The Nonni Economy

Dear Readers,

It's common knowledge that Italy's economy and the policies governing it is a dinosaur that must either evolve or face extinction. Its infamous bureaucracy and age-old professional guilds have more in common with the Middle Ages than the Cyber Age. Its creaking political machinery is overseen by a bloated battalion of decrepit mercenary toads--whose median age is something like 105. Italy has almost zero population growth. On top of this, educated, energetic, and ambitious young people--faced with such dim prospects for the future--are fleeing the country in droves. As a result, living in Italy sometimes feels like living in a gigantic old folks' home--a Renaissance Retirement Village, if you will. Seems you can't throw a cannellini bean here without hitting a smug, sturdy-soled pensioner making her way to the pharmacy--in short, the atmosphere in this confoundingly beautiful country is so fusty, so entrenched in a mildewed past, I sometimes get the feeling that the whole peninsula is but wiping its feet on Death's doormat. If Italy was a patient in the hospital, the prognosis for survival would be grim: in a coma, hooked up on life support, facing a chronic vegetative state. I don't mean to go all Thomas Mann on you, but, along with the heavenly smell of dark-roasted coffee wafting from the bars, the stale reek of an imminent demise is in the air unless something changes drastically.

And yet, if you were to stroll around town and have a look--out there on the streets and in the piazzas--things wouldn't seem all that bad. Plenty of Italians wear expensive, stylish clothes; their children are garbed like midget runway models and have all the latest game systems; they drive late-model cars, an increasing number of which are of the luxury variety or benzina-guzzling SUV's; they are able to throw elaborate birthday parties for their children when the cost of one Fisher Price toy runs something like €40 ($52); they take costly vacations to the beach or to the mountains; many eat out at ever-more-pricey trattorias and pizzerias; they smoke--a lot (and cigs cost between $5-6 a pack). Strolling around thus, you might be tempted to think that surely matters can't be very dire at all. You might even be tempted to believe what Berlusconi--that pancake-faced charlatan--was insisting all along, that everything's swell and Italy's economy is as strong, solid, and vigorous as a blowhard politico pumped-up on Viagra.

So what lies behind these disparities, then? I call it the Nonni Economy.

Nonni are a silent, quasi-mythic force
here in Italy; they're the unglamorous, varicose-veined legs on which the entire country stands. They're the grandparents who stuffed their wool mattresses with money for decades, who lived like closefisted clerics, who scrimped and hoarded all they could and avoided debt of any kind. They bought property back when it was relatively cheap--usually crappy ancient apartments with sporadic plumbing or crumbling case coloniche. They darned their socks and knitted their own sweaters. They worked two jobs or more and took care of scores of children and invalid relatives all living under the same leaky roof. Thanks to them, most Italians (that is, those who aren't still living at home with their parents) now have homes--restored, of course--for which they never had to pay (I read somehwere that something like 85% of Italians neither pay rent nor have a mortgage, which is why there was never a real estate bubble to burst). That means extra money to spend on la dolce vita, of course. As a rule Italians still eschew debt, particularly personal debt--but this may have more to do with the national sport of tax evasion and the penurious character of banks than any inbred distaste for owing money. (Leaving a paper trail for the tax man is, for many Italians, like leaving a trail of pork loins for a rapacious wolf).

Some cold, hard facts

Consider that the average Italian monthly net income for a full-time job is about €1300 (or $1700). Consider that pay raises in Italy happen only when Saturn is in the fourth moon of Jupiter's house, when Hell turns to hazelnut gelato, or when pigs get their pilot license. Consider that the cost of living in Italy keeps rising alarmingly--with prices on utilities, gas, over-the-counter drugs and staple foodstuffs such as bread, pasta, coffee and milk experiencing dispiriting jumps. Consider that the average rent for a two-bedroom apartment in Florence (should you be one of the unlucky few without nonni to gift you property)--outside the historic center, of course--is €1000-1200. My husband and I are unfortunately among that small percentage who pay a mortgage, and it's a fairly modest one at around €1000 a month. Consider that an elementary-school child's mensa, or school lunch, bill is a good €98 (or $130) per month, unless you qualify for low-income reductions. Consider that the average monthly grocery bill for a family of four is about €375. Consider utilities, including garbage removal, which are all much, much higher than their American, bargain-basement-priced counterparts. Consider that gas costs about €1.80 per liter or the equivalent of about $8 per gallon. Consider that a monthly bus pass costs €35 ($45). There is universal healthcare but consider that the co-payments (or i ticket, as they're called) required for many visits, exams, and analyses can cost up to €38 (or about $50) a pop.

