A quick anecdote to show how bad the situation in Italy really is: there are LOTS (relatively speaking) of youngish Italian immigrants living in my little corner of Spain. Work opportunities must be very low if the situation in Spain is for them much better than in their home country (in Spain we have a chronic unemployment problem).
Also, the role of the €€€ in Italy’s downfall cannot be overstated. In the 90s / early 00s Germany was in a quite bad situation (i know it bc I was there and saw it firsthand!). But once the full impact of the € and of the ECB’s ultra low rate policies hit, the change was massive. German exports profited from an artificial devaluation while Spanish and Italian industrial goods lost most of their competitiveness. The once excellent industrial equipment and machine tool industry in northern Italy was destroyed. Also, ultra low rates facilitated new investments in German manufacturing and in German firms buying Eastern European rivals, where they set up a low cost supply chain spanning all the way from Ukraine up to Czech Republic, while wage suppression inside Germany shielded the country against the high inflation that spread to the Eurozone periphery. These same low rates fueled the catastrophic real estate bubbles that we saw in Spain, Ireland, etc in 2008.
In short: the € has been the worst thing that has happened to to the Eurozone periphery since the end of WWII…
The sad part is the average fools in these south Europe periphery countries are the most enthusiastic of all Europeans about EU and euro. On the one hand, fanatic about breaking up their existing countries (Basque, Catalan, Valenciano, Galician independence movements in Spain, for example) and ditching their own currency because of alleged lack of control over policy dictated by the capital city, but then they want to unite into some larger entity like the EU and use the euro, so they have even less control than before. When anyone like me points out the contradiction, they are told to shut up because they are a foreigner who doesn''t understand the oppression they are currently suffering and how Brussels and the EU are rescuing them from oppression. Maddening to talk to these fools, in my experience (I'm more familiar with Spain, but Italy is similar, I'm sure).
You are right. In a sense, European periphery countries have been culturally colonized by the Anglo-Germanic-and a bit French core. Despite having a superior cultural heritage (Greece, Italy!!!!), most Southern (and many Eastern Europeans as well) have been beaten into accepting that the Northerners have better culture, institutions, work ethic, etc etc.
Having travelled and worked extensively in Northern Europe and knowing the real deal, this drives me freaking nuts.
it seems as though the european union has been a great idea for neoliberalism, but a very bad one for democracy.. now all the countries are beholden to unelected officials whether it be at the european central bank, european commission and etc. etc.. at some point many within europe who are a part of this union will have to call a spade a spade and exit this straight jacket.. but that won't happen before the capitalists get more money out of them, and for leaving too..
Neoliberalism really is poison. Industrial capitalism faced 'a fork in the road': one way led to socialism and the other (eventually) to the neoliberal finance capitalism we see today. Greed overwhelmed sense, and in many countries in Europe and in America, the next evolution to fascsim is proceeding.
Still, when I decided to convert the icebox on my sailboat to allow for full-time onboard living, I found the best product was a cold plate, a water-cooled Isotherm unit from Italy. It is well-made and has worked flawlessly for ten years now. Drawing at most 2.5 amps, I can power it with a solar panel. If Italy could free herself from the EU neoliberal dystopia, she would do alright.
Just a couple of comments (with references from Italian-language sources):
Students debt
I’m not sure if the sentence on the cost of higher education refers to Italy as well. If so, then this is one of the very few problems Italy does not have (not yet, anyway), for the very simple reason that the vast majority of Italian universities are state-funded (i.e. public) and tuition is quite reasonable. The most expensive public university I was able to find, with a quick on-line search (Pavia), is asking for around 4,000 euro/year, while the average tuition is around 1,500 euro/year.
Brain drain
It is indeed a problem, but official data from Istat (Italian National Institute of Statistics, which might be a smidge bit more accurate than Firstpost America on this matter…) says that, of the 1,000,000 residents who left Italy during the years 2013-2022, ‘only’ 352,000 were in the 25-34 age bracket. Of these, 132,000 had a degree. During the same period, 104,000 young Italians returned from abroad (https://www.istat.it/it/files/2024/05/Migrazioni-interne-e-internazionali-della-popolazione-residente.pdf). A few years back, a law was passed that offered tax incentives to those who decided to come back, and this number has been constantly on the rise ever since, although the overall balance is still negative (fig. 2 on page 4, no Italian needed to understand the trend: https://osservatoriocpi.unicatt.it/ocpi-Agevolazioni%20fiscali%20expats.pdf ).
Fading boost in tourism
I’m not sure this would be such a bad thing, after all (provided it wasn’t a total collapse). It seems people can’t get enough of Italy and this is really putting a strain on some destinations, so much so that some cities (like Venice) have decided to adopt entrance fees while other places (such as famous beaches/lakes) are implementing daily caps, in addition to the fees.
