Luigi Abete: we should not be afraid of private enterprises in culture

Cultural assets managed by public entities, private entities managing publicly owned cultural assets: the dichotomy between public and private in the management of cultural assets in Italy has given rise to a long-standing debate in which ideological positions often prevail. What is the current situation? What are the impediments to the development of the cultural heritage sector in relation to the public-private dichotomy? Why is the private sector often viewed with distrust? What would actually be virtuous management models for all? We talked about all this in this interview with Luigi Abete, president of the Association of Cultural and Creative Enterprises (AICC) and president and ad of Civita Cultura Holding.

FG. The debate has often focused on two points. Let’s start from the point of view of those who would like to see a larger role for the public at the expense of the private sector: in this case, it is pointed out that the interests of the private sector are often different from those of the public, and this could have a negative impact on cultural offerings. What is your position towards this view?

LA. Those who ask the question in this logic are asking it in the wrong way: the private and the public have the same interest, which is to best manage the protection and enhancement of cultural heritage. Only the methodologies change: the public uses a fixed structure, the private uses the market, so it has more flexibility, normally more dynamism, and from the use of these variable factors it draws a margin, which is called profit. The goal, however, is not different, it is the same: to enhance, by ensuring protection, the public good that is the subject of the project. What is the impact on the cultural offer? It is obvious that if I were to use, as some people think, only the public instrumentation, it would reduce the number of achievable goals, since public resources are limited, and indeed are normally decreasing (and have been decreasing over the years: let us not be distracted by the pandemic moment, which was an exception that allowed additional public resources to be allocated to certain goals). Public resources, those that come out of our pockets (because they come from citizens’ taxes), are defined, and being defined and limited, and as the needs for public goods increase (health care, enhancement of culture, defense, integration of migratory flows), it is clear that the number of operations that can be done with public instrumentation is reduced. If one wants to keep the number of users high and growing, one can only use, alongside the public, the market, and therefore the market is not an alternative to the public, nor is the public an alternative to the market: the market makes it possible to achieve a greater number of objectives, although not always with greater efficiency and therefore at a lower cost, including to the community. This is the approach: here it is not a question of rooting for one approach over the other, because those who put themselves in the logic of rooting put themselves in the logic of being biased. In Italy we have a huge cultural heritage (archaeological sites, works of art, villages, ecclesiastical assets), much of which is still abandoned, and it is obvious that it is in everyone’s interest to use the market to valorize as much of these assets as possible. Valuing means making them enjoyed by citizens in terms of visiting them, as well as making them live with a local economy that also develops the area, as well as keeping them open, and keeping them in a decent state in terms of services, cleanliness, communication, with all that this entails. That is the theme. No one is trying to take the job away from anyone else here; the important thing is to figure out what are the goals that you want to be pursued by the public and what are the goals that are best pursued by the private sector. And that is decided by policy. I don’t know how many times I told the previous minister to clearly decide which museums to run directly: we have 44 autonomous museums and archaeological parks, let them choose some that the Ministry wants to run as public and put the others out to tender, but when you put the others out to tender you have to make sure that whoever goes to run it takes a risk, that is, puts money into it, makes an investment, uses that money, for example, to do a restoration, a communication campaign, hoping that later on there will be a hundred thousand more visitors going to that site instead of a hundred thousand fewer visitors. But if you make the tenders in such a way that you cannot expect to make investments, so if you want to invest money you cannot do that nor can you expect to have more visitors because if you expect that it goes against the rule of the tender, then clearly the tender does not work.

So would the state struggle without private input in the management of public assets?

The underlying issue is this: is the public heritage managed today? For the most part, no! How many sites are abandoned? There are hundreds of sites, including churches, convents, historic prisons, that are abandoned, in beautiful places, because no one has the resources not to go there and do not extraordinary maintenance or renovations, but simply to go and open them or clean them. That should be focused on.

It is clear. In the area of private management of public assets, however, we find various entities operating in the sector. Corporations, cooperatives, nonprofit foundations. What are the main differences, what are the best management models?

The private sector is made up of various entities: corporations, cooperatives, nonprofit organizations, all can operate. There is no priority. As long as they abide by the rules, and I give an example: if I am a cooperative, if I am a corporation, if I am a foundation, and if the labor contract says that the worker has to take 9 euros per hour, I have to give him 9 euros per hour, whether I entered as a corporation, whether I am a cooperative, whether I am a foundation. I can give him something more, but I cannot give him something less. Instead, what often happens today is that the different nature of the subjects make personnel cost policies not in terms of rewards but in terms of reductions. And this is not just an industry issue, it is a civil issue.

In your opinion, what should be the cornerstones of a public-private relationship that is beneficial to all and ensures mutual recognition of each side’s role?

