“Ma Dov’e Questa Crisi?” *

http://globaleconomicanalysis.blogspot.com/2012/09/monti-warns-italian-unions-over-200000.html

I have never thought to post a link to an article before, but this one was so essentially synchronized with my current thinking that I could not resist.  I hope that if you take the time to read it, you will then come back and let me put in my two cents’ worth.

Things are bad.  They have been bad for so long that the frog boiling in the pot has been comatose for some time.  Luckily for Italians, he has a shadow double which lives on happily  in the underground economy.  It is a world where following the rules imposed by  a  conga line of megalomanaical governments was never an option.  What we might see as “corruption” is simply survival to almost everyone buying, selling, or producing anything.   Now, however, over ten years of imposed absurdity defined as EU “guidelines”   combined with the current economic collapse has brought things to crisis level.  Will there be a reaction?  Who knows.

I have been observing things, as we all have here, and so I have a few anecdotal stories which may help people from elsewhere understand what Italians are up against.

My husband once had a store.  It was taxed in many ways, and he eventually got out of the business because the fiscal pressure was too great.  Business income taxes are around 45 percent to start.   He had to pay tax on every article he sold, as if he had sold it, before he sold it.  Think about this:  You buy 100 articles, you pay up front for them, and immediately you turn over the hypothetical  4 to 20 percent value added tax to the government, as if you had already sold all 100 articles.    If things go really well, you might sell 50 of these articles.   The remaining fifty cannot be written off, and you are allowed only two “On Sale” periods of ten days in a fiscal year.  These must be communicated to the appropriate offices in triplicate ahead of time. (And yes, there is also a tax on each page of official documentation, which one must purchase in the form of stamps.  These range from a couple of Euros to 40, depending on the document.)   These are established by region and by date.   Stiff fines are levied on any store displaying a “SALDI“**  sign outside of this permissible window of time.

The roving representatives who offered their wares to store owners were also regulated by rules regarding competition, so in any small town there wasn’t really a choice as to whom to buy from.  Most representatives will not sell to a store owner unless he/she buys a certain amount of merchandise.  In a tiny town, how many of X article, especially things like specialty clothing, do you think you can sell once someone has already bought one?   Always, the  answer is “not nearly as many as you had to buy.”

The store space is taxed on its size, taxed on its location, taxed on whether or not it has air-conditioning, whether it has a phone, a bathroom, internet, how much window space it has,  how many lights it uses and the size of its monthly electric bill.  God forbid you should be so lucky as to need an employee (most small stores are owned and run by one person or a family).   Business owners are expected to not only pay a pre-established wage and follow all rules regarding hours, but they must pick up the tab for extensive medical and retirement fund coverage, and guarantee that there will be no firing before a certain period of months has passed.  No matter how  inept or dishonest the employee.  Hiring an employee is similar to adopting a child: you are forever responsible for that person.  It is a rare small business where the employee does not take home, every month, more money than his/her employer.  No wonder jobs are scarce.

But the most egregious example of the absurdity and extent of taxation on small business that I remember was the tax on signage.  It started by requiring a special tax if you had a sign, as most businesses do.  Sunsequently the sign was also taxed by its size.  Then the tax was increased if the sign used electricity to illuminate it.  But the final indignity came when, around the middle of the 1980’s, the government decided that store owners should be taxed according to how large a shadow the sign cast on the sidewalk at  a given hour, which I assume was not at noon.  I don’t think this tax is still in effect, but you can be sure the EU will have come up with something similarly preposterous.

The government establishes how many pharmacies there can be, one of them for each 12 thousand inhabitants.  It establishes which items the pharmacy may sell.  The licensed pharmacist is inevitably the wealthiest person in town, along with the “notaio.”  This is the notary,  whose signature is required on all transactions of property.  He must be paid a percentage of each land, car, house, business sale.  This percentage is very high.   As you might imagine, the declared value of such transactions is a fraction of the actual price.  Buy a farm for 100 thousand Euros?  Declare its cost at 20 thousand.  Nevertheless, the notaio is not only very wealthy, but also one of the most despised people in town.   The position of both notaio and farmacista is jealously guarded, and the license is passed down, always,  within the family for generations.  Find the nicest palazzo in town?  It belongs to either the pharmacist or the notaio.

It is said that as much as 50 percent of the Italian economy is underground.  I certainly hope so.  Recently a law was passed (ostensibly to regulate  money-laundering)  which mandates that any transaction larger than 1000 Euros (about 1,300 dollars) MUST take place electronically.  Cash is not allowed.   Only a certain amount of cash can be withdrawn from one’s personal bank account in a 24 hour period.   Add the transaction charge to an already tenuous bottom line in stores, and compound this by the fact that only about 25 percent of Italians will use plastic to make purchases,  factor in  the inflation which is sure to come,  and you can see the perfect storm on the horizon.

So if it is true that  rules create behavior, much of the “corruption” prevalent in Italy is a direct result of the population trying to hang onto what little they earn.  The entire structure is built on successive levels, the “underground” levels being where the bulk of transacting takes place.   I can testify, as someone who has been restructuring a house, that things can get quite interesting!   Work a job if you can, but make sure you have enough chickens in your coop to exchange with your neighbor who grows wheat!     And treat the winemaker well, too, you are going to need him!

“Seniority” mixed media on paper

*     “But Where is this Crisis?”   A famous song from the 30’s which is always pertinent.  They even made a Carnevale  float in theme, with an updated version of the song, which you might find amusing!!  If I have the time I will translate it.

Recognize anyone?   http://www.youtube.com/watch?v=vjP9J33ztYE&feature=related

**”SALE”

3 thoughts on ““Ma Dov’e Questa Crisi?” *

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