Italy has 61 public universities 36 private universities, the distinction is very much like the US state universities and the private ones. Public or private does not define the quality of the education there, or the prestige. Italy actually spends half the share of GDP on higher education than its peers, and that funding was cut by 14.4% between 2008 and 2018. The student to teacher ratio, at 31, is the highest in the OECD. The neoliberal "New Public Management" has been very heavily implemented in Italian universities with the casualization of staffing and the redirection of funding toward the "winner" institutions.
Fees at public universities have risen over time in real terms, and average between Euro 900 and Euro 4,000 per year. For a three-year bachelors degree that's Euro 2700 to Euro 12,000, plus living and accommodation expenses. Not exactly on the US level of utter ridiculousness but still significant in what is a low wage country with limited opportunities. Private universities can be much more expensive.
The issue for Italy that is so few Italians get a degree in the first place, so the loss of 132,000 is still significant. Fewer than 20% of Italians hold a Bachelors degree, with only about 200,000 getting such a degree each year. From your first istat reference, in 2022 35,000 people between the ages of 25-34 left the country, and 18,000 of those had at least a bachelors degree. So in recent years more than 50% of the 25-34 year old emigrants. There will of course be older emigrants with degrees and much experience.
Looks like Italy is cutting back on the incentives to bring back well educated emigrants (Reuters story). Less tourists may be nice in some ways, but certainly not for the economy.
The problem of "too many tourists" is very easy to fix - just charge more, especially the cruise ship passengers! Cruise ships and no frills flights capture all the revenue from the flood of low end tourists they bring who have no money to spend when they arrive.
Thanks for the reply. If I may add something to the discussion:
The ratio of public-to-private universities may be lower than 2:1 (61 vs. 36), but the enrolment figures paint a somewhat different picture: there are 1,500,000 students enrolled at public universities, with a total enrolment figure of 1,900,000 students, which gives a sub-total of 400,000 students for private institutions, or close to a 4:1 public/private ratio (all figures rounded for simplicity).
As for their prestige, Italian universities do not certainly top the world rankings, but the ones that make it through are mainly public: PoliMi, Sapienza, Alma Mater Bologna, etc. (with Bocconi as the notable exception).
Wages are low (no arguing with that), but Italy has a long-standing tradition of under-the-table pay and black/underground economy, two factors that can only be estimated (https://www.istat.it/wp-content/uploads/2024/10/Report-Economia-non-osservata_2022-1.pdf), and are not easily captured by macro data, but can help explain how a certain number of families not only make ends meet but are also able to send their kids to college, go on vacation, dine out, etc. Plus almost everything, from kindergarten to burial service, is subsidized by the State, in one form or the other. You just need to know how to wade through the red tape.
I truly do not want to downplay any of Italy’s problems, and it might be that I’m partial to the discussion, but I see no signs of imminent collapse around me (just the usual grind). If history is any indication, Italy goes through a major financial crisis roughly every 20 years, and since the latest one was in 2011-2012, I guess we might be good for another 7 years or so…
That's pretty much how Rome collapsed, a sudden crisis that drove society to a lower level, then a period of stability, then another crisis, rinse and repeat. A stair-step collapse that took centuries. People living in the period may have not experienced any collapse in their lifetimes.
We do things a bit faster in the twenty first century. Italy is famous for the "under the table" payments, the Italian statisticians have been worked hard to try to include them in GDP measures. But people do become habituated to a new level of economic output pretty quickly. In between the crises very little may seem to be changing.
Outside of the luxury sector, pretty much all the major Italian industries are open to increasing Chinese competition (precision machinery, auto manufacturing, chemicals, pharmaceuticals, electrical items) or competition from South East Asia (clothing). In luxury cars Ferrari is doing well, but Maserati is imploding. The Chinese are also rapidly moving up into the luxury and supercar niches, reducing the luxury/performance premium. Italian luxury clothes and accessories brands are also experiencing a crisis with issues of labour exploitation etc. hurting the brands. Chinese companies saying that they produce the majority of an Italian luxury handbag are also surely not helping. China has been a massive growth area for Italian luxury brands, but now Chinese brands are taking market share in China and also the Chinese seem to be spending more on tourism and generally cutting back on luxury goods spending. And of course, the US tariffs wont help.
Inside the EU and the Euro, Italy will just keep on declining. The government remains set on deflation to get the budget deficit down to 3% of GDP, which will become more and more difficult as GDP growth misses forecasts. The next step downwards may be significantly bigger given that the EU a a whole is in crisis, and the crisis of manufacturing may be intensifying. Then perhaps another extended plateau.
Great article Roger!
If anything, it might be even too optimistic…
A quick anecdote to show how bad the situation in Italy really is: there are LOTS (relatively speaking) of youngish Italian immigrants living in my little corner of Spain. Work opportunities must be very low if the situation in Spain is for them much better than in their home country (in Spain we have a chronic unemployment problem).
