Category: Italy

In Italy Regulators Ban Gelato in Cones but OK Gelato in Cups

(p. A10) Europe is lifting its lockdowns, but the new rules to battle the coronavirus are baffling Europeans as the continent goes into a familiar mode: regulatory overdrive.

. . .

When Italian beaches reopened in late May, windsurfing was allowed but tanning was banned. Except at other beaches, where it was the other way around.

. . .

In Lerici, a town of pastel houses on the Italian Riviera, Mayor Leonardo Paoletti spent months coming up with a plan.

. . .

“Where the virus is, or not, is irrelevant. What matters is that there are rules, and the job of us mayors is to enforce those rules,” Mr. Paoletti said.

Some rules confuse even the mayor. Take ice-cream cones. Rules on them vary widely across Europe. Many people don’t know whether they’re allowed or not.

In Lerici, some gelato sellers were reprimanded by a central government regional representative office for offering cones instead of only paper cups.

“I don’t see why,” said Mr. Paoletti. As far as he is concerned, ice cream can be served in cones.

“At this point, nothing makes sense to me anymore,” he said.

For the full story, see:

Margherita Stancati, and Valentina Pop. “Europe Reopens With Rules for Ice Cream in Italy, Dates in Denmark.” The Wall Street Journal (Saturday, June 10, 2020): A1 & A10.

(Note: ellipses added.)

(Note: the online version of the story has the date June 9, 2020, and the title “Moving to Reopen, Europe Goes Into Regulatory Overdrive.”)

Incumbent Italian Firms Invest in Cronyism, Not Innovation

I heard an intriguing paper at the January 2020 AEA meetings in San Diego. It shows that, at least in Italy, big incumbent firms protect their position more through investment in cronyism than through investment in innovation. The abstract of the NBER working paper version of the paper appears below.

Do political connections affect firm dynamics, innovation, and creative destruction? We study Italian firms and their workers to answer this question. Our analysis uses a brand-new dataset, spanning the period from 1993 to 2014, where we merge: (i) firm-level balance sheet data; (ii) social security data on the universe of workers; (iii) patent data from the European Patent Office; (iv) the national registry of local politicians; and (v) detailed data on local elections in Italy. We find that firm-level political connections are widespread, especially among large firms, and that industries with a larger share of politically connected firms feature worse firm dynamics. We identify a leadership paradox: When compared to their competitors, market leaders are much more likely to be politically connected, but much less likely to innovate. In addition, political connections relate to a higher rate of survival, as well as growth in employment and revenue, but not in productivity – a result that we also confirm using a regression discontinuity design. We build a firm dynamics model, where we allow firms to invest in innovation and/or political connection to advance their productivity and to overcome certain market frictions. Our model highlights a new interaction between static gains and dynamic losses from rent-seeking in aggregate productivity.

The abstract quoted above is from:

Akcigit, Ufuk, Salome Baslandze, and Francesca Lotti. “Connecting to Power: Political Connections, Innovation, and Firm Dynamics.” NBER Working Paper #25136, National Bureau of Economic Research, Inc., Oct. 2018.

Italy Regulates Irregular Pasta

(p. D8) BARI, Italy — The grandmothers set up shop early. Out of ground-floor kitchens that opened directly onto the street, they came out singing old songs, sweeping the stone floor and scattering their homemade orecchiette, the city’s renowned ear-shaped pasta, on the mesh screens of wooden trays

. . .

The scene — the grannies, the handmade pasta, the curved stone street — evoked the southern Italy of popular imagination.

. . .

But local officials suspect that the pasta street, in the historical part of town known as Old Bari, is the scene of a crime that has prompted the orecchiette crackdown scare of 2019.

According to the mayor’s office, in mid-October police inspectors busted a local restaurant for serving untraceable orecchiette, a violation of Italian and European Union regulations that require food in restaurants to be clearly sourced. The police fined the restaurateur and forced him to trash three kilos of pasta, or about seven pounds.

The November news reports (“Strong hand against the handmade orecchiette in Old Bari” wrote La Repubblica) immediately worried the sharp-elbowed women of Bari, who are permitted to sell small plastic baggies of pasta for personal use, but who are not licensed to deliver large, unlabeled shipments to restaurants.

The women don’t earn much to begin with, and fear having to wear hairnets, issue receipts and pay taxes. People here are asking if the Italian zeal for regulations, however often ignored, will end up overpowering the local pride in a custom that has brought Bari — where many families have their go-to pasta lady — tourists and much-needed good press.

