invisible hand

Off the Shelf: In ‘Story of My People,’ Recalling an Industry (and Way of Life)

August 10, 2013 by NewsMaker

The book, “Story of My People” (Other Press, 176 pages), conveys the exuberance of business when business was fun — when one could still “feel some sense of excitement and enthusiasm for work.” The family company, based in Prato, Italy, prospered as a weaver of high-quality velour and loden, an indestructible woolen for men’s overcoats.

The textile businesses around Prato formed an unplanned network of the sort beloved by disciples of Adam Smith’s invisible hand: “an entire city based on the textile industry, dotted with dozens and dozens of companies just like ours, all of them growing steadily and all of them intertwined in a system of production that is insanely fragmented but incredibly efficient.”

Mr. Nesi, now 48, was a co-chief executive at the young age of 30. He recounts sales trips to Germany, racing at 170 m.p.h. down an autobahn to make an appointment in Munich, and recalls his pleasure at recreating wonderful textiles from old photographs of F. Scott Fitzgerald’s fabulous woolen sweaters or Ernest Hemingway’s linen shirts.

He counts himself lucky to have come of age at a magical moment when postwar recovery was still driving an European consumer revival. “Even idiots could make money, as long as they dedicated every minute of their days to their work,” he writes. And then the bottom fell out. But with exquisite timing, the Nesi men had decided in 2004 to sell their business. They got out just before free trade and Asian imports decimated the business model that had sustained fine Italian textiles.

Mr. Nesi was left feeling guilty, having bailed out at “the most challenging moment in the history of Prato’s textile industry, and therefore of Italy’s textile industry, and indeed the European textile industry.” He frets over whether a captain of industry, like a captain at sea, is obliged to go down with the ship. His memoir becomes a eulogy to lost Italian greatness.

“Story of My People” has clearly tugged at Italy’s heart. First published in Italian in 2010, it became the first nonfiction book to win the Strega Prize, Italy’s prestigious literary award. Mr. Nesi, a businessman no more, has written six novels, translated Stephen King and David Foster Wallace into Italian, and written and directed a movie. His book benefits from Antony Shugaar’s nicely colloquial English translation.

Mr. Nesi’s musings are as finely woven as his textiles. His sentences dance along, running to 60 or 80 or 100 words but never stumbling, carried along by simple, one-syllable words, good verbs and offbeat reflections. They include unexpected allusions to Neil Young or Bob Dylan. And the author is as likely to quote “The Deer Hunter” or Richard Ford as he is to cite Machiavelli.

Mr. Nesi picked up a whimsical exposure to American pop culture by attending summer sessions at Cornell, Harvard and the University of California, Berkeley. At the movies, he was so taken by “The Verdict” that he enrolled in law school back home (and flunked out).

He writes that on the morning when the company was sold, he paced a silent weaving mill, where normally the din is like “a wave that crashes over you, a wind that makes you hunch over.” He muses about the calming effect of a popular rock ‘n’ roll ditty in Icelandic. And he closes with a riff on “The Magnificent Ambersons,” with Orson Welles, the director, weeping at his film’s being butchered at others’ hands — not because of the butchery, but “because it’s the past. It’s over.”

As long as Mr. Nesi writes about his own life, about his love of books and movies, and about his job, his joys, his regrets and even his guilt, it is easy for the reader to feel sympathetic. But when he goes beyond that and seeks to repeal the global economy, this endearing book becomes a polemic, if not a screed.

The game was changing even before Mr. Nesi got out. “I’d come home seething with rage at the bidding wars that by now our clients were forcing us to engage in to land the biggest orders,” he writes, “without any consideration for the quality of the fabrics, the reliability of the service, the on-time deliveries, the company name, the company’s history.”

He makes a tired case against Italian politicians for “betraying” millions of Italians by lacking the wit to grasp that free trade would demolish Italy’s small manufacturers or the gumption to fight a stubborn rear-guard struggle to protect the ordinary people who depend on them.

He mocks the academic economists who preached free trade’s consumer benefits and glibly challenged businesses like his to conquer China’s new consumer markets with wares based on unrivaled Italian design. That was a gargantuan task, far beyond the financial reach or imagination of Italy’s artisan manufacturers. Besides, he says, China had already copied the designs and churned out the products for pennies on the dollar.

MR. NESI closes by describing a demonstration in the Piazza Mercatale in Prato, where weavers were pressing for state subsidies to support jobless workers. Sounding like an Italian Quixote, he applauds this protest “against intangible and yet very powerful ideas that are accepted virtually everywhere outside of our city walls.”

So who are “my people,” after all? They are more than family, Mr. Nesi writes, and more than the people of Prato. They extend up and down Italy, whose entire textile industry is everywhere in trouble, as are its furniture makers, goldsmiths, ceramics makers, shoe producers — you name it.