Also, the role of the €€€ in Italy’s downfall cannot be overstated. In the 90s / early 00s Germany was in a quite bad situation (i know it bc I was there and saw it firsthand!). But once the full impact of the € and of the ECB’s ultra low rate policies hit, the change was massive. German exports profited from an artificial devaluation while Spanish and Italian industrial goods lost most of their competitiveness. The once excellent industrial equipment and machine tool industry in northern Italy was destroyed. Also, ultra low rates facilitated new investments in German manufacturing and in German firms buying Eastern European rivals, where they set up a low cost supply chain spanning all the way from Ukraine up to Czech Republic, while wage suppression inside Germany shielded the country against the high inflation that spread to the Eurozone periphery. These same low rates fueled the catastrophic real estate bubbles that we saw in Spain, Ireland, etc in 2008.
In short: the € has been the worst thing that has happened to to the Eurozone periphery since the end of WWII…
The sad part is the average fools in these south Europe periphery countries are the most enthusiastic of all Europeans about EU and euro. On the one hand, fanatic about breaking up their existing countries (Basque, Catalan, Valenciano, Galician independence movements in Spain, for example) and ditching their own currency because of alleged lack of control over policy dictated by the capital city, but then they want to unite into some larger entity like the EU and use the euro, so they have even less control than before. When anyone like me points out the contradiction, they are told to shut up because they are a foreigner who doesn''t understand the oppression they are currently suffering and how Brussels and the EU are rescuing them from oppression. Maddening to talk to these fools, in my experience (I'm more familiar with Spain, but Italy is similar, I'm sure).
You are right. In a sense, European periphery countries have been culturally colonized by the Anglo-Germanic-and a bit French core. Despite having a superior cultural heritage (Greece, Italy!!!!), most Southern (and many Eastern Europeans as well) have been beaten into accepting that the Northerners have better culture, institutions, work ethic, etc etc.
Having travelled and worked extensively in Northern Europe and knowing the real deal, this drives me freaking nuts.
it seems as though the european union has been a great idea for neoliberalism, but a very bad one for democracy.. now all the countries are beholden to unelected officials whether it be at the european central bank, european commission and etc. etc.. at some point many within europe who are a part of this union will have to call a spade a spade and exit this straight jacket.. but that won't happen before the capitalists get more money out of them, and for leaving too..
The ongoing deindustrialization of Germany will address the imbalances within the Eurozone.
In that all will be de-industrialized?
Neoliberalism really is poison. Industrial capitalism faced 'a fork in the road': one way led to socialism and the other (eventually) to the neoliberal finance capitalism we see today. Greed overwhelmed sense, and in many countries in Europe and in America, the next evolution to fascsim is proceeding.
Still, when I decided to convert the icebox on my sailboat to allow for full-time onboard living, I found the best product was a cold plate, a water-cooled Isotherm unit from Italy. It is well-made and has worked flawlessly for ten years now. Drawing at most 2.5 amps, I can power it with a solar panel. If Italy could free herself from the EU neoliberal dystopia, she would do alright.
Just a couple of comments (with references from Italian-language sources):
Students debt
I’m not sure if the sentence on the cost of higher education refers to Italy as well. If so, then this is one of the very few problems Italy does not have (not yet, anyway), for the very simple reason that the vast majority of Italian universities are state-funded (i.e. public) and tuition is quite reasonable. The most expensive public university I was able to find, with a quick on-line search (Pavia), is asking for around 4,000 euro/year, while the average tuition is around 1,500 euro/year.
Brain drain
It is indeed a problem, but official data from Istat (Italian National Institute of Statistics, which might be a smidge bit more accurate than Firstpost America on this matter…) says that, of the 1,000,000 residents who left Italy during the years 2013-2022, ‘only’ 352,000 were in the 25-34 age bracket. Of these, 132,000 had a degree. During the same period, 104,000 young Italians returned from abroad (https://www.istat.it/it/files/2024/05/Migrazioni-interne-e-internazionali-della-popolazione-residente.pdf). A few years back, a law was passed that offered tax incentives to those who decided to come back, and this number has been constantly on the rise ever since, although the overall balance is still negative (fig. 2 on page 4, no Italian needed to understand the trend: https://osservatoriocpi.unicatt.it/ocpi-Agevolazioni%20fiscali%20expats.pdf ).
Fading boost in tourism
I’m not sure this would be such a bad thing, after all (provided it wasn’t a total collapse). It seems people can’t get enough of Italy and this is really putting a strain on some destinations, so much so that some cities (like Venice) have decided to adopt entrance fees while other places (such as famous beaches/lakes) are implementing daily caps, in addition to the fees.