. . .

“These women work 10, 15 hours a day, seven days a week to support their unemployed husbands and sons,” said Francesco Amoruso, 76, whose mother, one of the street’s venerable pasta makers, died last year at age 99. “And this is who they come down hard on?”

. . .

In the evening, as the women brought their trays of pasta into kitchens adorned with St. Nicholas shrines, Diego De Meo, 44, the owner of the restaurant Moderat, across from City Hall, waited for the evening rush.

He said he didn’t know which restaurant was caught serving contraband orecchiette but talked about how those little irregular, handmade pasta ears had “a little magic in them.” He suggested that trying to regulate Bari was like trying to straighten the Leaning Tower of Pisa.

“Sometimes the irregular is what makes things beautiful,” Mr. De Meo said.

Pressed further for a hint on the identity of the offending restaurant, he paused awkwardly. “It was me,” he blurted out, adding that he alerted other restaurants, many of which he said bought orecchiette from the women.

“Look, it’s correct, it’s the law,” he acknowledged, referring to the fine. But while his business was unaffected, he felt bad for the women of Bari who he said “are perplexed.”

For the full story, see:

Jason Horowitz. “A Crime of Pasta, but the Suspects’ Lips Are Sealed.” The New York Times, First Section (Sunday, Dec. 8, 2019): 6.

(Note: ellipses added.)

(Note: the online version of the story has no date posted, and has the title “Call It a Crime of Pasta.” In the last several sentences, where the versions have slightly different wording, the passages quoted above follow the online version.)

When Labor Market Regulations Increase, Firms Hire Fewer Workers

(p. B5) “It’s serial stagnation,” said Nicola Borri, a finance professor at Luiss, a university in Rome. “The economy doesn’t contract, it doesn’t grow. Italy is a country that is weak, that is old, where there is no investment in new ideas.”

. . .

Thirty-five miles east of Naples, in the town of Avellino, Sabino Basso has halted plans to hire 30 more people at the olive oil bottling plant started by his great-grandfather.

Mr. Basso’s company buys olive oil from growers in Italy, Spain and Greece, exporting 80 percent of its wares to countries around the globe — especially the United States, where Walmart is a major customer. He had planned to increase marketing and online sales.

But then Five Star tightened legal requirements for companies that hire workers on temporary contracts, effectively limiting stints to one year. The change was aimed at forcing businesses to hire permanent workers.

Mr. Basso was aghast. All but five of his 100 workers are permanent, he said. The others are apprentices, a status that has allowed him to hire using temporary contracts.

“In order to understand if I want to keep people their whole lives, I have to test them,” he said. The new rules did not allow him sufficient time. “I just stopped hiring.”

For the full story, see:

Peter S. Goodman. “History, Views and ‘Serial Stagnation’.” The New York Times (Saturday, Aug. 10, 2019): B1 & B5.

(Note: ellipsis added.)

(Note: the online version of the story has the date Aug. 9, 2019, and has the title “Italy’s Biggest Economic Problem? It’s Still Italy.”)

“The Grapes Are Beautiful, the Heat’s Good for Them”

(p. A4) A 2016 study by NASA and Harvard of grape harvest dates going back to the 1600s found that climate change pushed harvests forward drastically in France and Switzerland in the second half of the 20th century.

. . .

(p. B5) Claudio Roggero, who as enologist at the Castello di Neive, decides, among other things, when to pick the grapes, strolled with satisfaction through the corridors of vines, saying the grapes looked perfect.

“If I left these grapes another week they could have been like this,” he said stopping in front of a rare sunburned bunch. “It’s very dangerous.”

In the middle of August, a thermometer planted in one of their vineyards showed heat in excess of 104 degrees Fahrenheit. “It went off the charts,” the wine estate’s owner, Italo Stupino, 81, said as he looked over the hills.

Mr. Stupino also pointed at vineyards destroyed by a hailstorm in April, and yet he expressed doubt that global warming drove the change.

“I believe it up to a certain point,” he said with a shrug. “The temperature goes up and down. We had hail in April, and I remember some hot, hot Augusts as a boy.”

That sentiment ran through the hills.

In Monforte d’Alba, just outside the town square, Giovanni Rocca stepped out onto his hills and happily chewed a grape he picked from his vineyard.

“The grapes are beautiful, the heat’s good for them,” he said, arguing that the vintage, which he said would probably come 10 or 15 days earlier than usual, was likely to yield a lower-quantity but higher-quality Barolo.

