TYLER COWEN: Luigi Zingales, my conversant,
is one of the best and best-known economists, both in the United States and in Europe. He's written three best selling books, the
most recent of which just came out in Italian. It's called Europa o no. A Capitalism for the People, from three years
ago is, in my view, perhaps the best book on the current American economy, what's wrong
with it, and what should be done. With Raghu Rajan, he has an earlier book,
Saving Capitalism from the Capitalists. Luigi's contributions are far-ranging. He's been at the Graduate School of Business
of University of Chicago for now, I think, 27 years. He is a major contributor to theory of the
firm, politics, culture, governance. This is just a small sliver of the papers
he has written, in addition to the three books. He is now the director of the Stigler Center
at the University of Chicago. Most of all, in recent times, Luigi has been
known for his biting critique of what we all sometimes call crony capitalism. There's more I could say, but let's get to
the dialogue. I think of a lot of your work as bringing
the ideas of culture and governance into economics. There're a few major strands in your thought,
and I want to explore a few of them. Since you're Italian, let's start with the
question of Italy. If you look at the economic performance of
Italy, the country is just coming out of a triple dip recession. Unemployment is about 12 percent. By some measures I've seen, per capita income
is not higher than what it was 15 years ago, and they're over €2 trillion in debt. Some serious problems, and a low birth rate. How do you see this playing itself out, and
what is the endgame? How pessimistic or optimistic are you? LUIGI ZINGALES: I think that you said correctly. It's not just the fact we're coming out from
a triple recession. It's the fact that Italy did not grow for
the last 20 years. There are a lot of things that don't go well
in Italy, but when I left it 27 years ago, a lot of things were not working, and Italy
was growing. In fact, in the period 1945 to 1995, Italy
grew at a rate that was at least as good, if not better, than Europe and the United
States, especially in terms of productivity. Since 1995, Italy stopped growing in terms
of productivity. Of course, if you don't grow in terms of productivity,
you don't grow in terms of income per capita, and so on and so forth. The question of why, I think, is one of the
most important questions, not just for the future of Italy, but for the future of Europe,
in general. With a coauthor, I have tried to analyze the
various theories. One theory, which is very popular, particularly
in Italy, is that it's all the fault of the euro, because it is true that this sudden
stop happened roughly at the time Italy joined the euro. I don't think there is any evidence that's
the case, in spite of the fact that it's a very strong correlation, temporally. I think that the sad reality is that the institutional
deficits present in Italy are particularly severe as you approach the technological frontier. If you have institutions that don’t work
and are corrupt, et cetera, you can get by if the only thing you have to do is improve
agriculture and produce t shirts. We've seen in Cambodia, not great institutions,
but they produce great t shirts, and it works. Once you try to compete in the first league,
when you try to be at the frontier of the technology, you need to have a relatively
non corrupt government, a system where people pay taxes without too much tax evasion, but
not too much taxes, because otherwise they don't produce. Italy has failed, in my view, to do that. I think that the government by Renzi is trying
to do this. The jury is still out whether it will succeed. COWEN: When I hear other people speak about
Italy, there's a certain tension as to how long these cultural effects last. You read Robert Putnam, things matter from
hundreds of years ago. In some of your papers, it matters how many
years a region had as an independent city state. It matters in the year 1,000 whether you had
a medieval bishop in your city. Those are very durable cultural effects. I think back to being in Italy in the mid
1980s, when it passed the UK in terms of per capita income, it was, in a sense, then at
the European frontier and still growing. Now, it's not so much later, and what feels
like the same culture seems to be giving very different results. How's the way we make sense of that? ZINGALES: Two things. First of all, the distinction that Putnam
makes and a lot of people make about the North and the South. I think, in some sense, it's disappearing
in Italy, but in the worse direction. All Italy is looking more like the South. [laughter]
ZINGALES: The Northern people . . . I come from the North, even if my grandfather came
from the South, but I came from the North. People in the North, when I go back home,
they still feel very proud that they're much better than people in the South. I say, “You know, when you are in the Titanic,
being on the third deck or the first deck doesn't make a huge difference.” [laughter]
ZINGALES: “Yeah, you are on the third deck is better than the first, because you just
sink a little bit later, but you still sink.” There is this arrogance in the North that
I don't think is fully justified, because many of the bad practices of the South have
been imported to the North. The Mafia used to be only in Sicily, today,
is present in Milan, is present in Venice, is present everywhere. When we are questioned, “What has gotten
worse?” I think there is this component. The second is the boom. What people did not fully realize, but the
boom of Italy in the 1980s was a boom of a developing country that had a protected currency
area. We were playing the catch up nation within
Europe. While everybody else in Europe was moving
in more advanced production and services, they were leaving behind market space for
us to capture the less technological production, and we did it with gusto. It was a boom in the ‘80s, but it was a
boom in the wrong direction. COWEN: Let’s say we go back to 1860. Was Verdi wrong? Say Italy had not become a single nation. There had been a North and a South or even
half a dozen or more nations competing against each other or more of a Swiss model. Was the nationalist model for Italy a mistake? ZINGALES: This is a very hard question, but
let me try to say that what I think was wrong is precipitating the unification without really
a national culture. There was a small elite that felt Italian,
but the rest of the population did not feel Italian. A number of accidents, including the errors
of the only Italian who actually was a military leader, Garibaldi, made unification possible
against all odds. I’m sure that if you ask people in 1858,
“What are the chances of within three decades Italy gets unified?” they will say, “1
out of 100.” Within two years, it unified—most of it. It was really a chance, but then, because
this happened before there was a national spirit, it turned out it was basically an
annexation of the South by North, in which the North imposed its laws to the South, and
they were not good for the South. One of the best Italian thinkers and most
unknown, is this guy Vincenzo Cuoco, who was part of the Neapolitan revolution in 1799,
and was actually convicted to death to participate in this revolution. This revolution, for people who are not familiar
with Italian history, was a Jacobin revolution trying to imitate what they were doing in
Paris and in Naples. This revolution initially succeeded, and then
a cardinal brought some troops from the South of very simple peasants that massacred the
Neapolitan elite and brought back the Ancien Régime. Then it, of course, went back and forth with
Murat, et cetera. The interesting thing about this guy is that
after he was convicted to death and then escaped, he wrote a history about that revolution. He’s probably the only person who wrote
a history of something that he lived in and gave an interpretation that is valid to this
day. His interpretation is you can’t export other
models in different contexts. The Neapolitans who tried to copy France are
