Day: February 2, 2017

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Why is Spain and Italy’s youth unemployment still so high?

I can answer for Italy alone, as I do not have any knowledge of the Spanish economic fabric.

Regarding the stubbornly high youth unemployment rate in Italy (now back above 40%, as of January 2017 and it has been hovering above 35% since 2009), there are multiple reasons behind it:

A. The Italian State genuinely hates entrepreneurs: it is basically impossible to do business in Italy. Those doing a business in Italy should be considered modern heroes, in my opinion. There is a constellation of bureaucratic hurdles, notaries, accountants, lawyers, whatever, that you are forced by the law to consult (and pay hefty fees) even BEFORE you start a business. After you start it, there will be a multitude of completely irrational tax deadlines with draconian penalties (that change every year), bureaucratic checks, useless controls, etc. that actively make your business frankly impossible. Bureaucrats live in medieval times, detached from reality, and they hate businessmen & risk-takers.

B. Lack of financial credit. Italy lacks a modern and efficient banking system. Money is lent by banks to friends, friends of friends, relatives of friends, etc. This approach proved disastrous and was able to take very important financial institutions (like Monte dei Paschi di Siena, the 3rd largest bank in Italy and Banca Popolare di Vicenza) to collapse because of Non Performing Loans generated by a handful (0.01%) of clients.

C. Closed market sectors: this is the elephant hiding behind the curtains of the room. In Italy entire market sectors are purposely closed to competitors (i.e. newcomers) in order to maintain the good life of the incumbents. Nobody is willing to touch the incumbents’ privileges because any action against them would be politically very pricey. Pharmacists, Notaries, University Professors, Taxi Drivers, etc. are just a few examples of ferocious pressure groups that have been able to blackmail and eventually force the legislator for decades to prevent by the law any innovation in their relevant sectors so to close their markets to any potential competition. Many excellent Pharmacy Graduates, Law Graduates, or would-be Taxi Drivers (these are just examples) are not able to enter the market and do their job because there is an artificial limit legally set forth by the State to the lucky few “members” who are allowed to practice that profession. Regardless how high is the youth unemployment rate, the legislator will not open these markets to new players as the existent ones would have to face new competition (and, potentially, compressed profits).

D. Secondary school system (particularly Universities) is totally detached from reality, living in a universe where the actual job you will be asked to do is completely irrelevant. After the students will graduate, they will not have acquired any set of skills useful in the market. Once you will have spent 4–6 years to get a degree, you will need to start from scratch to learn the skills needed in the market. (I have been suggested by Luca Accomazzi that this situation is currently improving).

E. As other answers here have already stated, the judiciary system in Italy is purposely archaic and inefficient: if you need to recover a debt, be ready to wait years while you carry out expensive litigation, and the result is far for certain thanks to the many loopholes that Italian lawyers are able to exploit to delay and eventually avoid to repay their clients’ debts.

I hope this helps.

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How did Jews escape Germany in World War Two?

In order to escape Germany, a jewish family had various routes:

a. The Western Route: obtaining a Visa to France or Switzerland;

b. The Eastern Route: once reached Trieste, there was the Lloyd Triestino express passenger route to Bombay and Shanghai by sea. Many jewish families used this route to eventually reach Australia.

c. The Southern Route: from France or Italy to Northern Africa.

d. The Northern Route — through the Baltic sea, which was immediately cut as soon as the Nazi invaded Poland, first, and, later, the Netherlands and Belgium.

Switzerland was considered quite safe throughout the war, but there was always the fear that Hitler would have eventually invaded even the Swiss territory. As we know, the Nazis even started planning for it.

For this reason many jewish families decided to try the French route: at the time, France had one of the largest army on the planet and had a history of good integration of the jewish communities in the French social and political fabric.

After having entered into France (relatively safe until 1940’s invasion), the jewish family could either settle there (especially in the South) or had to find a way to go to the border with Spain and get a second Visa to Spain.

After 1940’s occupation, la Republiquewas not safe anymore (even for high profile “ethnically-jewish” families who had long converted to catholicism) and, at the southern border, the lines of people trying to enter the (relatively) safe Spanish territory became interminable: the wait for normal people to get a Visa was normally of weeks (if not months) and many of them were eventually denied the Visa.

There were exceptional cases of high profile / wealthy individuals who were able to get the Visa to Spain skipping the long lines (most probably by bribing the right person at the Embassy or by using ultra-high level connections in the French / Spanish diplomacy).

For example: André Meyer — the legendary (jewish) partner of the French Bank Lazard Freres & Co. who later became the financial advisor of American Magnates and CEOs and even of Jackie Kennedy — was able to leave France through Spain, with almost treasonous speed, given how difficult this was even for other members of his own family(*).

Even after entering Spain (under the Fascist’s Francisco Franco regime at the time), the odyssey was not finished as there were no direct, accessible, connections to the Americas and the Generalissimo’s regime — formally an Ally of Hitler — was not a guarantee of a safe haven for the jewish community.

Those wanting to escape to US, for example, had to either reach Portugal or Morocco or Algeria (depending on which Visa they would get first) and then obtain (normally after many months’ wait) the even more coveted Visa to the US.

Once in Portugal, for example, there were at least the following options:

  1. By plane: there was the Pan Am Clipper— a large seaplane — connecting directly Lisbon to New York (with a short refueling stop in the Azores) with an almost impossible “waiting list”; or alternatively
  2. By boat: there were the American Export Linesships also connecting by sea Lisbon to New York.

I hope this helps!

(*) The Austrian-born Felix Rohatyn — himself son a Polish jewish — recalled that until very recently there were relatives of André Meyer whom he met in Paris many years after the war when he was appointed US Ambassador in France, saying that they will never forgive André for leaving and leaving them behind because he left through Spain and they were not able to do so. Mr. Rohatyn himself, together with his family, left Austria for France in 1935 and, after Hitler’s invasion in 1940, unable to follow the Spanish route, started a two-year odyssey which took him first to Casablanca, then Oran (Algeria), Lisbon, Rio de Janeiro and, finally, New York City (mostly thanks to forged Visas and the help of legendary Brazilian Ambassador to France, Martins de Souza Dantas, later dubbed “the Schindler of Brazil”).

You can also watch the very interesting video below of Mr. Rohatyn himself explaining how he escaped the Nazisduring WWII: