Sunday, September 30, 2012

Venetian lessons in economics

Venice has never had substantial natural resources. Yet Venetians, as is obvious to casual visitors who cannot help but notice the many grand palaces, ornate architecture, and extensive decoration, once had great wealth. Venice earned its wealth from two sources: trade and the inventiveness of its people. Although Venice once ruled a considerable area, its expansion occurred primarily because of Venetian wealth rather than the lands being the source of Venetian wealth, as tended to be true of British colonies. In an era that predated free trade policies, Venice’s territorial possessions, once obtained, did contribute to Venetian wealth.

Today’s Venice is but a shadow of yesteryear’s glory. The city’s population has shrunk by 50%, from 120,000 to 60,000 people, in the last thirty years. The decrease from its peak is even greater. Tourists (more than ten million annually) and sales of items made from hand blown Murano glass are now Venice’s economic mainstays. Parts of buildings appear empty and many (sometimes half or more on a street) former commercial enterprises (think small businesses such as bars and specialty shops that typically employ 1-5 people) are now shuttered.

A few beggars are on the streets, but I have not seen anyone sleeping rough. A handful of North African street vendors hawk handbags that look like luxury brand knock offs. As a tourist who does not speak Italian, it’s hard to estimate the unemployment rate. I have not seen clusters of people standing idly during the work day, an indicator of unemployment I’ve witnessed elsewhere, including in the US and the UK. Perhaps the high cost of living in Venice prompts the unemployed to move elsewhere.

Most buildings are in visibly need of repair, a function of both insufficient funds and the city slowing sinking into the lagoon, cracking and eroding stone and stucco structures. Streets are paved in stone; in general the trash is routinely collected and there is little litter apart from cigarette butts. I’ve seen a couple of closed bridges over small canals, presumably in need of repairs. I’ve noticed a few public employees working on Venice’s infrastructure and about a dozen crews working on what appear to be private property, but the observable backlog of work dwarfs these scattered efforts, which is unsurprising in view of the sad state of Italy’s economy. (Incidentally, one of the best restaurants at which I’ve eaten in Venice is a favorite of laborers in orange jumpsuits.)

What is striking is the number of what appear to be truly small commercial enterprises, e.g., a fruit shop with one or two staffers or a bar with three or four employees. Customers and proprietors greet one another warmly and frequent the same shops. Some of wealthy individuals may own multiple enterprises, but the appearance is consistently one of small, locally owned enterprises. Without the availability of large parcels of land to permit construction of a large store and a parking lot for the vehicles of customers drawn from a large area, Venice is commercially anomalous.

However, the plethora of small shops prompted some musings about commercial futures elsewhere. The English town in which I spent a week this month is known for its local shops (butcher, cheese, baker, clothing, etc.) that successfully coexist alongside national (e.g., Tesco, a large British supermarket chain) and international (e.g., Orvitz, a clothing and outdoors store) businesses. Farmer’s markets are increasingly popular; people choose to buy locally produced goods to support their neighbors, to minimize environmental costs, and to find top quality, hand produced or fabricated goods. If people do decide that quality living is possible with less stuff (cf. my post Post-industrialization), then the fate of truly small, local businesses may not be as dismal as economists and business analysts once predicted.

Having known small business people and farmers from my ministry in small towns in the 1970s, many of them cherished the quality of life and independence that self-employment made possible. Perhaps we will go back to the future. Some human endeavors (e.g., some scientific research and production of some consumer goods) happen most effectively and efficiently on a larger scale. But that is not true of all human endeavors and perhaps the industrialization of production epitomized by Henry Ford’s launch of the Model T automobile that over-reached at the end of the last century is beginning to ebb.

Satisfying jobs provide the worker with a decent standard of living, honor the worker’s dignity (this can happen by allowing individual expression, initiative, or other ways), permit – perhaps even encourage – the development of meaningful relationships, and contribute directly or indirectly to the community’s general well-being. Individuals opt for various combinations of those diverse rewards depending upon personal preference and need; choices may vary over time. Work that is not broadly consistent with those principles is not conducive to abundant living or personal happiness.

Venice, capitalizing on its heritage, seems to have achieved this for a significant proportion of its diminished population. Otherwise, crime would be higher, people living in poverty more readily apparent, and less interaction between people.

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