silly, because they don’t understand the social, cultural, economic context of France
at that time was completely different than one of Naples. He has this analogy say, “Every place has
its own clothes.” You’re not going to put Finnish clothes
to a Greek or Greek clothes to a Finnish, because you’re either going to sweat to
death or be freezing. Why do you want to impose the same rules to
everybody? Italy tried to do this, and the result was
that in the South, a complete rejection of the Northern model. So much so that there was a revolt that we
in history call bandits, but in reality was the liberation front that just lost. When you lose, you’re always on the wrong
side, and so these are called bandits. The North did not need this. The South had this revolt, and then they reached
a compromise. There was a compromise not unlike, I think,
what happened in the South of the United States. It was for the worst of both sides, in the
sense that North side agreed with the big landowners of the South that we’ll leave
them in power in exchange for consensus, and they will retain their power in exchange for
an army that defends their land against the revolt of the people. That led the South to underdevelopment for
years. Very few people know that when Italy got unified,
the income per capita of Sicily and the one of Emilia Romagna around Bologna were the
same. Today, it is almost double the one of Emilia
Romagna versus Sicily. It’s a huge sort of gap. Now, why I insist so much on this, because
I think there is an analogy that most people don’t fully appreciate between the Italian
unification and the European unification. Europe got unified roughly in the same way. There was a small elite that felt European. Most people don’t really feel European,
but a small elite feel European. They speak the same language, which happens
to be English. Pretty soon, England would be out of Europe,
but they feel part of the same nation. They talk, they go to the same meetings, et
cetera. They’re trying to force unification over
the desire of the people. The result, I think, is not working very well. In the old days, you were sending troops to
maintain the South and the order. Now, you use the Central Bank, but it’s
not that different. At the end of the day, what I fear is a desertification
of the Southern part of Europe similar to what happened in the Southern part of Italy. COWEN: Like in the Industrialization. One of my favorite papers by you is your paper
with Bruno Pellegrino. It’s a great name for coauthoring a paper
on Italy. The way I read that paper is you’re saying
something like this: Italy, right now, doesn’t have enough firms which could be 5 or 10 times
larger than they currently are. The global economy, over the last 20 years,
has put greater emphasis on scaling up. The 1980s were much less about scaling up. You could do better with small- to medium
sized enterprises in the 1980s. Now everything is about scaling up. You have Apple, you have Google. Kind of mega scale. Italy, more or less, has stayed still. China has scaled up. In the new world where scaling up is really
what matters, Italy is left behind. That’s the fundamental productivity reason
why even the Italian North hasn’t, in some ways, done that well. Is that the way you think about it? ZINGALES: Absolutely, but it’s not just
the Apple of this world. It’s also the Starbucks. If there is one thing Italy is competitive
on and is better than everybody else is food. The fact that the major chain of coffee is
not Italian is really hurtful. [laughter]
ZINGALES: No, I understand that Apple is an American product, but when I arrived in this
country 27 years ago, you were not really drinking coffee. You were drinking a dark thing that tastes
like I don’t say what because we’re online. The culture of coffee did not exist here. The culture of coffee and a café where you
seat and drink, et cetera, what Starbucks is, is an Italian or at most French culture. Why were you unable to export this? This is my little explanation. By the way, the only country in the world
where Starbucks has not arrived is Italy. If you go to an Italian coffee shop, the productivity
of the individual working there is five times the one of Starbucks. They do coffee, cappuccino, one after the
other, no questions asked. They understand five orders contemporaneously. You come here to the United States, you first
go to the cashier. You have to repeat five times what you want,
then another repeat five times to the one producing it, and then five times to the one
delivering it. How can Starbucks compete? The answer is very simple. The bar, the Italian café, is one shop, one
establishment thing. If you go to a café, you’re going to find
that at the register, there is an old woman who is generally owner, and she watches over
everything. Why? COWEN: You can’t scale monitoring. ZINGALES: Exactly, but why? Because the model they’re doing allows people
to steal whatever they want. You take money here, you use coffee all over
the place. You have no monitoring of how much coffee
is consumed, how much revenue I produce. If you don’t have the lady checking you
out throughout the day, at the end of the day, there’s zero revenues and all cost. In Starbucks, everything is computerized,
so you know at the end of the day how many coffee you have to have, how much rent you
have to have, how much coffee you have consumed. You can actually order coffee online automatically,
because everything is centralized in Seattle, so you can scale it. The extreme agency problems of Italy make
it difficult to scale firms. Either you have family firms in which you
have all the employees that are part of the family, and it’s not obvious that family
does not steal, but still less so. COWEN: At least they’re stealing from themselves,
right? [laughs]
ZINGALES: Exactly. At least there is some redistribution internally. At the end of the day, you can’t scale these
things up. I think that’s a huge problem. COWEN: Here’s an article from Quartz. Let me read you the headline. Maybe you saw it from a few months ago. “The most common surnames of new entrepreneurs
in Italy are Hu, Chen, and Singh.” If you look at Milan, you have to go through
20 names, and at number 20 is the Italian name Colombo for the most common or most frequent
names of entrepreneurs. Is this sustainable culturally, or is this
Italy’s future, in essence, to be economically colonized the way parts of Southeast Asia
have been by Chinese, Indians, Sikhs, whoever it may be. Maybe Germans. COWEN: One friend of mine was saying that
the demise of the Italian firm family structure is the demise of the Italian family. In essence, when you used to have seven kids,
one out of seven in the family was smart. You could find him. You could transfer the business within the
family with a little bit of meritocracy and selection. When you’re down to one or two kids, the
chance that one is an idiot is pretty large. The result is that you can’t really transfer
the business within the family. The biggest problem of Italy is actually fertility,
in my view, because we don’t have enough kids. If you don’t have enough kids, you don’t
have enough people to transfer. You don’t have enough young people to be
dynamic. The Italian culture has a lot of defects,
but the entrepreneurship culture was there, has been there, and it still is there, but
we don’t have enough young people. What the Chinese are doing are taking over,
mostly, the bars, the restaurants, the smaller things initially because those are the easier
ones to enter. They’re many and they’re very dynamic. I think that’s exactly the Italian problem. COWEN: Paint a picture for me here of the
end game 30 years from now. Typical Italian family has 1.3 kids. Debt to GDP ratio at least is reported at
about 130 percent, second highest in the eurozone after Greece. Productivity problems. Thirty years from now, what do you predict? What are we going to see? ZINGALES: It’s difficult to predict, especially
the future. One thing I can predict fairly confidently
is that we are not going to pay the debt. There will be some form of . . .
