Italy fact of the day

The Italian Tourist Board spends an astounding 98 percent of its budget on salaries, with basically nothing left for its actual job of tourism promotion.

The point of the article is that hardly anyone visits southern Italy any more, thus making it one of the world’s best arbitrage opportunities. It is one of my favorite regions.

By the way:

There are trains in the Mezzogiorno that travel at an average speed of 8.7 miles an hour.


Metaponto, in the Basilicata region east of Naples, has a five-track, marble-clad rail station, paid for by $25 million in European Union funds. But the last train out is an 8:21 a.m. express to Rome. If you want to go anywhere else, you have to take a bus.

In the 1970s, Italy was the world’s #1 tourist destination but now it has slipped to number five.  There has never been a better time to go.


The further south you go in Italy, the more the looks on people's faces change from friendly to furtive.

Peter Turchin has some interesting theories on what's wrong, long term, with Southern Italy.

Sounds like they aren't particularly welcoming of foreigners. Sounds right up your alley.

Yeah, I wonder how a Sailerian theory of tourism would look like.

It would look like it does pretty much everywhere: You and your money are welcome to visit. However, it is our home, not your home and you have zero say in how we run our home nor do we have any obligation to provide you food, shelter, medical care or education at public expense. And if you don't like the way we run our home, then you are free to leave.

Except for the U.S. of course, the tourist, then immigrants dream destination!

The per capita income of southern Italy is a shade less than that of New Zealand. There are 20 Italian regions; there are two where there homicide rate exceeds 2.0 per 100,000. The worst is Calabria (the boot toe), where the rate is 3.3 per 100,000. The suburban homicide rate where I grew up is usually about 2.4 per 100,000.

They do all right.

Perhaps soon (post-Euro, post-devaluation) there will be an even better time to go.

Is the Mezzogiorno in New Jersey?

Far west Italy.

Sounds like the tourist board is serving its real purpose.

There's an admirable efficiency in spending "98 percent of its budget on salaries" if we think of the Tourist Board as a pure transfer program, but how do they manage that? Everyone "works" from home?

Yeah, there's something not entirely kosher about that number, and the statement about trains with a low average speed is a bit misleading. If you go 80 miles an hour between stops that are 2 minutes apart, and you have 5, two-minute stops along the way, your average speed will only be 7 mph. It's the necessary stopping that lowers the average, not lazy, inefficient, socialists, much as he'd like it to be.

Check your math. If you go 80 mph for 2 minutes and then stop for 2 minutes, your average speed over the whole 4 minutes was 40 mph. Repeat five times, or as many times as you like, and your average speed is still 40 mph.

@AgeofDoubt, 8.7 mph is glacially slow. Even Metro systems, which stop far more often than trains, generally do better than that.

I've been there, and it absolutely is inefficient socialism at work. One striking feature in Italian infrastructure is the contrast between shiny, expensive projects and the dilapidated state of the rest of the network. The high speed rail network linking major cities is amazing, but the rest of the routes run creaky, slow, ancient trains. In Sicily, there is a new highway south of Catania, with tunnels through every hill to keep it flat, and hardly anybody driving on it. But most of the island's road network is severely underdeveloped.

Sounds a lot like rural Japan.

Can someone please explain how southern Italy is a good arbitrage opportunity? As I understand, arbitrage is profitting from differences in prices between 2 markets. I don't understand what the 2 markets are and what the prices are in this example.

Thanks in advance for the clarification.

Great cheap vacation and incredible food. Compared say to France.

Define the arbitrage. Both FR and ITA are on the Euro. (Prices for food, coffee, alcohol in both countries went up with the Euro adoption in the early '00's).


You can't compare, in terms of price or otherwise, the coffee in Italy to the motor oil that passes for coffee in France.

+1. And while top-end food in France is quite excellent, for mid-range neighborhoody places Italy is much better. It's hard to get a bad meal in Italy, all too easy in France.

How do you guys rate Germany?

@Rahul: With a few honourable exceptions, coffee is usually closer to the "motor oil" type. I live in Bavaria, which is in many ways more like Austria than the rest of Germany. But not when it comes to coffee -- I expect you can detect when you have crossed the border by just sampling the coffee sold in bakeries.

Tchibo is to Germany what Maxwell House or Folgers is to America (well, if either ran a nationwide chains of coffeeshops and stores with constantly rotating stock, and offered on the order of 10 or 15 types of coffee, retail - both in their own stores and in other supermarkets).

