January 15, 2008 / 1:29 AM / in 10 years

Once buoyant Italy wilts under cloud of gloom

ROME (Reuters) - Ask most foreigners what comes to mind when they think of Italy and the answer is likely to contain words like style, art, fashion. But ask an Italian and the most likely answer will be “decline.”

<p>An Italian soccer flag flies over a mound of garbage on a street in a suburb of Naples May 24, 2007. REUTERS/Tony Gentile</p>

Italy posted the biggest fall in consumer morale in the world in the second half of 2007, according to a twice-yearly survey of 48 countries by market information firm Nielsen. Italians are living under a “cloud of gloom,” the report said.

The findings are no surprise to anyone living here. The protracted garbage crisis which has filled the streets of Naples with rotting rubbish is symbolic of the popular mood.

Modern day Italy is in some ways reminiscent Britain in the 1970s, when trash on the streets during a strike-ridden “winter of discontent” was also emblematic of a seemingly intractable national decline.

Italy is the third largest economy in the 15-nation euro zone but its infrastructure is inadequate and outdated, jarring with its position among the Group of Seven rich nations.

Growth has lagged its euro zone peers for well over a decade regardless of the government in power, dogged by weak consumer spending as purchasing power has been eroded by stagnant salaries and sharply rising prices for basic goods.

Since 1990 productivity has lost momentum and gross domestic product has grown 15 percentage points less than the European Union average, making Italy the weakest performer in one of the slowest growing areas in the world.

The trend is forecast to continue this year and beyond, despite a recent export revival.

ECONOMIC MIRACLE

It wasn’t always like this. After the post-war economic miracle of the 1950s and ‘60s, Italy was still growing faster than most of its trading partners through most of the 1980s.

Local newspapers are full of surveys and editorials on Italians’ lack of faith in their leaders, with a running debate on whether the country is in decline (the answer is invariably yes), how deep the decline is and whether it is reversible.

“There is neither hope nor anger, nor commitment nor the will to change, only a great resignation,” sociologist Luca Ricolfi wrote recently in the daily La Stampa newspaper.

“Non-one is able to make plans because our politics transmits a daily message of uncertainty.”

Politics has, on the surface, become more stable since the revolving door governments for which Italy was famous until the late-1990s. But no real benefit has been reaped because a plethora of bickering parties produce policy inertia even when governments manage to last.

The sense of decline was compounded when Eurostat -- the European Commission’s statistics agency -- announced last month that Spain had overtaken Italy in terms of per capita economic output, leaving just the Greeks and Portuguese behind the Italians in the euro zone.

So pervasive is the feeling of gloom that President Giorgio Napolitano felt it necessary to use his New Year message to urge Italians not to “give in to a loss of confidence.”

Similar comments have come from Prime Minister Romano Prodi and Senate speaker Franco Marini. But Italians don’t seem to be listening.

“Of course we’re in decline, compared with our European partners but above all in terms of our expectations compared with those that our parents had, and our children’s will be even lower,” airline steward Alberto Mazzali, who lives in Rome, told Reuters.

Twenty years ago it could get irksome for foreigners here to be told so frequently that nobody knew how to live like the Italians. Now you are more likely to be asked what on earth induced you to come and live in a place like Italy.

SLOW REFORMS

Philosopher Umberto Galimberti says Italians must take some of the blame for a lack of civic values which has eroded the quality of life.

“Our society is fragmented, it has no concept of the common good which leads to unethical behavior on the part of everyone,” said on a recent television current affairs show.

Most Italians blame their politicians, and it’s easy to understand why. Italy’s political apparatus costs twice as much as France’s and Germany‘s, four times as much as Britain’s and 10 times as much as Spain‘s. And by any measure it doesn’t give value for money.

Parliamentary procedures are so slow that reforms can take years to pass and, after amendments from dozens of parties, are invariably weakened versions of the original plans.

A good example are the talks now being led by centre-left leader Walter Veltroni on how Italy should reform its inefficient political institutions.

Eleven years ago a cross-party commission was set up with the same goal by former Prime Minister Massimo D‘Alema. In the meantime, despite endless debates, committees and negotiations, virtually nothing has been achieved.

A static, ageing society and weak leadership are seen as the crux of the problem. Employers’ confederation chief Luca di Montezemolo has called Italy a “do it yourself country” which “hasn’t been governed since it joined the euro.”

University of Chicago economics professor Luigi Zingales pinpointed the inability to change when he rhetorically asked in a recent magazine article what had happened to cause twenty years of decline.

“Paradoxically, the answer is: nothing. Absolutely nothing has happened. Our country, with its vested interests, corruption, inefficient public sector, tax evasion, has remained exactly the same ... but the rest of the world has changed.”

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