COWEN: External redistribution. ZINGALES: No. Unfortunately, we missed the right moment. There was a moment in which 50 percent of
the debt was owned by foreigners, and the Germans made sure that we bought it all back. That was part of the system. Now, I think it’s 70 percent owned by Italians,
so it’s mostly redistribution. It’s very hard to imagine that we can sustain
this level of debt. I think that the combination between lack
of fertility, lack of productivity growth, and not particularly lawful immigration makes
demography being the number one consideration. I’ve said this like 10 years ago. Of course, nobody wants to talk about these
things, but it’s inevitable. COWEN: Let me try giving you an optimistic
case for Italy, and you tell me if you buy it or not. If you look at debt to income for Italy, it
does look horrible. It is horrible. If you look at debt to wealth of the eurozone
nations, the ratio of wealth to income in Italy is quite high, as you know. A very high percentage of Italian families
simply own their houses outright. Private debt is pretty low. Traditionally, a lot of the banks have been
in OK shape. When you think about Italian debt relative
to wealth, it’s only an extraction or a political economy problem—who is going to
pay, who is going to pick up the bill on the table of the restaurant. Of course, all the Italians are waiting, but
when the time comes and things are truly desperate, Italy has often done best in desperate times,
and the wealth is there to pay off the debt. Everyone’s simply playing a postponing game. True or false? ZINGALES: I think it’s false. The only thing that I agree is that Italians
get the best in the worst times. I think that that’s definitely the case. However, I’m surprised that you don’t
think there are significant deadweight cost of taxation and redistribution. Especially within a more mobile world, this
is becoming very serious. You mentioned correctly houses. That’s the only stuff that cannot run away. People run away. Financial capital runs away. Houses don’t run away. First of all, Italians are taxed very little
on houses today. The first decision that Renzi has made is
to de tax houses completely. COWEN: Yes, I know. ZINGALES: It’s going completely in the wrong
direction. Why? Because it’s extremely unpopular. If 70 percent of people own houses, then it’s
hard to tax houses. Honestly, if you were to do a wealth tax on
houses, then the value of houses would go down, because people are very illiquid, and
so it would go down. How can you tax a lot of other stuff? Labor leaves. I’m an example of that. Unfortunately, there is an increasing number
of people leaving. When I left Italy, very few people were leaving
at that time. Today, it’s hard to find people of the younger
generation not leaving. It’s really a major migration that, by the
way, decreases the human capital. Who are leaving? Italy is in the business of exporting high
human capital people and importing low human capital people, so it’s not a good trade. As long as you are in the European Union,
even financial mobility is like saying—unfortunately, I always choose the wrong places, because
I live in Illinois. Illinois is not that different from Italy. COWEN: Chicago. ZINGALES: Exactly. In fact, I always say the thing that makes
me feel at home in Illinois is Chicago politics. [laughter]
ZINGALES: If you tried to fix the Illinois budget, et cetera, it’s very hard to increase
taxes, because people move to Indiana, or Michigan, or Wisconsin in a second. We can discuss how big is the Laffer curve
at the national level, but at the state level, it’s very elastic. It used to be that in Italy this was not the
case, but what the European Union has done is to basically eliminate this bias. I grew up in Veneto, which is not far from
Austria and Slovenia. People moved to Austria and Slovenia anytime. Why do you want to stay in Italy where you’re
taxed more, things work less well, et cetera? The elasticity is very large. If you try to catch up in that game, I think
that you’re going to lose. COWEN: Let’s try the United States for a
while. A lot of us have been very struck by a piece
you wrote in 2011. I think it was for City Journal. This was a piece about Donald Trump. You basically said in this piece, “Donald
Trump is for real or could be for real. We should be very grateful that he has decided
not to run for president.” This is 2011, not 2015. You’re Italian, a quarter Sicilian, I’m
told, and you’ve lived here now, not here, you’ve lived in Illinois for 27 years. What is it you see about us that we don’t? You’re a kind of Tocqueville of Italy. A lot of your papers are on the United States. What’s the insight into us that you get
and we lack? ZINGALES: Let me start with the analogy between
Trump and Berlusconi, because I think that they are very similar in every dimension,
in a sense. They’re both extremely good salesmen. They’re both extremely wealthy and not afraid
to show off their wealth. They’re both obsessed with women. They’re both obsessed with hair, or lack
of hair for Berlusconi. They both profess themselves as free marketeers,
but they both made their money in businesses that are the ultimate opposite of free markets. This is real estate and gambling versus real
estate and TV that is basically a regulated utility in Italy. You make money by having the right connection
with government. That’s their version of the free market. They’re both extremely good, and this is
the success of Berlusconi and the success of Trump, in portraying themselves as a friend
of the people. In part, it’s because they speak at a very
low level, so people identify with them. They are happy to identify, because even somebody
that is so crass like Berlusconi can become rich. Maybe I can make it, too. That self identification is very important. The most important thing, and this is coming
to my advantage, having seen what Berlusconi got presented for Italy, I became much more
concerned about what the United States are becoming. My favorite line is that the great contribution
of Berlusconi to human kind is that he made things transparent. Berlusconi is the integrated version of the
US Congress. In what sense? In the US Congress, you have people that were
lobbyists before, they become congressmen, and then they go back to lobby. At least until they are congressman, or secretary
of the treasury, et cetera, they are not employee of somebody. They are beholden to somebody because they
come there, they go there, but at the moment, there’s a little bit of appearance of separation. Berlusconi did not even care about the appearance. Everything was integrated. He ran a party with his own employees. He created a party. From a strategic point of view, in three months,
he created the party, and he was sending his ad agency guys, being the party leaders, all
over the place. The same people became, then, his members
of parliament. The others were his personal lawyer, his personal
something else, and so on. They became members of parliament, ministers. You have the minister of telecommunications
that was the employee of Berlusconi deciding on rules on telecommunication that affected
Berlusconi. COWEN: Are you saying that we here are more
corrupt than we think and that Berlusconi is a kind of mirror on us? You have better access to that mirror, and
so through that mirror, you understand America and its crony capitalism, in some ways, better
than we do? ZINGALES: Yes. [laughter]
COWEN: One thing that strikes me about the literature on corruption, and rent-seeking,
and political influence is what is sometimes here called the Tullock paradox. Gordon Tullock worked in this building, and
Tullock raised the question of how much is at stake in politics? In the US, it’s about 40 percent of GDP. In Europe, it may be above 50 percent of GDP. Tullock was actually surprised, in a way,
relative to that, how little was spent on lobbying. For him, there’s some kind of structural
barrier story. What’s your take on the Tullock paradox? Why aren’t we even more corrupt yet, given
what percent of GDP in this country is allocated through mechanisms of a mix of force and democratic