If, in considering these figures, you're beginning to wonder how an average family can get by much less demonstrate all the seductive trappings of Italian life on display in the piazzas, you're not alone--I've always wondered the same thing. (And it seems the new PM Mario Monti is wondering, too). For instance, my husband and I really struggle, and I know others in the same boat. We've seen our income dramatically dwindle in purchasing power over the last ten years (granted, we've since had two children, but even given that, we're worse off now than before*). This year we had to forego after-school activities for our kids. We both commute and run most errands by bicycle to avoid the costs of gas and bus fares (anyway, it's healthier and better for the environment, right?). We have one basic PC, two cell phones of the decidedly unsmart variety, a car that is 20 years old (and was recently awarded "antique" status--thereby qualifying us for cheaper registration rates, amen). We took out a small loan to pay for our last summer vacation. We rarely go out to eat or spend on trifles. The lining in my winter coat is being held in place by a safety pin and I haven't seen the inside of a salon in a year. I'm not complaining--it's just the way things are.

But it just doesn't add up, does it? Which means that...

La dolce vita is clearly not about doing the math

Italians tend to perceive well-being in different terms than, say, Americans. Not having much personal debt is part of it, but I think that the biggest thing contributing to Italian complacency is the family--and specifically, all the boons bestowed upon the current crop of citizens by their nonni or other elderly, hard-working relatives.

The family unit has always been the building block of Italian society--we all know this. It is typically the source of all security, both economic and emotional, and it is the fruits of these nonni's and bisnonni's thrift which are being enjoyed by many of their descendants today. Though it's hard to quantify the effects of the Nonni Economy, it does create a sort of protective bubble around many Italian families that makes them feel and appear more prosperous than they might be if left to truly fend for themselves amidst the tempest of market forces. It encompasses certain antiquated practices as well, such as the predilection for trade or cash-only transactions and the rather, ahem, creative accounting that results.

                                                             
Italy's low birth-rate certainly contributes to the semblance of being better-off (if you don't have kids or have only one, obviously there's more money to spend on yourself or more to lavish on that figlio unico). But even many one-child households would be strapped if it weren't for the financial safety net provided by grandparents. The ever self-sacrifing elders of the Nonni Economy also provide less tangible benefits, the main one being unlimited free child care for their grandchildren. Put yourself on any street corner or in front of any elementary school and watch the endless to and fro of grandparents shepherding their young charges. They often function as full-time maids as well as babysitters, providing meals and even doing the laundry, ironing, and grocery shopping--a huge help to working parents. In addition, many provide gifts of cash or clothing--or even pay for cars or settimane bianche (ski vacations) for their grown children, and swim lessons and scuba gear for their grandchildren. Mind you, I am not talking about wealthy people--these nonni are ordinary folks who have managed to squirrel away significant savings, accrue zero debt, and have healthy pensions to live on. They have the lifelong habit of near-zero consumeristic consumption (why, merely turning on an electric light is considered an act of fiscal profligacy), which in turn enables them to lavish spending on their far more materialistic (and often more economically pinched) children and grandchildren.

To their credit, most Italians--whatever their economic status--find contentment in their little daily rituals of coffee and well-prepared meals; in socializing with the small circle of friends that they've known since childhood; in dolling themselves up in their best duds and strolling around town, stopping for an espresso or gelato or to gawk at shop windows. If these things remain unchanged, and if the overall health and well-being of the family is intact, then Italians generally feel themselves to be doing just fine.

How did they do it again?

As the recent rash of Monti raids has proved, tax evasion in Italy is rampant, pervasive, and often considered a kind of sacred duty--making it, and not Roman Catholicism, the real religion of the Italian people. For instance, it's common practice when inquiring about the cost of a service--say a teeth-cleaning--to be given two options: "85 euro with receipt, 60 euro without." (Now that the sober-faced Monti has put the fear of God into everyone, I'm curious to see if this will change).

So if today--with the albeit lackluster use of credit and debit cards, with computers and electronic banking--Italians are able to conjure financial smokescreens on such an epic scale, imagine what many cagey nonni were able to accomplish in their day? (My FIL, for example, worked three jobs but only ever declared income on one). This is not to diminish at all their hard work and penny-pinching ways--but you have to wonder if, along with a lot of choice real estate, the current generation of Italians has inherited public coffers that were already suffering from acute anemia.

What does all this mean for Italy's future? Given the nature of this Nonni Economy--the fact that frugality seems to be a lost art, that these traditionally selfless nonni will eventually die out--and the zeal with which Mr Monti is pursuing scofflaws, is the current brand of Italian-style "sweet life" a tenable one for the times to come?

Or will Thomas Mann indeed have his day?


Yours,

Campobello

* check out this article on Italian earnings