Mr. Nesi’s sense of loss will touch hearts much farther afield, wherever the West’s world-class industries have fallen to free trade and the Internet. So he is not alone. But neither his beloved industry nor any other is assured a place in the sun. He barely concedes that bad news for Italy’s textiles is good news for China’s.

The market giveth, and the market taketh away.

Article source: http://www.nytimes.com/2013/08/11/business/in-story-of-my-people-recalling-an-industry-and-way-of-life.html?partner=rss&emc=rss

Economic View: How Economics Has Benefited From Immigration

ALL the recent talk in Washington about reforming immigration policy brings to mind Pat Paulsen, the comedian who, every four years, conducted faux campaigns for president.

“All the problems we face in the United States today,” Mr. Paulsen would say, “can be traced to an unenlightened immigration policy on the part of the American Indian.”

That quip contains a deep truth. Almost all Americans today are beneficiaries of a policy that welcomed our ancestors when they arrived at the border.

As an economist, I am often surprised at the hostility that some segments of the population express toward immigration. Most members of my profession are far more receptive to it, and for three main reasons.

First, many economists, especially conservative ones, have a libertarian streak. Ever since Adam Smith taught us about the wonders of free markets and the magic of the invisible hand, we have been loath to prohibit mutually advantageous trades between consenting adults. If an American farmer wants to hire a worker to pick fruits and vegetables, the fact that the worker happens to have been born in Mexico does not seem a compelling reason to stop the transaction.

Second, many economists, especially liberal ones, have an egalitarian streak. They follow the philosopher John Rawls’s theory of justice in believing that policy should be particularly attuned to its impact on the least fortunate. When thinking about immigration, there is little doubt that the least fortunate, and the ones with the most at stake in the outcome, are the poor workers who yearn to come to the United States to make a better life for themselves and their families.

Third, economists of all stripes recognize that our own profession has benefited greatly from an influx of talent from abroad. In just the last few weeks, the economics department at Harvard, where I am chairman, has brought in six candidates to be considered for two assistant professor positions. Of the six, three are Americans, one is German, one is Argentine, and one is a New Zealander. The jobs will be offered to those deemed to have most promise as teachers and scholars, regardless of nationality.

The competition from foreign-born economists makes it harder for American economists to get the best positions. But it would be hypocritical for American economists to argue against such competition, as we have long preached that nations are better off over all when they pursue a policy of free and open trade. This principle applies not only to manufactured goods like textiles and aircraft but also to labor services, including lectures on economics.

The system of higher education in the United States is the world’s best in large part because it has long taken a global approach to hiring. The best students from abroad often come to the United States to earn their Ph.D.’s, and the best of these often stay here and join the faculties of American institutions. In my own department at Harvard, we have professors who were born in Canada, England, France, Italy, Spain, Austria, Poland, India and South Africa.

THIS competition from abroad may reduce the salaries of American-born economists like me, but it has improved the university, much to our students’ benefit. For one thing, such competition keeps down the university’s labor costs. Many parents are shocked at how high college tuition is, but it could be worse.

The willingness of universities to tap foreign talent also means that our students can learn from the worlds’ best minds. America’s superb system of higher education has been an engine of growth for the entire economy, thanks in part to the immigration of scholars from abroad.

I understand that not all workers in the United States will embrace foreign-born competitors with the same equanimity as a Harvard professor. That is especially true of those with fewer skills and opportunities.

Over the last several decades, for the most part, the wages of workers without any higher education have stagnated, while the wages of those with advanced degrees have risen. The main forces driving these trends are technological change, which tends to increase the demand for skilled workers relative to unskilled workers, and, to a lesser extent, international trade. But the immigration of unskilled workers from abroad may be a contributing factor, and one that is all too obvious when these immigrants vie for the same jobs as unskilled workers born in the United States.

The best solution to wage stagnation is to promote educational attainment among Americans. That’s easier said than done, but the task is imperative nonetheless. We won’t substantially help unskilled workers who are already here by denying the American dream to others who wish to pursue it.

In the end, even as an economist committed to rational policy analysis, I have to acknowledge that the immigration debate also has a visceral, emotional element. In my case, that is shaped by family history.

I am the grandson of four immigrants from Ukraine, who arrived in the United States about a century ago. None of them had more than a fourth-grade education, and none could speak English when they set foot on their new homeland. Yet they found work, made a living and raised families. They lived modest lives, but their children did better than they did, and their grandchildren did better still.

Lucky for me, the American Indian did not pursue the enlightened immigration policy suggested by Mr. Paulsen.

N. Gregory Mankiw is a professor of economics at Harvard. He was an adviser to President George W. Bush.

Article source: http://www.nytimes.com/2013/02/10/business/how-economics-has-benefited-from-immigration.html?partner=rss&emc=rss

Off the Shelf: In ‘Story of My People,’ Recalling an Industry (and Way of Life)

Economic View: How Economics Has Benefited From Immigration

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