whatever you want to call it rather than voluntary exchange? ZINGALES: First of all, let me spend a word
to praise Gordon Tullock. Very sorry he passed away recently, and I’m
even more sorry that he wasn’t celebrated the way he deserved to be celebrated. In my view, he was an extremely insightful
economist who made the point there is not enough money in politics in 1972, if I’m
not mistaken, or ’74. COWEN: A long time ago, yeah. ZINGALES: A long time ago, at a time where
there was much less money in politics. First of all, he got, clearly, the derivative
right, because from 1972 to today, the amount of money in politics exploded. I think he was very far sighted in understanding
this. The second is, in my view, the reason why
we don't see enough money is twofold. Number one, there is ideology. You can't really pay everybody. People will have some preferences—especially
when they're not paid a lot—for some position. That decreases the power of money. The most important fact is that some people
find it very easy to collect money, which are vested interests. They organize because they're small. This is Mancur Olson. They organize much faster, they can collect
money faster. The public at large finds it difficult to
collect money. The paradox of Tullock, the way I like to
describe it, the Gordon Tullock paradox is the following. Imagine you have some lottery tickets in which,
unlike most lotteries, which the state gets most of it, is pure, actuarially fair. You know that you are going to buy let's say
$5 trillion that pay off, and you start to sell the tickets. You know that by buying all the tickets, for
sure you're going to get $5 trillion. It seems that why the collective amount of
tickets doesn't sell for $5 trillion? That's basically what Tullock is saying. He's saying why, if we are purely cynical
and we try to buy all the votes, if you buy all the votes in Congress and for president,
you can get to allocate a lot of goodies. The value of the votes collectively should
be at least the value of the rents you get and all the goodies you allocate, which we
can discuss how much it is, but it's in the order of trillions of dollars. The point is that the public at large is not
able to coordinate and beat very much for those votes. Those votes sell cheap. Why do they sell cheap? Because the parties are not well organized. Since the time of Gordon Tullock to today,
people got more and more organized, and so the price is going up, but there is a way
to go. If we don't do something, there is a way to
go and spend more. I think that Gordon Tullock was absolutely
right. The interesting thing is that Gordon Tullock
implicitly, because the type of game he designed for this, it’s a game in which there is
a benefit for society to put some limits. I actually enjoyed, in my book, to pick a
little bit on Robert Barro, because Robert Barro defends restrictions in basketball and
baseball but not in everywhere else in the United States. I don't understand why in the United States
the only thing that is really noncompetitive is sports. In Europe, the only thing that is really competitive
is sports. In Italy, soccer you are the first division,
second division, you are promoted or demoted, according to performance. You don't buy your way into the NFL or the
Major League, et cetera. Here, you buy the franchise, and once you're
in, no matter how incompetent you are, you stay there, which is completely un American. [laughter]
[applause] COWEN: I'm very struck by your early work
on business firms and hierarchy. Some of this is written with Raghu Rajan. The idea of introducing or reintroducing ideas
of culture and governance and hierarchy into the business firm. I wonder sometimes, is this an Italian perspective? I'm sure you know Luigi Barzini's analysis
of the multiplicity of masks in Italy. Sometimes the outsiders who think it's so
freewheeling overlook these significant elements of hierarchy. The question I want to ask you is these recent
New York Times articles about Amazon and how Amazon either treated or allegedly treated
its employees. The woman took off a day to give birth to
a child, the next day she was expected to come back in, all kinds of demands. People supposedly left the company crying. A lot of hierarchy. Pay was pretty good. Given your analysis of the business firm and
hierarchy, what's your take on this whole Amazon story? Do you think Amazon, those people are heroes,
or this is inhumane, or we have the balance wrong? What do you say? ZINGALES: I think that probably we're going
a bit too much in a Southern direction. Take also Netflix. Apparently, Netflix has this credo that “we
are a team, not a family,” and like a team, we set aside everybody who is not up to being
first team. It works very well to motivate people. It's also quite hard for many of the people
to work. There is always the trade off between incentives
and some form of insurance. If you eliminate every insurance, you have
all incentives, then incentives are great but people are not particularly happy. You need to find the right trade off. COWEN: Maybe it's how we get these scalable
firms in the US that Italy is somewhat lacking, by being harsher in some ways. ZINGALES: I always said that the perfect world
is a world in which you take the best things from Italy and the best things from the United
States. My dream would be to live in Italy and work
in the States. The commuting is a bit complicated. I think that you're absolutely right. I come from a region in Italy where there
are a lot of family firms. What is extremely moving and depressing in
this moment is, in these firms, when they go bankrupt, the owners commit suicide. It is a pretty large number of suicides today
because, unfortunately, the business is not doing well. Sometimes, they leave their life insurance
to pay the salary of the employees, and then they commit suicide. That's a completely orthogonal view of the
firm like we are a family. Which one is better depends on a lot of things. Depends on how much is important to transfer
knowledge within the family. Italian firms specialize, or used to be specialized,
in craftsmanship that is hard to teach unless you have a dedicated person transferring this. That's the reason why they were family firms,
because the parents transferred to the kids. A lot of the education in Italy is done in
the family. One of the best things about Italians, for
example, is that they sit down at dinner. You say, “Why so important?” I thought that everybody sit down at dinner
with their family. I realized in America, a lot of people don't
sit down at dinner. When I grew up, I sit down at lunch and dinner. Today, it's difficult, because most people
are not around at lunch. There is a tradition of spending some time
around the dinner table. That's a place where you socialize, you learn,
you transfer human capital from the older generation to the younger generation. I think that this is one thing that is lacking
in the United States that they can learn from Italy. COWEN: You've written on conglomerates. One of the recent business stories is that
Google will turn itself into a kind of conglomerate. The parent firm will be called Alphabet. Google will be one division. Will this matter, and if so, how? ZINGALES: I think it's not a bad idea for
Google to separate the moneymaking machine from the rest. Why? Because when you don't see how much transfer
takes place, you tend to overdo it. I think it's a first step to do this separation
so that you see, from an accounting point of view, who's making money and who is investing
money or wasting money, depending on the point of view. COWEN: Won't it lower innovation by imposing
more accountability, or you think it's the opposite? ZINGALES: If innovation were just throwing
money at it, Greece would be the most innovative country in the world. I think money is a necessary condition, but
all the time it's not sufficient and sometimes it's also counterproductive. I heard some young entrepreneurs saying, “Look,
you don't want to get too much money early on because it distracts, it doesn't keep you
