The Italian Dilemma

Italy is by far my favorite European country, but what appeals to a visitor — the great museums, archeological sites and superb  food— may not provide a sustainable road to a prosperous future.

Tourism injects money into an economy, and produces some mostly moderate to low end jobs. But it cannot be the basis of a successful economy, particularly for the next generation. It’s youth unemployment rate is among the EU’s highest and approaching three times that of the US. Italy also has the highest percentage of people under the age of 30 as any major European country.

As is generally the case in Europe, as well as the UK, there is no clear path for  recovering economic dynamism that started to fade in the 1980s.  Western Europe’s GDP per capita is about $63,000 per year, adjusted for the cost of living. In the United States, it is $86,000. Italy’s is $40,000.

The problem, Veronica de Romanis, a leading Italian policy analyst and author of the recently released L’Economia de Paura, or economy of fear, lies in a kind of lazy welfare state regime   fundamentally opposed, left and right, to any meaningful change. “Italy is going backwards but Italians don’t see it,” she told me last month in Rome. She sees Italy as dominated by narrow “tribes” who protect their niches from competition.

Italy is also plagued by the lowest birth rates of any major EU country. Yet it may have   a weapon that could prove useful in the post-AI era— it’s traditions of artisanship. You see this  in food, fashion, urban design and art. But Italy is rich in creative talent, but lacks ways to exploit it. The low youth employment and high rate of   disengagement , despite an extreme slow rate of labor force expansion, is a natural reflection of this fact.

Another aspect on this dilemma is what Italians seem to prioritize. Americans tend to be instinctively mercenary, but in Italy the priority tends to be la dolce vita, a way of life that is far more relaxed and frankly more human-focused than most EU countries.

So, is there nothing to learn from Italy? In the work I am conducting with Professor Irene Lottini from the University of Iowa, we are examining Italy’s artisan economy. This includes interviews with firms in fields as diverse as furniture making, textiles, food, jewelry and stone masonry. Together these firms possess  a store house of talent that is worth Italy’s nurturing, and also our emulation.

As more of the information and high-end services sector face digitization, artisanal skills and the arts remain one area that the nerds cannot totally control. Tactile experience, as I wrote about for National Review, is in great demand, as we can see by the massive expansion of farmer’s markets and the growth of artisan industry even in the US.

As artificial intelligence entrepreneur Rony Abovitz told me, tasks that require physical skills like plumbers, carpenters, and custom design. These trades are growing rapidly while the computer-centric field has retreated to 2017 levels, notes economist Gad Levanon . Increasingly skilled workers are doing better than products of the diploma mills.

But it’s not just about economics. Italians may suffer from a stagnant economy but they also enjoy healthier food, notably less ultra-processed ones, with much production coming from local, small farms. Italians tend to live  longer, despite having less money, than Americans or Germany.

Can we find a middle ground between genteel decline and the kind of high-tech nihilism common among top  American tech entrepreneurs, who tend to promise us a dark future dominated by computerization and scientific hierarchy?

These are among the questions Professor Lottini and I are exploring for the Italian Institute and the Center for Demographics and Policy, both at Chapman University. Interested in your ideas on this subject as well. Please feel free to comment to my Substack.

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Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com, follow him on Substack and Twitter @joelkotkin.

Homepage photo: Cinqueterre, Emilia-Romagna, Italy, by Ian MacKay.