a couple of hours there, of playing video games on a handheld device in some airport I would take the dead time and walk through a museum, a tradeshow, or just go into some church along the way. Curiosity over what I had seen would then push me to find out more about the artist, designer, food or wine.

I am not indicating that visiting museums should be primary activity on a vacation in Italy but, while you are appreciating the great food, wine and destinations, it may be interesting to just walk through some of the historic or cultural exhibits that may be open in your area. Think about visiting the vineyards of Capezzana and the local museum that shows the tools, equipment and processes used in the past to create these fantastic wines. It will help you understand why pushing facilities to their theoretical maximum capabilities and hiring lower wage unskilled workers is a failed business model. The same way to express this concept is to ask why Italian companies can compete, and in many cases, dominate world markets when their employees make twice that of their US counterpart, have 6 weeks paid vacation a year, national health coverage, and if they get sick continue to receive 80% of their salary.

Over the next couple of weeks I will publish articles about some events open through the end of the year. I hope you will find the opportunity during your next trip to check them out.


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Anonymous Anonymous said...

That's a very acute observation about the higher wages and benefits. Maybe there is an alternative to exploiting cheap labour in third world countries.

2:48 PM

Blogger Travel Italy said...

Lexcen I think you are one of the few who agree with me on this one. I have become very unpopular with my private equity people.

It may seem by this that I am against producing goods and services in poorer countries. This is not the case. I simply believe that the actual costs for producing in poor countries should be associated with the goods and not pushed off on the taxpayer in the form of wars to protect our interest, etc.

I also believe that quality products can compete with the junk offered by the big box retailers of today. It is important to understand who we are selling to.

I am also very concerned about the amount of goods produced outside the country where the goods are consumed. This sets up a basic need for stronger countries to get involved in foreign affairs where we should not be involved. If we do not, they will cut off the supply of oil, wood, fruit, cloth, flour, etc.

Think for a moment, no international transportation for 1 month...

3:24 PM

Blogger AY said...

Oh no... David, I almost disagree with everything said here - mainly on an economic basis. Ah well.

America's problems are quite a lot easier to solve, IMHO.

# There wouldn't be any need to fear resource scarcity (be it due to inability to source resources), if the American Administration worked on real diplomacy rather than on the basiss of "if you're not with us, you're against us!".

# Electoral system restructuring is vital - make taxpayers pay for electoral campaigns and you won't "breed" cronies and hangers-on who will want their backs scratched later.

Etc. etc...

If you were to adopt an "isolationist" policy across the board, you'd lose the dynamism, ability to attract skilled/educated immigrants + capital etc... --> the essence of what makes America, America.

Consequently, you'd lose your technological supremacy and the like. This is hardly going to make America more prosperous and especially not more politically-stable nor safe, from a strategic perspective.

Just a quick rant. Don't mind me. Globalisation is the best thing that has happened to the world entire. We need to face this fact and soldier on behind it.

Isolationist policies will not only hurt ourselves, it'll ultimately hurt the disadvantaged around the world, who need our help (remember - "help" is truly help only if it is defined by the party needing assistance, not the "helpers"). It's a moral obligation alright.

PS: The American economy cannot be compared to that of advanced European ones - Italy for example, is an economic mess. Most of its people are in fact under-employed and the nature of Italian state welfare means that the Government there needs to make huge transfer payments - which translates into gigantic public debt the Italian kids of tomorrow will have to pay for.

If anything, I'd use Sweden as an example, not Italy. Italy's "elite" may do very well c.f. their American counterparts but they are constitute a minority segment of the Italian economy.

Plus, Italy does not have to structure its economy/government etc. to sustain/employ hundreds of millions of people. =]

The USA, no matter what, is still an amazing place where hardwork and drive can make dreams a reality for the majority, IMHO.

2:10 AM

Blogger ChickyBabe said...

As much as I enjoy admiring the works of art, I'd rather "live" the experience than be stuck in a museum. Italy abounds in art, and after a while it starts to merge into a blur. Though I'd never forget the Sistine Chapel...

5:27 AM

Blogger Travel Italy said...

ChickyBabe I agree. Every chapel, every corner, every shop has so much to offer but certain artists can only be seen in shows. I think it is valuable to see a number of different pieces from the same artist all together. It creates a story or timeline.

AY Thanks for your thoughts.

I have noticed in other posts that you have a real problem with Italy's economy. And while Italy has numerous various class structures and there is the good, bad and ugly in every economy, I do not see the "Mess" nor the "unemployment" you are talking about.