focused, et cetera.” I think it's very important to find where
to invest the money. This is why markets are so important, because
we're not that good at it. I admit, I teach entrepreneurship, but if
I were that good at picking the right investments, I would be a multibillionaire and I'm not. It's a difficult business to do. That's where the market is useful. My fear is that Google . . . Especially because
the governance of Google resembles more the governance of Italian companies rather than
the one of American companies. There's not a lot of floating, voting stock. The power is concentrated in the hand of few
people. As long as these few people are at the top
of their game, and they're smart, and they are in the right sector at the right time,
great. As we all know, people age or change, and
there will be a time in which they're not up to the game and they need to be replaced. At that time, the temptation for them to waste
a lot of money will be pretty strong. COWEN: I'm going to try an exercise here. I know I'm the interviewer, but I have a somewhat
speculative bent, as well. You've worked in a lot of different areas,
and I'm going to try to give my account of what I see as the underlying unities in your
thought. You've released papers, many more. A true stack would be higher. There's a lot of breadth there, but I think
it is tied together. I'll tell you how I see it is tied together
and you respond to that. How's that? ZINGALES: That sounds fantastic. COWEN: There's maybe two or three ways of
thinking about what you've done. A lot of your main papers, they're about corporations
or politics. I read you as taking core areas of economics,
and then pretty consistently suggesting that culture really matters and governance really
matters, and doing that consistently for businesses and government. There's another way I think of what you're
doing. This is maybe more Italian. Take the Italian Marxist Antonio Gramsci,
who wrote about hegemony, and power, and control. To me, you read like someone who read Gramsci
at an early age, was quite struck by it, maybe didn't agree with it, but you're taking all
of his questions and reasking them about control and hierarchy but with real economics and
with something like scientific method. In both ways, you're quite this Italian thinker. I have this saying, “All thinkers are regional
thinkers. You just have to figure out what the region
is.” You're redoing Gramsci with economics or you're
redoing economics with culture and governance. Then, there's this other Gramscian dimension
to your thought. He once said, “In the medium of the intellect,
I am a pessimist, but when it comes to the medium of the will, I am an optimistic.” There's this seesawing back and forth of the
extreme pessimism and extreme optimism. I see that in your work, too. You're an Italian who came to the US with
such high hopes. In many ways, you love it, but in other ways,
you're deeply disappointed. You keep on seeing the unities between US
and Italy, corporations and government, and the practical pessimism of this state of affairs. Yet, you're propelled to do something about
it by writing, speaking, being a public figure, and so on. That would be like my two minute version of
who you are, what you do. What do you say to that? ZINGALES: It's fantastic. I wish I had thought about it. Seriously, I think that it's very true. By the way, the only thing that you probably
missed is that this tension between the North and the South is also Gramsci. It's called the historical bloc. It's the bloc that ruled Italy for a long
time is this alliance between the Northern elite and the Southern elite was exactly Gramsci. I think that intellectual tradition of Chicago,
Stigler, when he invented regulatory capture was borrowing from Marx. It's right wing Marxism. COWEN: You told me you're a quarter Sicilian. What's the part of your thought that's a quarter
Sicilian? ZINGALES: I have a huge sense of pride, which
is not typical of my region. It's typical of Sicilian. My grandfather was in military, but in his
life, he did three duels. Won them all. [laughter]
ZINGALES: That was part of the culture of Sicily at the time. What is interesting is a very interesting
mechanism. If you are in the military and you are challenged
to a duel, if you did it, you were punished. If you did not do it, you were demoted. Which is the right way to do it. You don't want to encourage something like
this, but you don't want to encourage people to be cowards. I thought it was a brilliant system. I think I have this element that goes back
to my Sicilian roots. COWEN: Another Gramscian question, also an
Italian question. In Europe, you're European, it seems to many
of us there's some kind of line. Gramsci asked what's the difference between
East and West, and where in Europe would you draw that line? What from culture, what from governance, all
the different areas of your research, what determines that line? Why is, say, Macedonia in the situation it
is right now and Southern France is not? It seems to have something to do with that
line. ZINGALES: It's very interesting. When I go to Istanbul, I find it part of Europe
in every sense, at least part of my world. I don't know whether I belong to Europe or
not. It's all relative. Byzanztium is so similar to Venice that it's
impressive. I feel completely at home in Istanbul. It's a bit Venice, a bit Rome. How can you feel different? I've never been to Macedonia. Definitely, when you go to Moscow, you feel
it's a different world. It's interesting because my notion of culture
is probably more Mediterranean then East/West. I feel fairly at home in the Mediterranean. I went, actually, to Iran before Obama reached
the deal because I'm an Italian citizen so I could go to Iran without any problem. I was moved by how European, if you want—the
Persian culture is very much linked to all the traditions in the Mediterranean. So I don't feel it's so much East. By the way, Iranian people are super lovely
people, and they're not anti American. In fact, you find more anti Americanism in
France than you find in Iran. COWEN: They haven't seen us for so long, right? [laughter]
COWEN: I'm going to try an exercise I did with Jeff Sachs. I'm going to toss out a few terms, people's
names, whatever, and just ask you overrated or underrated. First one, campaign finance regulation. Overrated or underrated? ZINGALES: Paradoxically, overrated in the
sense that capture takes a lot more subtle ways than just campaign financing. It is an important consideration, but even
if tomorrow we could fix that, I don't think it would fix the capture problems. COWEN: Overrated, OK. Angela Merkel, overrated or underrated? ZINGALES: I think it's probably underrated. I'm impressed by her ability to, number one,
run Europe for the interest of Germans in a very effective way. [laughter]
ZINGALES: You should be impressed. She's elected by German people. She has no European constituency, so she does
her job as a politician extremely well. Doesn't correspond to the interest of the
rest of the Europeans, but that's a different. The other thing that I'm impressed is how
she handles the immigrant crisis. Recreating a positive feeling toward Germany
that was absent in Europe and taking, I think, the right approach. We want refugees, because refugees are the
best people. Not only is there a moral obligation to save
people that escape extermination, it's also an economic consideration. These are the most talented, the most entrepreneurial,
the most dynamic people in the world. We want to have them. COWEN: Given your work on the persistence
of culture, can Germany and Merkel absorb 800,000 Syrians a year for two or three years? Do you think so? ZINGALES: I think that's an excellent question. This is something that is not discussed enough
about immigration is the process of assimilation. I think that it's important to try to get
immigrants that are more similar so that they assimilate faster, precisely to avoid those
fractures that we have seen in the French banlieue, in the suburbs of Paris and so on
