Sometimes big, complicated things are best understood in microcosm. Consider, for instance, Stephan Faris’s portrait of Sicily for Bloomberg Businessweek:
- “Giarre, a town in eastern Sicily, sits above the sea on the slopes of Mount Etna… The city of 27,000 hosts the largest number of uncompleted public projects in the country: 25 of them, nearly one for every 1,000 inhabitants. So spectacular is the waste that some locals have proposed promoting Giarre’s excess as a tourist attraction.”
Notable members of this herd of white elephants include “a partly built, graffiti-covered theatre where work has started and stopped 12 times… a hospital that took 30 years to build and was outdated before it was ready to open… an Olympic-size swimming pool that was sunk but never completed.”
The most striking example is a 20,000 seat polo field:
- “’The whole population of Giarre, babies included, was supposed to come here and watch polo,’ [a local journalist] said. ‘We don’t even have horses. It was like building a hockey rink in Nairobi.’”
The story of Giarre helps explain why the island as a whole is in such a mess:
- “In 2011 the Sicilian regional government ran a €5.3 billion ($6.8 billion) deficit on a €27 billion ($34.8 billion) budget. This year, with the island’s credit rating hovering just above junk status and Italian Prime Minister Mario Monti cutting subsidies to the regions in an effort to shore up the national budget, Sicily has reached the breaking point.”
In turn, Sicily stands as a symbol for the country as whole:
- Sicily’s problems are an extreme version of Italy’s. The entire country had been heading toward insolvency long before the euro crisis struck… Monti may have pulled the country from the fiscal precipice by raising taxes and cutting pensions, but his success stopped there. A labor reform bill that took months to wind its way through Parliament was so weak when it finally passed that business leaders greeted it with a shrug. The country is roiling with corruption scandals, but a bill drawn up to address them has stalled.”
One might wonder how such beautifully diverse and culturally rich part of the world can find itself in such dire straits. But as Stephan Faris observes:
- “The danger in Sicily isn’t that the island’s economy will suddenly implode. As with the rest of Italy, the region’s problems are less economic than political. The biggest threats to Sicily’s future are its politicians.”
In particular, he describes a culture of patronage in which “Sicily’s politicians became dispensers of benevolence, handing out jobs and favors, with little incentive to worry about waste.” It is a culture he blames on the fact that while taxes are gathered by Rome, the largesse of the state is exercised by the region.
But before anyone gets all northern European about the political practices of the south, consider the culture of patronage exercised by the European Union. Here we see the same disconnect between taxation and expenditure, i.e. funds are provided by member states, but dispersed by various EU institutions – as advertised on those little plaques attached to various EU-funded projects across the continent. And then, of course, there’s the Eurozone – the ultimate disconnect between where wealth is created and where it is dissipated.