One could almost say that Tchibo is also to Germany what Starbucks is to America, except that Tchibo is considerably cheaper, with far less explosive growth - and regardless of one's coffee preferences, Tchibo offers far fewer options.

I guess my tastes are just crappy. After 30 years of India + USA I found run-of-the-mill German coffee / bakeries / food in general pretty darn awesome. So I'm amazed people think German stuff as crappy.

I only really have spent time in Berlin. I found the coffee pretty solid, nightlife was great and the food could be hit or miss but there are a lot gems. German bakeries are grossly underrated. In absolute terms close-by Copenhagen outshines. But Berlin's awesome because it's got the creature comforts you'd expect of Western European capitols at Eastern European prices.

Berlin is so different from the rest of Germany though. In all respects. Very hard to extrapolate from Berlin to Germany.

'Very hard to extrapolate from Berlin to Germany.'

Not when it comes to bakeries. Berlin is just another run of the mill part of Germany in that particular area (though quite cheap - it was completely unexpected visiting a couple of years ago to see how food was easily 10% cheaper in the major city of Berlin than in any middling sized city along the Rhine).

You must think like a chess player to decode TC. Arbitrage here means you want to go to south France, but instead, at the last minute, you decide to go to Italy. The money you save (Italy - France) is the arbitrage opportunity. In an alternative universe you would be in France, but paying more. You realize this in the present and derive pleasure from it. That is the opportunity cost arbitrage.

Side note: I saw a recent stat at the Seeking Alpha site that S,G&A (corporate admin expenses) are creeping up again. At some places like some cosmetics companies and Procter & Gamble the SG&A expenses are 35% of all profits. Not 98% but pretty high for a multinational that supposedly is governed with profit in mind. Bureaucracy capture.

@carlospln, even with the Euro, there are regional price variations. Southern Italy is incredibly cheap for tourists compared to France. A quick look at a site like will reveal that you can easily stay in nice accommodation at top tourist destinations in southern Italy for $50/night or less, even in the summer. Good food is much cheaper than France, as well.

@carlospin - In northern Italy, the arbitrage with rest of Europe has long since been arbitraged away. Parts of Southern Italy are a very different story. I've been to several seafood restaurants in the south that are worthy of hats, multi-course menus with amazing starters and whole fish mains, a bottle of wine and dessert for about Eur50 for two people. Wouldn't get the equivalent in France, Milan or the US for less than $200.
Oh and we've found the people to be very welcoming for the most part. Amazing part of the world.

In France, you get to hear people speaking French, which is the most pleasant of experiences.

I am another one who doesnt understand your arbitration idea. South Italy is not cheap, at least not for us Israelis. It is child-free and depressing. Turkey is real value and our preferred vacation spot. The young arbitrage to Nepal and Viet Nam.

By choosing one location over another as your holiday spot, you are effectively 'buying out' of one location and 'buying into' the other one. This means that, on average, all of the vacation spots are equal in some sense, just like the real interest rate would be similar across investment areas. The stabilizing factor is that if one spot if better than the others, then more tourists will choose it and thus drive up prices and drive down quality.

If you think you've spotted an 'underappreciated' tourist spot then you could call it exploiting arbitrage to visit there.

But supply of hotels, restaurants etc. and isn't constrained, asides from Venice and a few other locations. If Naples tourism numbers doubled over the next decade hotels space would also approximately double. The price of a bed wouldn't change. Attraction would become more crowded of course and it would be harder to find a locals restaurant. Equally some people like having a tourist infrastructure available.

You could call it that, like you could call a tail a leg.

But since you can't actually sell a vacation in France, or at least I can't, I'd just call it a good deal.

Kind of a strange definition of arbitrage. If there was a derivative that tracked the popularity of tourist destinations you could go long southern Italy and short the French Rivera, but I still don't see how that would be an arbitrage play.

An average of 8.7 might not be that slow if they are idle for substantial part of the year. Does it only count time the train speed is greater than zero, or is it over the entire life of the locomotive?

I actually laughed at loud at this one.

Economists decide the point they want to make then choose a denominator.

I hope it includes the time that the iron ore that went into the train spent sitting underground, otherwise it's not a complete analysis.

You have almost convinced me to go to Italy but I have one lingering doubt: I fear that I might find young, attractive women in restaurants.

women, yes. young and attractive? no guarantee

In Italy young is not as necessary to attractive as in some other places.

I see what you did there.

Why would anyone want to visit Italy is beyond me. Especially in light of tons of new idiotic laws actually banning everything/making everything a misdemeanor.

Good. Stay home.

That makes it less crowded for the rest of us.