and so forth. Probably 800,000 people are less than 1 percent
of Germany. COWEN: That is close to 1 percent. ZINGALES: Yeah, it's close to 1 percent. In a year, it would be a lot. It depends on how fast they are learning German. They already have a pretty good Turkish population
that is not perfectly integrated, but they made them win the World Cup. I think they are pretty high up in the national
respect and prestige. COWEN: Pope Francis, overrated or underrated? ZINGALES: I have to say I love Pope Francis. It's hard to say he's underrated because everybody
loves him. Not being a Catholic—I was raised Catholic,
but I'm not a practicing Catholic by any stretch of the imagination. I've been known to be anticlerical all my
life. I've been anticlerical because I really thought
that the problem of Italy was that the Church was there. Once, I actually was discussing with a cardinal
in Chicago. They said, “No, no, the problem is the other
way around. The problem with the Vatican is the Vatican
is in Italy.” [laughter]
ZINGALES: I thought he was joking, but when they elected Pope Francis, I realized it was
true. First of all, Pope Francis was elected, basically,
by Northern and Southern American cardinals who were sick and tired of the Italian Mafia
in the Church. They were sick and tired of why? Because they end up being sued in here in
the States and losing money in the States for responsibilities of the Vatican, and the
Vatican did not chip in one dime. Not only that, it was wasting money with this
IOR, Istituto per le Opere di Religione, that was a money laundering organization. Something that should be dedicated to charity
was a money laundering organization. Pope Francis is changing all this. My only hope is that he's not killed, because
I think the chances of him being killed is not zero. He's fantastic. COWEN: So Italy should elect someone from
Argentina? ZINGALES: I wouldn't go as far as that. I don't think Argentina has the monopoly of
good leaders—actually, the tradition is not in that direction. I'm just saying Pope Francis is a fantastic
leader, and I wish Italy had a leader like that. COWEN: A related question from some of your
research. Is Christianity good for economic growth? If we look at those border areas of Africa,
does it matter much for their future economies if they go Christian or Muslim? ZINGALES: If I look at the data, I think that
Muslim religion is not generally associated with good attitudes for capitalism. COWEN: Muslim traders do very well around
the world, right? ZINGALES: Sure. I'm not saying that you can't be successful
and be Muslim. I don't think that it's necessarily the Muslim
religion, per se. It's the association of the way religion has
been practiced and diffused in countries that are mostly Muslim. I might be wrong of that, because I think
Weber was wrong on saying that Catholicism is such a disaster. I think that Catholic countries caught up
fairly well. I think that some of the Protestant ethic
is useful in the system, but I don't think it's necessarily the major cause of retardation
in development. I think it's something you want to think about,
but I don't think it's the major cause of underdevelopment around the world. COWEN: Luchino Visconti, the Italian film
director. Overrated or underrated? ZINGALES: Underrated, I think he's fantastic. But the best movie ever is The Leopard done
by him. COWEN: What's the social science lesson in
this movie? ZINGALES: The story is a very sad story, but
it's a very true story. It's the story of the Northern troops arriving
in Sicily and liberating Sicily, and the nobility there saying, “We should change to remain
the same.” This ability of Italy, which by the way, I
think is absorbed from the Catholic Church, which survived that long, to change—not
to change, to appear to change to leave everything unchanged. It's really a desperation, but the movie is
wonderful. There is Claudia Cardinale out of this world,
and Burt Lancaster and Alain Delon, really a fantastic thing. I showed it to my wife. She thinks it's slow because it lasts three
hours and a half. It's not something that generally you have
in Hollywood movies, but the quality of the scenes and the quality, also, of the silences
is out of this world. COWEN: I once saw it on a big screen at American
Film Institute. That was quite a help. A classic case where the movie was not worse
than the book, you might say. ZINGALES: I think exactly one of the few cases. I never read a book first and then saw a movie
that I thought the movie was the same level as the book. COWEN: The movie is better, I think, actually. ZINGALES: I don't agree. I think they are the same level, which, for
me, is the only case I can mention. COWEN: Beppe Grillo, is he actually funny? ZINGALES: Yes, he is funny. COWEN: If I understood Italian, I would laugh? ZINGALES: Yeah, he has some foul jokes, but
most sort of comedians have. I think certainly more funny than Trump. [laughter]
COWEN: Is he funnier than you? ZINGALES: Definitely. Look, there is one thing you have to realize
about Beppe Grillo. First of all, he has a degree in accounting,
which, first of all, is not normal for a comedian. Accountants are not that funny. Second, it makes him more qualified than most
people, certainly most comedians, to read income statements and balance sheets. Before he even was a politician, he started
being an agitator in shareholders’ meetings and going to shareholders' meetings with one
share, starting to ask questions and pose problems in Italian corporate governance. Was very successful, at least, at raising
the level of awareness. In that sense, he did something very valuable. COWEN: No coauthors, no colleagues, but who
is the most underrated living economist, and why? ZINGALES: This is a very, very difficult question. Who is the most . . . ? I would have said
Gordon Tullock had he not just passed away. I think he was really underrated for what
he did. COWEN: Around here, we'll grant you that. How would you say your opinions have changed
in the last 7 to 10 years? An awful lot has happened in the world. The EU has not turned out the way a lot of
people thought. There's a lot more opposition to migration. We've had a financial crisis. We may be on the verge, possibly, of another
global recession because of China. Italy possibly or probably hasn't turned things
around. Over the course of the last 10 years, how
have your views changed? I don't mean on particulars, but at the conceptual
level? ZINGALES: I think that I got much more interested
in monetary problems, and since ironically I started to study economics because I grew
up in a country with double digit inflation, so I thought that that was a big problem. But then by the time I became an economist,
inflation was not an issue and I thought that was not particularly interesting. Now, all this issue of deflation, how to fight
deflation, is deflation a problem—I think that are topics that, 10 years ago, I would
be completely ignorant about and now I'm fascinated by. COWEN: Now you think they're very important. ZINGALES: Yes. COWEN: Do you find it striking that the world's
three main currencies all have interest rates of zero? ZINGALES: Yeah. It is striking, and there is a part of me
that say that the zero interest rate policy is a redistribution in the wrong direction. This is taking away from the people with the
bank deposits and giving it to the guys who can easily engage in speculation, et cetera. From a moral point of view, I think the distribution
goes in the wrong direction. On the other hand, I have seen the eurozone
fall slowly into deflation. For six months last year, we're in the deflation
range. This maybe is my Italian heart bleeding, but
when you have a huge amount of debt and you start to have deflation—Irving Fisher was
right, the debt deflation spiral is pretty terrible. That's probably the worst possible outcome. I think that generals are famous to be prepared
to fight the last war, and so are economists and central bankers. The ECB has been set up to fight inflation. It's completely unprepared to think in those