His son, Maurizio, 37, also spoke of the benefits of the sunshine. But he added that temperatures above 100 degrees “are not good for the wine; the berries become unbalanced and too fat, with too high an alcohol content.”

He said that they knew how to deal with anomalies, but that if intense heat waves became permanent, “We’ll have to plant bananas and pineapples.”

. . .

An enclosed observation deck hangs like a giant helicopter cockpit over the hills of Alba at the headquarters of the Ceretto family, which produces nearly a million bottles a year.

The company’s employees will be out in the fields a week earlier than usual to pick arneis grapes for its wildly popular Blangé white wine, said Roberta Ceretto, 44.

But she was mostly unbothered by the heat, saying that while her employees might not be able to go on vacation in August in the future, the quality and culture of the area’s wines would survive.

“The dinosaurs didn’t go extinct in 20 years,” she said with a smile.

For the full story, see:

Jason Horowitz. “LA MORRA JOURNAL; The Harvest of a Changing Climate.” The New York Times (Wednesday, Aug. 23, 2017): A4.

(Note: ellipses added.)

(Note: the online version of the story has the date Aug. 22, 2017, and has the title “LA MORRA JOURNAL; In Italy’s Drought-Hit Vineyards, the Harvest of a Changing Climate.”)

Low Interest Rates Increased Zombie Firms After Economic Crisis of 2008

ZombieFirmsIncreaseGraph2018-10-03.png

Source of graph: online version of the WSJ article quoted and cited below.

(p. A1) Italian clothing maker and retailer Stefanel SpA became famous for its knitted coats and cardigans.

Many economists, investors and bankers know Stefanel as something starkly different: a zombie company. It has posted an annual loss for nine of the last 10 years and restructured its bank debt at least six times, including several grace periods when Stefanel only had to pay interest on what it owed.
After booming during Italy’s post-World War II expansion, Stefanel and its lumbering factories were overwhelmed by Spanish fast-fashion giant Zara and then battered by the economic slowdown that hit Italy in 2008.
Stefanel is still alive but staggering. So are hundreds of other chronically unprofitable, highly indebted companies being kept afloat with new infusions from lenders and shareholders, especially in Southern Europe.
Economists and central bankers say zombies undercut prices charged by healthier competitors, create artificial barriers to entry and prevent the flushing out of (p. A10) weak companies and bad loans that typically happens after downturns.
Now that the European economy is in growth mode, those zombies and their related debt problems could become a drag on the entire continent.
“The zombification of the corporate sector and banks [is] a risk for future living standards,” Klaas Knot, a European Central Bank governor and the head of the Dutch central bank, said in an interview.
. . .
In some ways, zombie firms are an unintended side effect of years of easy money from the ECB, which rolled out aggressive stimulus policies, including negative interest rates, to support lending and growth. Those policies have been sharply criticized in some richer eurozone countries for making it easier for banks to keep struggling corporate borrowers alive.

For the full story, see:
Eric Sylvers and Tom Fairless. “Zombie Companies Haunt Europe’s Economic Recovery.” The Wall Street Journal (Thursday, November 16, 2017): A1 & A10.
(Note: ellipsis added.)
(Note: the online version of the article has the date Nov. 15, 2017, and the title “A Specter Is Haunting Europe’s Recovery: Zombie Companies.”)

No Known Maximum Life Span

(p. D3) Since 1900, average life expectancy around the globe has more than doubled, thanks to better public health, sanitation and food supplies. But a new study of long-lived Italians indicates that we have yet to reach the upper bound of human longevity.
“If there’s a fixed biological limit, we are not close to it,” said Elisabetta Barbi, a demographer at the University of Rome. Dr. Barbi and her colleagues published their research Thursday [sic] in the journal Science.
. . .
Dr. Barbi and her colleagues combed through Italy’s records to find every citizen who had reached the age of 105 between 2009 and 2015. To validate their ages, the researchers tracked down their birth certificates.
The team ended up with a database of 3,836 elderly Italians. The researchers tracked down death certificates for those who died in the study period and determined the rate at which various age groups were dying.
It’s long been known that the death rate starts out somewhat high in infancy and falls during the early years of life. It climbs again among people in their thirties, finally skyrocketing among those in their seventies and eighties.
. . .
Among extremely old Italians, they discovered, the death rate stops rising — the curve abruptly flattens into a plateau.
The researchers also found that people who were born in later years have a slightly lower mortality rate when they reach 105.
“The plateau is sinking over time,” said Kenneth W. Wachter, a demographer at the University of California, Berkeley, who co-authored the new study. “Improvements in mortality extend even to these extreme ages.”
“We’re not approaching any maximum life span for humans yet,” he added.

