Riding the storm Italian traditions buffer economic woes
VICENZA, Italy -- Self-made Italians like Amedeo Tartarini never expected to need help.
Tartarini's goldsmith business thrived for decades in Italy's postwar boom. He was one of legions of small businessmen who made Italy an industrial power. With a house, money in the bank and a teeming workshop, the affable artisan never questioned his financial security -- until it was too late.
As Italy's financial crisis deepened, Tartarini ignored signs his business was failing, but persevered in the belief that skill would outshine cheaper competition from China. Hard work and quality, he was convinced, would protect him from the forces of globalization. They did not.
"I always trusted it wouldn't end this way for me," Tartarini said, his eyes darkened with regret. "I had to sell all I had to continue, hoping to make it."
In many rich countries, a person like Tartarini, who has lost his home, his business and his life's savings, might have ended up on the street. Instead, he has managed to keep afloat thanks to friends and community spirit. Italy's extraordinary social safety nets, rooted in centuries of tradition, have helped soften the blow for millions of Italians -- and, so far at least, insulated the nation from the scenes of explosive unrest that have unfolded in other crisis-hit southern European countries. Italy is in the midst of general elections this weekend that promise to determine what shape these crisis buffers will take in the future.
Institutions like family, hometown loyalty and church activism have combined with a generous welfare state to maintain social peace, despite escalating episodes of individual financial collapse. Meanwhile, Italians' own obsession with keeping up appearances at all costs -- a cultural trait known as "la bella figura," or cutting a fine figure -- has made them allergic to public displays of misery, while masking the true extent of national hardship.
The No. 1 factor in Italy's social equilibrium: The Family. The postwar economic-boom generation of prudent savers is lovingly maintaining those that followed. Grandparents care for grandchildren, while parents help finance, or even buy, that first home for just-married children. And young Italians may be just as inclined to live at home with mom and dad well into their 30s, with no social stigma. An organic extension of family is "campanilismo" -- a fierce loyalty to the village bell-tower -- which has meant that Italians look out for each other in their home communities, which are often better suited than the state to find the best ways to help those in need.
Experts see good and bad in this Italian way of life.
On the one hand, it has helped to maintain not only social stability, but also high living standards, in Italy's worst economic crisis since the end of World War II. On the other, it has been a social crutch that has eroded competitiveness, sapped opportunity for young people and perhaps put Italy on the path of long-term -- if decidedly genteel -- decline.
Tableaus of daily life in Italian towns and cities provide abundant evidence of social buffers at play.
Italy's vast network of volunteers offer services at little or no cost, with such organizations as retired corps of Alpine soldiers staffing recycling centers or managing parking at public events in exchange for a fraction of what it would cost to contract out the job.
Visit any Italian playground on a workday, particularly in the wealthy north, and small children are tended by a grandmother or grandfather, supplementing a paucity of daycare for children under 3 and providing after-school care for older children -- mostly so mothers can work. Research by the IRES think tank finds that this help sustains the employment of 800,000 women -- who in turn generate 2.4 percent of GDP.
The research concludes that grandparents' contributions don't just sustain and deepen familial relationships, ‘'but are fundamentally linked to the economic systems of social services." Older Italians, defined here as over 54, contribute every year around (euro) 18.3 billion ($24.5 billion) to the Italian economy, or 1.2 percent of GDP, according to IRES. That sum amounts to roughly what Italy's economy has grown annually for the last two decades.
"It is reasonable for 35-year-olds to be living with their parents, and whole families may be relying on a grandfather's pension. One or two incomes may support four or five people, and it is not considered dysfunctional," said Raj Badiani, an IHS Global Insight analyst.
Other economic factors are at play in preventing social tumult despite youth unemployment of 37 percent:
n Italy's robust underground cash economy allows many young people to work four or five months a year in sectors such as tourism, allowing them to pad their pockets with cash -- albeit with corrosive consequences for the nation's tax receipts.
n Unlike Spain, Italy has avoided a housing bubble. Housing prices are steady in a country with 80 percent home ownership. It means legions of families, many of modest means, may have a home in the city and another in the countryside, perhaps in a town where their family originated, allowing them to take the kind of holidays that foreigners fantasize about -- passing days in idyllic settings and feasting on cheap local specialties.
n And Italians are exemplary savers, unlike their government, which has been placed under international scrutiny for its poor handling of public debt, now over 126 percent of GDP and expected to worsen.
A new study by Pioneer Investments and Unicredit found Italian savings are four times its public debt, or (euro) 8.5 trillion compared with a debt of nearly (euro) 2 trillion. In other words, Italy's public debt is 22 percent of its private wealth -- which puts it in line with Germany and the United States. Italy in 2011 had higher household financial assets than France and Germany, and was above the eurozone average, according to the Italian Banking Association.
"It has been this high rate of financial wealth and the capacity of Italian families to save compared with other European countries that has protected Italy from the crisis," said Giovanni Sabatini, general director of the Italian Banking Association.
There is a flip side: While family welfare provides a cushion, it does not allow efficient distribution of resources and leaves the younger generation at the mercy of those that came before. It's not for nothing that Italy is known as a gerontocracy, where the strings are pulled by the elderly -- from the highest levels of government to big business to the extended family.
"If there were a way to institutionalize the passage of this wealth, things would be more natural compared to the current condition, which is tied to generosity," said Marcello Calabro, who ran the study for Pioneer.
Social buffers have also encouraged many people, like Tartarini, to ignore signs of the crisis and carry on in the hope they can outlast it. And "la bella figura" can create an illusion that all is well when in fact things are falling apart.
‘'It is a crisis of identity," said the Rev. Giovanni Sandona, coordinator for the Catholic charity Caritas in northeastern Italy. "It is not just an economic crisis."
When Tartarini's world crumbled, he found he could rely on friends and charity.
These days, Tartarini takes whatever handyman jobs found by the nuns at his Vicenza parish. And friends take him on trips to the grocery store, where they pay for his, too.
Tartarini, in well-worn work clothes and heavy black shoes, spent a recent morning preparing to move with his wife and 25-year-old son from a rented accommodation he could no longer afford into a free vacated apartment belonging to the parish church of Nove, a town north of Vicenza. Caritas has reached out to parishes with empty residential properties to house people who have lost their lodging in the crisis.
"For me, it's an incredible thing," Tartarini said. "I had a few days in which I didn't know where I would go."
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