terms. In fact I would raise this charge, because
when the European leaders talk, they say that “Oh, our objective is an inflation below
but close to 2 percent,” and I look for a statement of this type. If you look in the web page of the ECB, they
say that they want inflation below 2 percent—so there's no close—below 2 percent. Inflation is measured as the amount expressed
in the European level. Then they want every individual CPI of every
country below but close to 2 percent. If you have an average and every term has
to be below two, even close to two, the average must be below two, probably by a lot. COWEN: I think so. ZINGALES: I think that the ECB has been designed,
basically, to have deflation. I don't think they're mentally prepared to
out deal in this situation. I think that's a big issue. COWEN: I'm also struck by some of your work
on behavioral economics. I like very much the paper where you take
some investors, and instead of showing them Visconti's The Leopard, you show them a horror
movie and you see what happens to the risk premium. There's another paper I want to ask you about. It's about impatience and procrastination. It's often the case the same people who are
very impatient and procrastinate—and you give the example of people who were very impatient
to get a check—they'll even settle for a much smaller sum of money to get the check
now. Then they get the check, and they don't cash
it or spend it or do anything with it. They get it, and then they procrastinate. What's the underlying view or model of human
behavior that causes impatience and procrastination to go together? ZINGALES: Oh, you're setting me for a very
low standard. I don't think I have a model that includes
everything. This is part of a larger experiment, which
to some extent is still undergoing. With a colleague at Northwestern, we study
an entire cohort of MBA students at Chicago, 550 people. Many experiments that are done around the
world are done with undergrads. Most of them are the poorest undergrads, because
they're the ones that desperately need money, so generally art majors, not really representative
of businesspeople. A lot of people in economics dismiss some
of these results because they say, “Oh, these are the weird guys. They're not the ones that will run big corporations,
blah blah blah.” We started with a sample that, hopefully,
will run big corporations and statistically has run big corporations. What we find in many of the deviations that
behavioral economics find are present in our sample. The particular experiment that Tyler is talking
about is at the end of a bunch of games that won an amount of money that was going from
$0 to $300—some people were winning a significant amount of money, $300. We offer them to delay the delivery by two
weeks with value interest rate in some cases at 10 percent over two weeks. 10 percent over two weeks, over $300, is both
percentage wise huge but even $30 is not trivial, at least for me. It may be for my students, it's more important. These guys really give up receiving $30 over
two weeks to get the check in the mail that day. However, this is the only clever thing we've
done in that particular study, we follow when they cash that check. On average it was two weeks, but 10 percent
never cash it. They lost it. [laughter]
ZINGALES: They are so eager to get the stuff. I think if I had to give a sense, it's the
salience of this. Honestly, these people, everybody should have
accepted delayed payment because we checked, 90 percent of them were not maxed out on their
credit cards. What it means receiving a gift in cash, a
check—it's not even a gift in cash—today over two weeks. Once you know you'll receive it, we think
we were fairly credible as a faculty promising. I think the credibility issue was not major. If you know you won $300, you can go spend
it today on your credit card and get the check two weeks from now. The fact that you want to have it now, I think
is an interesting aspect about saliency. The fact that once you have it you relax and
you forget to cash it is, I think, really interesting by itself. COWEN: Speaking of procrastination and impatience,
what's your view on the future of the European Union? It seems to me it cannot fully integrate,
because unlike with North and South Italy, there you actually have a fully integrated
electorate. Right? You have a single set of elections where you
choose a national leader, and everyone more or less accepts it. It's really hard for me to see that for Europe. I suppose my expectation will be that the
ties become weaker and weaker, Schengen falls away, there's not a fiscal union. The euro becomes a bit more like a currency
board. National central banks keep certain kinds
of liabilities. What's your prediction for 20 years from now? European integration: more of it, less of
it? What's the underlying model? ZINGALES: Quoting Gramsci, let's first give
the pessimistic, rational view. There will be a breakup between the Northern
Europe and the Southern Europe. The wishful thinking—no, the wishful thinking
is too bad—is the optimism of the desire to make a change. That's what every sensible human being should
be working for is to try to actually make the European project a democratic process. COWEN: So a European-wide electorate? ZINGALES: We vote somebody that can decide
something. We elect a parliament that has not the real
power to appoint a prime minister, to appoint somebody, and nobody really responds to the
European people. I think that an injection of democracy is
what is most needed, and hopefully all the tension, will emerge. If you want to be optimistic, like I want
to be, the United States did not have an easy route. As I said at the beginning, there was a lot
of tension and there was a civil war. Hopefully, in Europe, we already fought the
civil war—two—in the last century, so we don't want any more of that. The fact that the process is not linear is
inevitable. The fact that there are tensions and bumps
is inevitable. The important thing is at least you see the
right direction, and this is what sometimes I'm not so sure that everybody sees. I think the right direction is more democracy. COWEN: Last question before we open up to
the crowd. You're now director of the Stigler Center
in Chicago, and you've studied organizations for your whole career. Given what you've learned—we're here, of
course, at the Mercatus Center hosting this event—but how will this shape what you will
do with the Stigler Center, as an economist? ZINGALES: I think that the first thing is
spend time in hiring the best possible people. I think that one thing that works well in
university is that we spend a huge amount of time selecting faculty. A lot of what we do is listening to seminars,
reading papers, refereeing papers, selecting the next generation. What I've learned in various organizations
is the best, most successful organizations are the ones that spend a huge amount of time
selecting the good people. Because it's very costly to fire—you don't
want to fire unless you have to. Once you get the right people in place, organizations,
I wouldn't say run themselves, but almost. If you don't have the right people in place,
you spend a lot of time fixing the hiring mistakes. COWEN: There's now a little bit of time for
questions. Please, question, not statements. Go up to the mic. We will alternate how we call on you. How many minutes are left? Ten minutes? OK. If you make a long statement, I'll just cut
you off. This is for our guest to answer. First question, yes? AUDIENCE MEMBER: Thank you very much for coming. My name's David Wille. I'm a research assistant with the Mercatus
Center. Part of our research is looking at the connection
between the financial services industry and small business creation. As you know, on a number of measures, small
business creation is down, innovation seems to be down in the US. What, in your view, is the connection, if
any, between the financial services industry, the problems in that industry, and the decline
in innovation, the decline of new business creation in the US? Thank you. ZINGALES: I think that the role that the financial
