Italy is in terminal decline, and no one has the guts to stop it

The Rome Opera House sacked its entire orchestra and chorus the other day. Financed and managed by the state, and therefore crippled by debt, the opera house — like so much else in Italy — had been a jobs-for-life trade union fiefdom. Its honorary director, Riccardo Muti, became so fed up after dealing with six years of work-to-rule surrealism that he resigned. It’s hard to blame him. The musicians at the opera house — the ‘professori’ — work a 28-hour week (nearly half taken up with ‘study’) and get paid 16 months’ salary a year, plus absurd perks such as double pay for performing in the open air because it is humid and therefore a health risk. Even so, in the summer, Muti was compelled to conduct a performance of La Bohème with only a pianist because the rest of the orchestra had gone on strike.
After Muti’s resignation, the opera house board did something unprece-dented: they sacked about 200 members of the orchestra and chorus, in a country where no one with a long-term contract can be fired. It was a revolutionary — dare one say Thatcherite? — act. If only somebody would have the guts to do something similar across the whole of the Italian state sector. But nobody will. Italy seems doomed.
The latest panic on global stock markets has reminded the world of the vulnerability of the euro, and this week pundits in the British press have been busy speculating about France’s possible collapse. Hardly anyone bothers to fret about Italy any more, even though last week its exchanges took the second biggest hit after Greece. Italy’s irreversible demise is a foregone conclusion. The country is just too much of a basket case even to think about.
Italy’s experience of the European monetary union has been particularly painful. The Italians sleepwalked into joining the euro with scarcely any serious debate, and were so keen to sign up that they accepted a throttlingly high exchange rate with the lira. The price of life’s essentials, such as cigarettes, coffee and wine, doubled overnight while wages remained static — though back then jobs were still easy to find and money easy to borrow. But when the great crash happened, Italy, as a prisoner of a monetary union without a political union, was unable to do anything much about it, and could not even resort to the traditional medicine of currency devaluation.
The only path to recovery permitted by Brussels and Berlin — that of austerity — has been counterproductive because it has only been skin-deep. If austerity is to stimulate growth, it must be done to the hilt, which inevitably involves terrible suffering and the risk of mass agitation. No Italian politician can stomach that.
Italy can’t blame all its problems on monetary union, however. The euro did not cause the catastrophe, but it deprived Italy of a means to combat it and exposed its fatal structural weaknesses.
Source and full piece: Nicholas Farrell, The Spectator, 25 October 2014