For the full story, see:
Zimmer, Carl. “What Is the Limit of Our Life Span?” The New York Times (Tuesday, July 3, 2018): D3.
(Note: ellipses added.)
(Note: the online version of the story has the date June 28, 2018, and has the title “How Long Can We Live? The Limit Hasn’t Been Reached, Study Finds.” The NYT article says the Science article was published on “Thursday,” but the citation for it that I found says it was published on Fri., June 29, 2018.)

The Science article mentioned above, is:
Barbi, Elisabetta, Francesco Lagona, Marco Marsili, James W. Vaupel, and Kenneth W. Wachter. “The Plateau of Human Mortality: Demography of Longevity Pioneers.” Science 360, no. 6396 (June 29, 2018): 1459-61.

The More Governments Tax, the Less Workers Work

(p. A17) European countries trail the U.S. in working hard and controlling taxes, and their economies have lagged in comparison. France has a tax-to-GDP ratio of about 44%, and in Italy it’s 43%. The French and Italians work almost 30% fewer hours per person than Americans. Notably, the French economy has flatlined since 2010 while Italy’s has contracted.
These patterns are not a coincidence: High taxes discourage work and capital formation. Data from the Organization for Economic Cooperation and Development suggests that a 1% increase in a nation’s tax rate is associated with a 1.4% decrease in hours worked per person in the working-age population. U.S. data dating to the 1970s also shows that higher taxes cause workers to limit their hours, reducing economic output.

For the full commentary, see:
Winkler, Rolfe and Justin Lahart. “Government Spending Discourages Work; The French and Italians pay higher taxes and put in 30% fewer hours per person than Americans.” The Wall Street Journal (Tuesday, Feb. 27, 2018): A17.
(Note: the online version of the commentary has the date Feb. 26, 2018.)

Italian Bureaucracy Leaves Innovative Restaurateur Feeling “Psychologically Violated”

(p. A7) ROME–The campaign leading up to Italy’s national elections on March 4 [2018] has featured populist promises of largess but neglected what economists have long said is the real Italian disease: The country has forgotten how to grow.
Take Gianni Angelilli’s pizzeria in downtown Rome. He uses an innovative dough mix and flexible cooking methods, drawing long lines and rave reviews. But Italy is too bureaucratic, the locals have no money and his ambition isn’t what it used to be, Mr. Angelilli said. If he opens more outlets, they will be abroad.
“Now, foreigners have more desire to eat well than Italians,” he said. “Italy is dead. Italy is finito.”
. . .
Italian politics have become measurably more chaotic since the country’s old party system–largely frozen during the Cold War–collapsed amid corruption scandals in the early 1990s. Data collected by Einaudi economist Luigi Guiso and others show that since 1992, coalitions have become more likely to crumble, lawmakers to defect and governments to need confidence votes in parliament. Politicians jostling for attention push more frequent, longer and more-complicated legislation.
“An excess has cluttered the bureaucratic machine,” says Mr. Guiso. “The country has become cumbersome.”
Yet the weakness of transient politicians has paradoxically made the public administration more powerful, at the same time as constant legal changes immobilize it, he says.
Mr. Guiso has practical experience. He is helping to set up a government-supported program to send young Italians to learn about entrepreneurship in Silicon Valley and at U.S. business schools, and he said Italian civil servants decided a tender offer inviting U.S. organizations to participate could be published in Italian only. After much persuasion, the civil servants agreed to publish the tender in English too–but insisted all applications must be in Italian, said Mr. Guiso. He said political friends apologized, saying there was nothing they could do.
Mr. Angelilli said his encounters with Italian bureaucracy while running his Pinsere pizzeria have left him feeling “psychologically violated.” He said he had to pay a fine recently because his oven’s air extraction, made to comply with European, national and regional laws, ran afoul of new city rules.

For the full story, see:
Marcus Walker and Giovanni Legorano. “The Real Italian Job: Rev Up Productivity.” The Wall Street Journal (Wednesday, Feb. 28, 2018): A7.
(Note: ellipsis, and bracketed year, added.)
(Note: the online version of the article has the date Feb. 27, 2018, and has the title “Italy: The Country That Forgot How to Grow.”)

