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Italian traditions provide buffers to the crisis

Thursday - 2/21/2013, 12:00pm  ET

In this Nov. 22, 2012 photo, Amedeo Tartarini visits an apartment in Nove, near Vicenza, Italy. Tartarini's goldsmith business thrived for decades in Italy's postwar boom, but the country's financial crisis and cheap competition from China brought it to an end. In many rich countries, a person like Tartarini, who has lost his home, his business and his life’s savings, might have ended up on the street. Instead, he has managed to keep afloat thanks to friends and community spirit. (AP Photo/Antonio Calanni)

Associated Press

VICENZA, Italy (AP) -- Self-made Italians like Amedeo Tartarini never expected to need help.

Tartarini's goldsmith business thrived for decades in Italy's postwar boom. He was one of legions of small businessmen who made Italy an industrial power. With a house, money in the bank and a teeming workshop, the affable artisan never questioned his financial security -- until it was too late.

As Italy's financial crisis deepened, Tartarini ignored signs his business was failing, but persevered in the belief that skill would outshine cheaper competition from China. Hard work and quality, he was convinced, would protect him from the forces of globalization. They did not.

"I always trusted it wouldn't end this way for me," Tartarini said, his eyes darkened with regret. "I had to sell all I had to continue, hoping to make it."

In many rich countries, a person like Tartarini, who has lost his home, his business and his life's savings, might have ended up on the street. Instead, he has managed to keep afloat thanks to friends and community spirit. Italy's extraordinary social safety nets, rooted in centuries of tradition, have helped soften the blow for millions of Italians -- and, so far at least, insulated the nation from the scenes of explosive unrest that have unfolded in other crisis-hit southern European countries. Italy heads into general elections this weekend that promise to determine what shape these crisis buffers will take in the future.

Institutions like family, hometown loyalty and church activism have combined with a generous welfare state to maintain social peace, despite escalating episodes of individual financial collapse. Meanwhile, Italians' own obsession with keeping up appearances at all costs -- a cultural trait known as "la bella figura," or cutting a fine figure -- has made them allergic to public displays of misery, while masking the true extent of national hardship.

The No. 1 factor in Italy's social equilibrium: The Family. The postwar economic-boom generation of prudent savers is lovingly maintaining those that followed. Grandparents care for grandchildren, while parents help finance, or even buy, that first home for just-married children. And young Italians may be just as inclined to live at home with mom and dad well into their 30s, with no social stigma. An organic extension of family is "campanilismo" -- a fierce loyalty to the village bell-tower -- which has meant that Italians look out for each other in their home communities, which are often better suited than the state to find the best ways to help those in need.

Experts see good and bad in this Italian way of life.

On the one hand, it has helped to maintain not only social stability, but also high living standards, in Italy's worst economic crisis since the end of World War II. On the other, it has been a social crutch that has eroded competitiveness, sapped opportunity for young people and perhaps put Italy on the path of long-term -- if decidedly genteel -- decline.

Tableaus of daily life in Italian towns and cities provide abundant evidence of social buffers at play.

Italy's vast network of volunteers offer services at little or no cost, with such organizations as retired corps of Alpine soldiers staffing recycling centers or managing parking at public events in exchange for a fraction of what it would cost to contract out the job.

Visit any Italian playground on a workday, particularly in the wealthy north, and small children are tended by a grandmother or grandfather, supplementing a paucity of daycare for children under 3 and providing after-school care for older children -- mostly so mothers can work. Research by the IRES think tank finds that this help sustains the employment of 800,000 women -- who in turn generate 2.4 percent of GDP.

The research concludes that grandparents' contributions don't just sustain and deepen familial relationships, "but are fundamentally linked to the economic systems of social services." Older Italians, defined here as over 54, contribute every year around EUR18.3 billion ($24.5 billion) to the Italian economy, or 1.2 percent of GDP, according to IRES. That sum amounts to roughly what Italy's economy has grown annually for the last two decades.

"It is reasonable for 35-year-olds to be living with their parents, and whole families may be relying on a grandfather's pension. One or two incomes may support four or five people, and it is not considered dysfunctional," said Raj Badiani, an IHS Global Insight analyst.

Other economic factors are at play in preventing social tumult despite youth unemployment of 37 percent:

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