sector has in promoting new businesses, innovation, and also small business, is crucial. Much of the first book with Raghu Rajan was
dedicated precisely to celebrate this role. Do they succeed always so well? The answer is no, because there are some frictions. Ironically, I don't think we're there anymore,
but there was period in which venture capitalists were so much flooded with money that they
had to dish out this money sufficiently fast, that they had to shell it out in big pieces. They were only financing more advanced companies,
because they couldn't find the time to actually shell it out in small pieces at a time. It's very important that you have capital
in the right people to do that. If I were to point out the major problem to
financial innovation today in the United States, I know the financial system. In other countries, I will think it's the
financial system. In Italy, clearly it's the financial system. In the United States, it's not. It's more of a pattern policy and other form
of barriers to entry. One story that I tell in my book that really
motivated me to write the book is when I got approached by some students that were trying
to start a company. The first thing that they had devised was
basically a lobbying plan. I said, “If the first thing, the part of
the business plan, is the lobbying plan, then we have a problem in America.” COWEN: Over here. Question. AUDIENCE MEMBER: Frank Manheim, School of
Government Policy and International Affairs right here. I wonder if you have taken a look or compared
the environmental regulatory policies in Europe with those in the United States, which are
in quite a bit of debate right now, and what your thoughts about the comparisons might
be. ZINGALES: I'm sorry to disappoint you, but
I haven’t looked at that. I think that your idea is extremely good to
make the comparison, to see also which lobbies are winning the game. My bet is that the differences in regulation
are driven entirely by who are the most influential groups across the board. I was talking to some farmer in Italy who
was saying in regulation of how much . . . what it's called. Not copper. You give on the vineyard to—they use a copper
based stuff that you put on the vineyard to prevent some diseases. There is some regulation. There is only one exemption in Europe, and
it is for the plant, now it escapes the name, that you make beer. Because the Germans wanted to make sure that
you could produce enough of that to produce beer. Regulation, unfortunately, not just in the
United States but also in Europe, is driven by the special interests. I think it would be a very nice comparison
to do. COWEN: Next question. AUDIENCE MEMBER: My name is Alexander Skouras,
from the Atlas Network. I'm from Greece, so that's what I'm about
to ask you about. Please don't laugh. I know that you have been following what's
going on in Greece and in other European countries very closely. The question is very simple. Given the new agreement that the European
Union signed with Greece, is there anything, under any conditions, you would see something
good coming out of it? The second part, what Greece can do in order
to get out of the crisis, if we forget about the debt negotiation, which we must assume
that is going to take place some time soon? ZINGALES: The big hope is that eventually
there will be some debt forgiveness in some form that is not called debt forgiveness,
but delay of payment to infinity that is tantamount to debt forgiveness. [laughter]
ZINGALES: This is why politics is so hard, because in economics, you call a spade a spade. If you forgive in present value, isn't that
forgiveness? In politics it's very different. I think that's the hope. The big fear that I have is the political
backlash we have seen with the rise of Syriza. Now Syriza has been tamed and made part of
the European elite. All of a sudden all the newspapers in Europe
are celebrating how great is Tsipras, the same guy that, until yesterday, was a communist,
a revolutionary, dangerous. Now, he's sort of part of the European team. Why? Because he signed on the dotted line whatever
they told him to sign. My frustration is I agree with a lot of the
reforms that the European Union is imposing on Greece. I think that longer term would probably benefit
Greece, but I am democratic at heart. I think that the reforms, you should own them. They should not be imposed on you. I think that inevitably the Northern countries
are trying to do with Greece what Northern Italy did with Southern Italy. They're trying not to fix Greece but to minimize
the problem for Europe. Nobody really in Brussels, except maybe the
Greek representative, cares about Greece and the Greek people. They care about stability in the EU and getting
that problem off their agenda, exactly like in Turin people did not care about people
in Sicily. They care that the revolt will be sedated. They did whatever it takes to sedate the revolt—including,
by the way, aligning with the Mafia. One of the reasons why the Mafia is alive
and well is because it was a method of control of Sicily that the Northern army used very
effectively. The long term costs are huge. Now, I'm not saying the European Union is
helping the Greek Mafia, but I wouldn't exclude it. I wouldn't exclude it. Also because the people that best can negotiate
with the European Union in Greece are part of the Greek elite. They all speak English, travel abroad, are
part of the very elite that run the country, up to now, into the grounds. Corrupt, crony, and every negative thing that
you're going to say. Why do you expect these guys, all of a sudden,
to change just because they're blessed by the European Union? I don't think that that's the case. I think that I thought that the so called
bailout of Greece in 2010 was a disaster, was really a bailout of French and German
banks covered with the pretense of helping Greece. I think that since then, we're not recovered
from that mistake. I think that's a really sour spot in the European
history and something that will weigh heavily in the future. COWEN: We have time for just a final, very
quick question and quick answer. Next, please. AUDIENCE MEMBER: Hi, my name is Stephen Jones. I'm a MA fellow at Mercatus. I do have a quick question. In your little vignette at the beginning,
you noted that the café shop workers are so unbelievably productive. I'm just wondering why you would want somebody
to be that productive in a café. Is it because Italians value coffee that more
or maybe labor regulations or something else entirely? COWEN: We come back full circle to Italy. [laughter]
ZINGALES: You actually raise an excellent point. My wife, who is American, walked into an Autogrill
in Italy. She's amazed by the fact that the guy speaks
perfect English. She said, “Much better than yours.” [laughter]
ZINGALES: She discovered that this guy has a university degree in English literature,
and he was serving coffee at the Autogrill. I think that's pretty depressing. That's maybe the reason why Italian café
are so good is because there are not a lot of opportunities. Actually, I have this line, again, comparing
the United States and Italy. I notice that in Italy, on average, that the
personal assistants are great, are really fantastic, and managers are not that good. [laughter]
ZINGALES: I said, “Wait a minute. Why is that the case?” Obviously, because the market doesn't work. If you don't sort out the market, you can
have some very talented people doing jobs that generally don't require the talent, and
you have, unfortunately, non talented people doing jobs that require a lot of talent. My favorite line that did not make me very
popular in Italy—Italy is the country with the best secretaries and the worst managers. [laughter]
COWEN: On that, three announcements to close. [applause]
COWEN: First, big round of thanks for Luigi. [applause]
COWEN: Next, September 24th is Dani Rodrik. Finally, Luigi will be outside signing books. He has three books. Any book you bring, he will sign. Luigi, thank you again. A great honor and pleasure to have you. ZINGALES: My pleasure.