Maybe not all of us want to engage in the same kind of "everything" that you do.

The article is titled Why No One Goes to Naples. I'm shocked the author fails to mention that it might be because Naples looks like a post apocalyptic wasteland. I had the best pizza of my life in Naples in 2011. For that I will probably return someday. But I don't think I have feared for my personal safety more anywhere else that I've been, just on the half mile walk from the train station to my hotel, nor have I seen more garbage in the streets.

An Italian once told me that the old expression, "See Naples and die" has gone from metaphor to reality.

There are about 500-odd homicides in Italy in a typical year. Unless 40% of are in greater Naples, that city has a lower homicide rate than a typical American metropolis.

No doubt.

My friend was referring to the pollution levels, not the crime rate.

"Andy" was referring to the crime rate.


I was too eager to get a cute line in.

If you walk from the train station to the main convention center where I grew up, you tromp through some desolate and disconcerting urban real estate (after dark). Every place has it slums, its warehouse districts, &c. There are 3.7 million people in greater Naples. If one person in six lives in a slum, they are likely to be pretty extensive and populous.

The NYT piece is not just about Naples. It also talks about Sicily which is, IMO, a wonderful place to visit.

You grew up in a convention centre? Must have been an interesting childhood.

@Andy--I'm sure as an Italian connoisseur you are aware of the Mafia Naples Trash War, but I mention it to anybody else reading this thread so they can Google it. It probably explains the high pollution and wasteland look of Naples.

As for me, it's more fun to vacation and live in the Philippines, where a little (or lot) of trash in the streets never hurt anybody. But recently in parts of Manila they banned plastic bags, to the betterment of the environment (the libertarian in me protests, but the practical me admits it does work to clean up litter).

Well, if the topic is better places to visit than Naples, I nominate Bogota. :)

Well, there was a garbage crisis on in 2011. I was there in 2011 and again this February (I get to lead a study abroad program based in Rome about every 3 years). The accumulated garbage is gone. Naples has plenty of other problems.

"Why don’t you fight the flies in Naples? At home, in northern Italy—in Milan, Turin, Florence, even in Rome—the city governments have organized campaigns against the flies. You never see a fly in our towns.

“There isn’t a single fly left in Milan?”

“No, not a one. We have killed them all. It is a preventive measure to avoid epidemics and diseases.”

“In Naples we also have struggled against the flies. We have actually waged war against flies. We have been fighting the flies for the past three years.”

“Then why are there still so many flies in Naples?”

“Well, you know how it is! The flies have won!”

Kaputt by Curzio Malaparte

The National Archaeological Museum in Naples is fantastic for the Pompeii and Herculaneum artifacts alone (and although it made me a little nervous, our rental car even survived being left parked in the neighborhood without a problem). Amalfi is beautiful, of course, and Paestum is well worth the drive (it seems almost as rustic as the days of the 'Grand Tour' when cattle were supposedly wandering through the fields and temples). I'm sure we'll be back.

I think now is the best time to avoid Italy because if we all persist it may actually get forced out of the eurozone.

Last year I successfully dissuaded a friend and his wife from visiting the EU and I keep dis-recommending the place to everyone who asks and that's despite the fact I own rental property (for tourists) in the EU.

Now is the best time to help with disintegration of eurozone and the EU.

Naples is the type of place you have to stay a while to enjoy. Most Americans pass through Naples for a few hours or a day on their way to the Amalfi Coast. But if you stay a while you begin to see through the initial ugliness and threat of crime. Naples has great food, museums, scenery, etc.

You know, almost every continent has much nicer and more-fun cities than the USA, with better food, nightlife and history (in the case of Europe). The major cities of Japan make ours look like pig-opolises. Even a dirtier city, like Bangkok, has street food to die for, and colorful street life. Almost any city in Europe and Asia is safer than a USA city.

Let's face it: American cities are crap. We do have the F-35....

Would you rather liv in Paris or Phoneix?

There are two pre-requisites for that sort of urban landscape, population density and time. Both of which are abhorrent to Americans. America does a small-to-medium town pretty well in places, but cities? Yeah, they are better elsewhere. Except Russia.

I would rather live in Phoenix, though I would definitely rather visit Paris on vacation.

I don't know Phoenix at all, so I am curious to hear more about the reasons you would prefer to live there.

Cost of living is lower in Phoenix, and Mexican and Asian food is better.

@Benjamin Cole: What percent of your life have you spent in USA? I think a lot of this is grass-greener-on-other-side syndrome.

e.g. Ask the random person in Bangkok if he'll take up a chance to swap into a USA city.