On a relative basis (to the US) all of the things you are criticizing of Italy are significantly worse here in the US. If the US can survive as an empire it will have to come to the realization that we are poor, we have squandered our financial equity and sold our people's future for the benefit of the mega corporations.

As for Isolationism your assumption is a bit off. I do not say we should be isolated, I think all goods should have the appropriate costs associated. For example all goods from Taiwan should include a tariff to cover the costs of negotiating the "non war" with China. Foreign oil should have to cover the cost of fighting terrorism, goods produced in china should have additional costs for foreign diplomacy etc.

Regarding shutting ourselves off. Absolutely not, I think all Americans should be required to live 2 years outside the US before entering the workforce. I do not think it is a good idea for any entity to rely un unstable and unreliable sources for their goods and services.

6:32 AM

Blogger AY said...


# America is not poor. Its per capita income (PPP) is still quite a lot higher than that of Italy's. The problem is that it hasn't a good income transfer system that Italy has. Clinton tried to deal with that. Can't expect the Cowboy to do the same. I can't argue with the coddling of Big Business, however. Yet, it is not much different in Italy (only that, the "Big Business" in Italy is privately-owned - yet still extremely powerful).

# Italy's Government is one of the most fiscally imprudent in the world. It has the world's third largest debt - which is around 110% of the GDP! Just trying to service the debt makes repayment very difficult - which detracts foreign investors and of course, makes procuring capital (for whatever purpose) more expensive/difficult for locals.

# Italy's labour productivity has been one of the lowest in the EU area at the past five years - despite steady increases in wage and inflation rates (i.e. further compounding the problem).This makes Italy one of the least competitive in the region - which is worrying because it depends heavily on exports, esp. its design industry.

# The current official 7% of unemployment is >>extremely<< misleading - as underemployment is rampant largely in the well-educated, highly trained professionals (e.g. doctors, scientists...) + there is a huge black/underground economy (around 30% of Italian GDP) + too many people are on the State's payroll (I suppose this is another form of underemployment, only worse). The huge difference in the economic well-being of the North and the South regions, is also very socially worrying.

# Italy hasnt' many public companies, comparatively speaking - private companies are difficult to regulate (hence the huge underground economy) and their financial dealings are not transparent. This helps the few large private companies to engage in unfair trading practises, including cross-ownership that makes the overall economy even more inefficient (best example is how Berlusconi came to control Italian media or how the Fiat empire is able to wield so much power/control).

# Italy relies heavily on SMEs - but they are substantially smaller than in other nations. The average company employs only about 3 people and coupled with expensive capital, it is inconceivable that they are able to grow much in the short-term and be more internationally competitive. The problem is compounded by the fact that, due to Italy's reliance on these SMEs (compared to other EU nations), it is subjected to more competition from alternatives Asia (and America). The myth of Asia producing less-attractive products is just that, a myth. Importantly, they are producing what people want in an efficient/competive manner - the Italian SMEs need to ask themselves why. Meanwhile, more bad news for employment rate.

These are the main problems I can think of without needing to go into extreme detail. The trouble is, Berlusconi could have done something about it, if he wasn't so busy protecting his own interests. Prodi has a huge crisis looming over his head... and being centre-left, he won't be as adamant/cruel as he needs to be (unless voters understood the economic impact of not reforming - which I highly doubt).

Italy's problems makes the American economy looks rosy in comparison. America's problem is political/social. Italy's is much more genuinely about economics.

There aren't many things I disagree with the American economic model, which is fairly dynamic and robust/competitive. It's more the "Administration" that is causing the problems and again, that is political/social.

But I suppose, the two economies are too vastly different to warrant fair comparisons.

PS: Why make Taiwan (who did not cause the Taiwan-China problem - because the USA did that for us) pay for the defence? Why not slap a tariff on Chinese goods to make THEM pay?

But yeah, I agree with the oil part - American oil prices don't reflect the true cost. But that's become an election issue ha!

There are again, far easier options - R&D in alternative energy sources. It's a huge industry waiting to explode but it requires governmental incentives/policy-direction.

Besides really, peak oil is over-exaggerated, esp. in America where you have enough domestic oil reserves to serve your needs.

What's more worrying is climate change from the use of fossil fuels.

5:52 PM

Blogger Travel Italy said...

Aussie Yam I wanted to thank you for taking the time to prepare such a complete response. I do not agree with your perception and that may be because I create companies, hire people, sell things and produce goods and services whereas I get the feeling you are looking at this from an intellectual point of view. Although this blog is probably not the best place I enjoy exchanging ideas.

