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     Oct 4, 2011


Italy's future - a theme park
By Spengler

Not a crisis, but a negotiation is underway among the debt-ridden countries of southern Europe. Greece and Italy illustrate Spengler's Universal Law Number 15: Stick around long enough, and you turn into a theme park. As the descendants of the former masters of the Mediterranean fade into senescence, hordes of Asian tourists will keep them in business. That's the Spartan model.

Sparta is the first world power to succumb to demographic suicide, and also the first former power to live on as a theme park. Aristotle reports that Sparta "sank under a single defeat; the want

 
of men was their ruin". Sparta once had 10,000 citizens, but by 371 BCE, when Thebes broke Spartan power at the Battle of Leuctra, had shrunk to barely 1,000.

Aristotle's observation is doubly remarkable, as I report in my new book, How Civilizations Die (and Why Islam is Dying, Too). It is the first report in history of depopulation due to a reluctance to raise children. It is also the first time that the decline of a great power has been blamed on depopulation. Sparta lived on, though, as a theme park: the last remaining Spartans continued to oil their hair, don their red robes, play their flutes and train in a phalanx for gawking Roman visitors until the end of the 2nd century CE. "The prestige of the 'revived' training and the tourism which it generated helped this otherwise fairly typical provincial Greek city to maintain a place in the world and allowed the Spartans to feel that they were still 'special'," [1] according to two recent historians.

If Italian tourists kept Sparta afloat half a millennium after its political model passed its best-used-by-date, Chinese tourists well might sustain Italy for another century or two. Forty-three million tourists visited in 2009, spending about US$1,000 each. Another 15 million came to Greece. Under the right circumstances, Asians could double that number in a few years, helping Italy to service its US$2.2 trillion external debt. But there's a catch: China would have to own a good deal of the country. The Chinese do not wish to merely stop and gawk: they want to learn, buy, and carry home the magic of Italian manufacturing. That would unlock tens of billions of dollars of unrealized export potential.

Unlike Germany, whose machine tools hum in every Chinese factory, Italy has done a poor job of exporting to China. Italy's best-known manufacturing company, the automaker Fiat, has a tenuous hold on second-rate markets, for example, Russia and Turkey, and the downwardly mobile end of the American market. It says something about the condition of that United States that Fiat wants to market a revamped Cinquecento - the starter car of the Italian poor during the 1960s - to declassed American consumers. An Istanbul taxi driver explained to me last February why Italy will go bankrupt. "We all drive Fiat's now," he explained. "They're lousy cars. They break down too much. But now the South Koreans are building plants here, and in two or three years no one will drive a Fiat."

Every Italian businessman famously keeps four sets of books; one for the tax collector, one for the bank, one for his wife, and one for himself. The cost of dealing with the predatory incompetence of the Italian government keeps firms in the family. That is why there's very little that is worth buying on the Italian stock exchange: the best firms remain closely held, many with superb technology.

The family-owned manufacturer best known to Americans is, of course, Beretta, which makes the US Army's standard 9mm sidearm. Italy has hundreds of superb companies, but corruption, bureaucratic caprice and the general fecklessness of Italian governance keep them below the radar. Closely held companies rarely develop the global reach to realize their full potential, though.

The best thing that could happen to Italian industry would be a national bankruptcy. If foreigners began shopping for Italian assets, Italy's best firms would be flushed out into the open field of international trade, and their talents would attract the capital and support they require. Italy's political system can't be reformed. It can only be bypassed. That is what Italians have done to survive for centuries.

A delightful primer on the Italian capacity for survival and genius for accomplishment is Michael Ledeen's new book, Virgil's Golden Egg and other Neapolitan Miracles (Transaction, 2011). Asian investors should study it carefully. Italians have spent thousands of years integrating commerce and art to create products that delight the senses.

"While big factories have not done well" in Naples, Ledeen observes, "businesses based on high style and elegance have become world-class enterprises. Some of the finest furniture in Italy - from inlaid marble desks and tables to magnificent carved wood pieces - come form Naples, and men's fashion has reached its highest level (and certainly its highest prices) in Naples, from Marinella ties to the super-chic ateliers of Borrelli, Isaia, Attolini, Kiton, Barba, Rubinacci, et al." Clothing this refined "feels like a second skin", Ledeen observes.

The greatest obstacle to the preservation of Italian talent is the Italian government. What Italy requires, in short, is an invasion on the scale of the Gothic incursions of the 5th century CE, but with checkbooks rather than battle-axes. Both as business people and as tourists, the Chinese will find tastes and technologies in Italy that complement their own talents, and fill important gaps in their own capacities. With luck, millions of Chinese tour buses will traverse the Apennines in search of the perfect Parmesan cheese and the optimal silk spinner or chef's stove.

China's love affair with everything Italian goes back a dozen years, when ossobucoalla Milanese became the signature dish of Shanghai. First-rate Italian food is easier to find in Shanghai than classic Shanghai cuisine. To transform sentiment into investment, Italy simply needs do declare itself open for Chinese shopping. That implies the evisceration of all the nasty political arrangements which envelop Italy like a parasitic vine. How would this occur? As my Asia Times colleague Francesco Sisci wrote September 14 in the Italian daily La Stampa:
Speaking concretely, the Chinese have envisioned the possibilities of synergies with the Italian economy for years, in almost every sector. The [Italian energy companies] ENI and ENEL are two businesses in which China would be interested; ENI has collaborated for years with Chinese energy firms. Today, a participation in ENI by PetroChina, for example, could multiply ENI's own opportunities for development, as well as bring urgently needed funds to the Italian Treasury.
The Chinese would arrive in the nick of time. Like the Spartans of classical antiquity, the Italians are disappearing. With only 1.25 children per female in 2005, Italy languishes at the bottom of Europe's fertility ranking. Before 2040, three-fifths of the Italians will be elderly dependents, according to the United Nations. Even if we assume that fertility will gradually recover towards the replacement level of 2.1, the number of women of child-bearing age will have fallen by 40% by mid-century, which means that Italy's population never will recover.

Elderly dependent ratio, selected European countries

Source: United Nations World Population Prospects


It is well for Italy's entrepreneurs to sell their skills to Asia, for some of the best family firms will not have sufficient family members or enough skilled workers to continue operating a generation hence. They will look like the glass-blowers of Murano, the Venetian island famous for centuries for hand-crafted glass. A few craftsmen of the old generation remain there, and entertain tourists by making glass animal figures before their eyes. The aging craftsmen are there to allow the merchants to unload cheap knockoffs of the Murano product.

Like the Spartans, the diminishing number of living Italians will remain resident in their own theme park. They will throw pizza, stage operas, blow glass, restore paintings, design shoes, and bottle wine for busloads of Asians. Italy's government may be bankrupt, and its bondholders may be paid at 70 cents on the euro. The parasites who leech off the Italian state will feel rather like fleas on a dead dog. In Naples, at least, the entrepreneurs will accommodate to a new conqueror as so many times in the past, and continue to enjoy life, until Vesuvius erupts.

Note
1. Hellenistic and Roman Sparta: a tale of two cities, by Paul Cartledge and Antony Spawforth (Psychology Press, 2002), p. 194 Spengler is channeled by David P Goldman. Comment on this article in Spengler's Expat Bar forum.

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