Meh. What I love about American cities is that, in contrast to most European cities, they're coastal with great waterfronts (New York, LA, San Fransisco, San Diego, Seattle, Boston, and even Chicago, which has a fabulous lakefront). If you include Canada, then Toronto and Vancouver fit the same pattern. But big European cities tend to be inland on rather dirty-looking, uninspiring waterways (London and Paris especially). And comparing Paris to Phoenix is sort of like asking whether you'd rather live in New York than Lyon -- not exactly apples-to-apples is it?

One reason I love American cities is because they are full of Americans.

I would say Lyon :)

Amsterdam, Barcelona, Copenhagen, Oslo, Lisbon, Marseille, Genova etc. are good counterexamples.

You are right, though. In the ancient times, being situated on the sea coast was a security problem. The seas were full of pirates, and not just in the days of the Vikings.

Until the beginning of the 19th century, Arab slave-catching expeditions were common and the total head count of Europeans dragged into Moor slavery probably exceeds two million.

Is it possible that better communication technology means Italy has lost ground? We're less naive these days about the filth of Naples, the Mafia, etcetera.

so, when needed, the NYT is a reliable source ?
and when the NYT says something conservatives don't like, it is the NYS (new york slimes ?)
Mark Levin is particularly hilarious: he will quote a piece from the "slimes" and some gratuitous comments about how the slimes is full of hateful statists, and then use the piece as a reliable source, for free, on which he does 10 minutes on his show.

He uses their admissions against interest.

Not sure how relevant Mark Levin is to this blog post but it happens all the time on both sides. It makes your argument better if you can find someone stating your position on an "adversarial" news source you otherwise despise.

"In the 1970s, Italy was the world’s #1 tourist destination but now it has slipped to number five.  There has never been a better time to go."

#1 in terms of number of bodies attending? Otherwise, this seems only to be a disagreement with the rating system.

Late as usual to the comment party.
(Southern) Italy needs more investment by tourists than France. This is in regard to finding places to go, dealing with the locals, many minor hassles (especially the car hire companies), even much poorer English language capabilities (French people generally speak good English). So, although I agree the food and scenery exceed anything in France, you are not really getting an arbitrage, more a return on investment. This is as it should be, arbitrage opportunities should not exist very often, per EMH. Tourism is a highly liquid market, with millions of transactions a year, and a wide range of buyers and lots of advice. It would be strange if large arbitrage opportunities persisted in such a market.

Fire 90% of the Board. Then give everyone visiting the South a voucher for a hotel.

George Gissing's By the Ionian Sea: Notes of a Ramble in Southern Italy. Recommended.

please guys: the post is based on an article by severgnini - you might not know that, but NO ONE takes him seriously in Italy. like, you know - NO ONE!

Hi there! And yes, I am Italian. I drink very good coffee, I take trains that sometimes are fast and sometimes much slower, I have seen Naples and I am still alive.

More that this, I recently left a well paid Exec job in the biggest tech company in the world (yes, spot out who is number 15 in Fortune 500...) to launch a startup in Travel ( More exactly, a startup to have foreign travellers to come to Italy with a "Buddy", so having a certified local to help people like you to discover hidden gems of Italy, or even more known ones, with a local flavor and the right insights. We launched, have some tractions, and are talking to investors to get funded to scale up. I mad? No, I do strongly believe that things can and must be improved, based on ethics, meritocracy, collaboration. And we are a few millions of guys here thinking the same. So give Italy a try and you will experience something unique, starting from its people.

And, ENIT, yes, let's close it and save all the money.

(Thanks Marco V. to have shared this!)

I freaking love Italy and am heartbroken this is my last trip here. I am near Vicenza, between Colli Berici and Colli Eugenie. I was here for three months last summer and was depressed coming back to the states. There is so much beauty in every direction, whether it is the landscape, the meticulous, yet casual way the Italians case for their yards, the ancient buildings, Or even the dilapidated falling down villas and farm houses. There is no comparison to the dilapidated buildings in the states that are just plain depressing. I've not even been to southern Italy as I've not felt that I've even begin to scratch the surface of northern Italy.

When I visited the Capodimonte museum in Naples, a quite large and impressive facility filled with works by great masters, they were so unprepared for visitors that they couldn't make change for my 10 euro note. The lady behind the counter had to give me change out of her own purse.

European Cities for me:

Athens (helps to speak the language and have relatives there)
London (ditto)

Always wanted to go to Berlin.
Avoid Sofia; trust me.

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