I am somewhat surprised that you are using raw data instead of putting them into context and generally, while I know you tend toward a socialist viewpoint, are supporting the Cowboy Capitalism attitude of the US elite.

While the Gross Per capita may be slightly higher than Italy the net disposable income is significantly less. On the medium income of 34k$ the health insurance costs are more than 10% something completely covered by the national health system in Italy. Additionally it should be noted that 98% of the wealth is concentrated in 0.5% of the population. Housing is also about 30% more expensive here in the US and while lower incomes in Italy can live without a car this is not possible in the US.

Regarding fiscal responsibility I know that you are aware that just under 50% of Italian GDP is under the table. This became the de facto standard during the heavy corruption years of Craxi and the Socialists. Old habits are hard to eliminate. I believe Italy has taken the wisest of positions regarding foreign investments and ownership of Italian companies. Italy does not need foreign investment, with one of the highest savings rates in the world, additional money supply would cause rampant inflation. Having been, and still am, a local I have never had problems procuring capital at reasonable conditions and fixed contractual terms. Something that is not available here in the States where interest rates can be, legally, 20% up front and 28% annual compounded! In Italy, the CEOs of these banks would be imprisoned for usury!

Actually Italy's primary industries are software-hardware solutions, tourism, wine, and agriculture. The fashion portion has long been outsourced to China. Italy is the number 1 exporter of wines to the US even though it maintains the highest quality standards in the world.

While I thought the official unemployment rate was somewhat higher I am glad to see that it has come down. Again I am not aware of the underemployment. Regarding the black market labor, yes it is very high and makes the 7% actually around 2-3%. The difference between the regular and underground employment is that the underground employee and the employer split 50-50 the additional costs that are not paid to the government. Most US workers would, in a heart beat, accept the conditions of underground Italian employment!

Why does Italy want a lot of public companies? The only advantage of the public markets is pump low cost funds into big corporations so that they can execute unfair trade practices reducing free market competition and eventually raising prices and lowering wages. This is the current situation in the US where the government has been totally absent and allowed cowboy capitalism to destroy the very strength of the US economy, that is small business. It is not more efficient, it is only a way for the few to pick the pockets of the masses.

Yes, Italy relies on SMEs. This is a good thing. This is what should be in every nation. It is called middle class or better known as the American Dream! BTW the average SME has 8 employees and 80% of GDP is generated by companies with less than 15 employees. The SMEs are doing fine, they think about quality instead of quantity. I think that is a good thing. They do not need to attempt to compete with the Chinese or other emerging countries. Over time quality always wins.

Prodi has a huge crisis looming, I agree. He is attempting to allow the same cowboy capitalism executed by his cronies, Soros and company, here in the US. Perhaps you do not remember why Prodi was exiled to the EU Parliament.

Now this is where we differ, Italy will have its growing pains as it adjusts to the influx of illegal immigrants, China dumps poor quality low price junk onto the market and oil prices rise, but they will adapt as they have done for 3,000 years. The US is heading toward a popular revolt of epic proportions. Corporations and political corruption has raped the country for the last 30 years and the people are very upset. Remember the moderates do not march in the streets, they do not threaten, they act. The US problem is not social; the problem is that Joe Worker makes less money than he did thirty years ago, inflation has gone up, university tuition is up 1000%, Health Care is up 500% as is housing. The public debt is 47 trillion, yes trillion, GDP is a function of smoke and mirror "management" of global production, financial "earnings" and services of health care and home building (the last two make up 60% of US GDP and are services...) The US no longer produces the primary goods necessary to feed and cloth the people and this scares moderates to death particularly when the whole world has its hand out and threatens Nuclear War if the US does not pay.

Regarding Taiwan it was not intended to single out Taiwan, It was to say any good produced anywhere should have the real costs of production associated with that product instead of getting the government to subsidize the production of that product. I am not for tariffs, I am for taxing companies according to the amount of goods they produce outside the US in order to appropriately pay for the "protection of US interests", that is corporate America’s interests. The individual taxpayer should not be paying for what is 40% of the US budget! So our government should stop thinking about reducing pension benefits for which people have paid all their lives and start thinking about getting those who benefit from international policy to pay for it.

Again on oil, all imported oil should have the appropriate costs associated. That would be 2 billion $ a day in this moment.

Yes, the US not only produces sufficient oil but has more untapped capacity than the rest of the world combined, however I think the US should be pushing for new sources of energy and let everyone play with all of the hot spots around the world.

2:21 PM


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