Italians Learning to Eat the Jellyfish That Thrive with Global Warming

(p. A8) MARINA di GINOSA, Italy — As a small boat loaded with wet suits, lab equipment and empty coolers drifted into the warm turquoise sea, Stefano Piraino looked back at the sunbathers on the beach and explained why none of them set foot in the water.
“They know the jellyfish are here,” said Dr. Piraino, a professor of zoology at the University of Salento.
While tourists throughout Europe seek out Apulia, in Italy’s southeast, for its Baroque whitewashed cities and crystalline seas, swarms of jellyfish are also thronging to its waters.
Climate change is making the waters warmer for longer, allowing the creatures to breed gelatinous generation after gelatinous generation.
The jellyfish population explosion has blossomed for years, but got a special boost since 2015 with the broadening of the Suez Canal, which opened up an aquatic superhighway for invasive species to the Mediterranean.
The jellyfish invasion has now reached the point where there may be little to do but find a way to live with huge numbers of them, say scientists like Dr. Piraino.
. . .
Convinced that climate change and overfishing will force Italians to adapt, as they once did to other foreign intruders, like the tomato, his team has launched the Go Jelly project, which roughly boils down to, if you can’t beat ’em, eat ’em.
The study, which officially gets underway in January, will attempt to show that the enormous and increasing jellyfish biomasses can be the inexhaustible Jell-O of the sea.
While overfishing, warmer seas and pollution may wipe out ocean predators, they are allowing jellyfish to thrive — and reproduction comes easily enough to jellyfish.
. . .
Dr. Piraino has plumbed the mysteries of the creature, more than half-a-billion years old, for its possible uses. Those include the potential to fight tumors, and also using collagen-heavy species as a source for more voluptuous lips.
Then, there is food.
Antonella Leone is a researcher at Italy’s Institute of Sciences of Food Production, and since about two months ago, Dr. Piraino’s wife. At their wedding this summer, the couple celebrated with a tiered cake dripping with confectionary jellyfish.
A leader of the Go Jelly project, she thinks that Italians, with their zeal for locally sourced regional ingredients, might just find a taste for jellyfish.
Others already have. The Japanese serve them sashimi style in strips with soy sauce, and the Chinese have eaten them for a millennium.
. . .
Dr. Piraino cut a piece that he said was full of protein and omega-3 fatty acids.
“It’s great,” he said, as it slipped out of his hand.
The chef marinated a piece in garlic and basil for the grill. He prepared another on a bed of arugula next to a sweet fig to balance out what everyone agreed was an intense saltiness.
At the end of the tasting, there were several untouched specimens on the table. Dr. Leone packed the foodstuff of the globally warmed future into a jellyfish doggy bag.

For the full story, see:
JASON HOROWITZ. “As Jellyfish Swarm the Seas Off Italy, a Fix Emerges: Try Ragu, or Sashimi.” The New York Times (Mon., SEPT. 18, 2017): A8.
(Note: ellipses added.)
(Note: the online version of the story has the date SEPT. 17, 2017, and has the title “Jellyfish Seek Italy’s Warming Seas. Can’t Beat ‘Em? Eat ‘Em.”)

More Evidence that Once-Dynamic Florence Is Now Stagnant

(p. C1) New research from a pair of Italian economists documents an extraordinary fact: The wealthiest families in Florence today are descended from the wealthiest families of Florence nearly 600 years ago.
The two economists — Guglielmo Barone and Sauro Mocetti of the Bank of Italy — compared data on Florentine taxpayers in 1427 against tax data in 2011. Because Italian surnames are highly regional and distinctive, they could compare the income of families with a certain surname today, to those with the same surname in 1427. They found that the occupations, income and wealth of those distant ancestors with the same surname can help predict the occupation, income and wealth of their descendants today.

For the full story, see:
JOSH ZUMBRUN. “Florence’s Rich Stay Rich–for 600 Years.” The Wall Street Journal (Fri., May 20, 2016): C1-C2.
(Note: the online version of the story has the date May 19, 2016, and has the title “The Wealthy in Florence Today Are the Same Families as 600 Years Ago.” Where there are minor differences in the two versions, the passages quoted above follow the online version.)

The Barone and Mocetti working paper, is:
Barone, Guglielmo, and Sauro Mocetti “Intergenerational Mobility in the Very Long Run: Florence 1427-2011.” Bank of Italy Working Paper #1060, April 2016.