Italy has 61 public universities 36 private universities, the distinction is very much like the US state universities and the private ones. Public or private does not define the quality of the education there, or the prestige. Italy actually spends half the share of GDP on higher education than its peers, and that funding was cut by 14.4% between 2008 and 2018. The student to teacher ratio, at 31, is the highest in the OECD. The neoliberal "New Public Management" has been very heavily implemented in Italian universities with the casualization of staffing and the redirection of funding toward the "winner" institutions.
Fees at public universities have risen over time in real terms, and average between Euro 900 and Euro 4,000 per year. For a three-year bachelors degree that's Euro 2700 to Euro 12,000, plus living and accommodation expenses. Not exactly on the US level of utter ridiculousness but still significant in what is a low wage country with limited opportunities. Private universities can be much more expensive.
The issue for Italy that is so few Italians get a degree in the first place, so the loss of 132,000 is still significant. Fewer than 20% of Italians hold a Bachelors degree, with only about 200,000 getting such a degree each year. From your first istat reference, in 2022 35,000 people between the ages of 25-34 left the country, and 18,000 of those had at least a bachelors degree. So in recent years more than 50% of the 25-34 year old emigrants. There will of course be older emigrants with degrees and much experience.
Looks like Italy is cutting back on the incentives to bring back well educated emigrants (Reuters story). Less tourists may be nice in some ways, but certainly not for the economy.
https://journals.openedition.org/rhsh/7764
https://www.reuters.com/world/europe/tax-break-clampdown-adds-italian-brain-drain-fears-2024-02-22/
The problem of "too many tourists" is very easy to fix - just charge more, especially the cruise ship passengers! Cruise ships and no frills flights capture all the revenue from the flood of low end tourists they bring who have no money to spend when they arrive.
Thanks for the reply. If I may add something to the discussion:
The ratio of public-to-private universities may be lower than 2:1 (61 vs. 36), but the enrolment figures paint a somewhat different picture: there are 1,500,000 students enrolled at public universities, with a total enrolment figure of 1,900,000 students, which gives a sub-total of 400,000 students for private institutions, or close to a 4:1 public/private ratio (all figures rounded for simplicity).
As for their prestige, Italian universities do not certainly top the world rankings, but the ones that make it through are mainly public: PoliMi, Sapienza, Alma Mater Bologna, etc. (with Bocconi as the notable exception).
Wages are low (no arguing with that), but Italy has a long-standing tradition of under-the-table pay and black/underground economy, two factors that can only be estimated (https://www.istat.it/wp-content/uploads/2024/10/Report-Economia-non-osservata_2022-1.pdf), and are not easily captured by macro data, but can help explain how a certain number of families not only make ends meet but are also able to send their kids to college, go on vacation, dine out, etc. Plus almost everything, from kindergarten to burial service, is subsidized by the State, in one form or the other. You just need to know how to wade through the red tape.
I truly do not want to downplay any of Italy’s problems, and it might be that I’m partial to the discussion, but I see no signs of imminent collapse around me (just the usual grind). If history is any indication, Italy goes through a major financial crisis roughly every 20 years, and since the latest one was in 2011-2012, I guess we might be good for another 7 years or so…
That's pretty much how Rome collapsed, a sudden crisis that drove society to a lower level, then a period of stability, then another crisis, rinse and repeat. A stair-step collapse that took centuries. People living in the period may have not experienced any collapse in their lifetimes.
We do things a bit faster in the twenty first century. Italy is famous for the "under the table" payments, the Italian statisticians have been worked hard to try to include them in GDP measures. But people do become habituated to a new level of economic output pretty quickly. In between the crises very little may seem to be changing.
Outside of the luxury sector, pretty much all the major Italian industries are open to increasing Chinese competition (precision machinery, auto manufacturing, chemicals, pharmaceuticals, electrical items) or competition from South East Asia (clothing). In luxury cars Ferrari is doing well, but Maserati is imploding. The Chinese are also rapidly moving up into the luxury and supercar niches, reducing the luxury/performance premium. Italian luxury clothes and accessories brands are also experiencing a crisis with issues of labour exploitation etc. hurting the brands. Chinese companies saying that they produce the majority of an Italian luxury handbag are also surely not helping. China has been a massive growth area for Italian luxury brands, but now Chinese brands are taking market share in China and also the Chinese seem to be spending more on tourism and generally cutting back on luxury goods spending. And of course, the US tariffs wont help.
Inside the EU and the Euro, Italy will just keep on declining. The government remains set on deflation to get the budget deficit down to 3% of GDP, which will become more and more difficult as GDP growth misses forecasts. The next step downwards may be significantly bigger given that the EU a a whole is in crisis, and the crisis of manufacturing may be intensifying. Then perhaps another extended plateau.
https://www.businessoffashion.com/articles/sustainability/what-happened-italy-sweatshop-investigation-armani-dior/
https://fortune.com/2025/02/11/chinese-consumers-lvmh-kering-slump-new-investments/