Let’s start with the Ronchey law, which was passed in 1993, almost 30 years ago, according to which in exchange for granting certain services to the private sector, the private sector puts up capital to renovate an asset, to promote it and so on, and takes any major benefit from the increase in visitors or the increase in ticket prices. If the tender prevents you from making the investment and thus prevents you from making the margin, it is clear that when there is a tender, the only way to win the tender is to reduce the cost of personnel. That is, the tender is done, in effect, at the expense of the workers. And the Ronchey law is not enforced because it started from the assumption that you invested in the museum, and whoever invested, if they did the investment, the promotion, the management well, then they would recover a margin, but the moment you prevent the investment from being made, and then you prevent the margin from being recovered as I was saying, it becomes a tender, and if it becomes a tender, it becomes on the cost of personnel. So what happens is that instead of being projects to improvement they are projects to the reduction of personnel cost. Then whether the third sector wins, whether the cooperative wins, whether the capital enterprise that does not abide by the rules wins, it makes no difference, because certainly those who abide by the rules do not win, since if the price or the cost is less than what the rule says, it is obvious that the rule is not being abided by. Why is there this idiosyncrasy towards the Ronchey law today? Because the Ronchey law has made it possible in 20 years to modernize museums. Museums today are different from the museums of thirty years ago. But this has not happened by accident, this has happened because year after year investments and management have improved the performance of the museum and a synallagmatic relationship has been created: the offer improves, the number of visitors improves. I also understand that the state may expect a given museum to be particularly significant, and then it may think of managing it directly, but then there is no need for the joint stock company or cooperatives or foundations or Ales: there is a need to make the public machine work. But then when you have to convince the workers on Monday to move the day off or leave, the public machine must have the power to do it, because if it doesn’t have the power to do it then we can’t regret the fact that a museum remains closed. And for as long as the world has lasted, unfortunately the public employee is less flexible, but he is less flexible because even if he wanted to be more flexible, the rules prevent him from being so: it is not a bad will of people, it is the organizational system that is different. The public bureaucracy, by definition, is repetitive, it’s stuck, because otherwise it doesn’t work. And the market by definition is flexible, otherwise it does not exist. Actually, there is nothing new here: this whole debate would be likely if we managed all the available sites today, but we do not manage them! How many art sites spread across the territory of the Italian regions are abandoned, no one even knows they exist! How many castles, how many monasteries, how many ancient prisons are closed without anyone being able to do anything about it! And we who have the problem of having to find the resources to manage primary public assets and cannot find the money, do we not use private individuals to manage cultural assets? That seems to me a contradiction in terms! Here we need to overcome the logic of antinomies: we are not having a competition of who is better, we are competing to solve a huge problem and make it an opportunity for all, using different tools.

Among the priorities recently indicated by the Association of Cultural and Creative Enterprises for the start of the 19th Legislature is the reform on the order of management priorities, and here the AICC makes explicit reference to the realities that make use of the surreptitious forms of volunteering that are nothing more than precarious labor relations, which distort the labor market and de-skill.

I hope that Minister Sangiuliano and the new administration will value the coexistence of the public and private sectors within the goal of enhancing the cultural heritage sector, guaranteeing the quality of work and workers. I highly appreciate those who volunteer, but volunteering has meaning and value if the activities for which the volunteer work is done then transfer to the market in terms of free of charge, but if I in a museum or an exhibition charge a ticket, those who work must be paid according to the collective bargaining agreements of labor, because using volunteer work to replace legal work is not an ethically correct thing to do, especially because it becomes a form of exploitation of volunteers. But do you know how many people I love volunteer in prisons or for migrants? But that is volunteering! The volunteer at the limit gets a reimbursement, but he devotes his time to do good work, not to replace another whose salary he takes away because he would be paid double or triple the volunteer check they give the volunteer! And then we do the reports on television about caporalism? What do we call this then? I don’t think there is any primogeniture of the business over the public in doing the actions, nor of the capital enterprise over the cooperative enterprise or other business activities. There are two basic rules, however: the first is that everyone abides by the same rules, so labor contracts, and the second is that it is clear which activities are managed one way and which are managed another.

Instead, let’s talk about the Art Bonus measure, which has tried to connect the public with the private sector and also seems to have yielded good results. In your view, can it achieve more from businesses? And if so, how can they be more stimulated and involved?

The Art Bonus was an excellent invention, but why should the Art Bonus only go to the renovation of a public asset? Why should the Art Bonus be limited only to those assets that are owned by the state and cannot go in different ways, and with all the safeguards, to those private assets that are made available to the public as well? Of course, if I restore an asset and put it in my home, I don’t have to benefit from the Art Bonus, but if I restore it and put it inside a public place to have it visited, to have it appreciated and enhanced, or I do international events in which I show Italian culture, or how it was expressed a century ago or ten centuries ago, and therefore I enhance Made in Italy not only in the logic of fashion or in the logic of food, but also in the logic of the history that we have, isn’t that an interest of everyone? And so from this point of view I think that the structure that has been created during the last ministerial managements has strongly blocked this whole process.

Let’s go back to a topic we touched on earlier. One of the most debated points in the area of private management of public property is that of tenders: in particular, we talk about the limitations on the maximum number of visitors, but above all we talk about the rule of the maximum discount, which is considered harmful. This applies to culture as well as other sectors. What is the impact this rule has on private culture management?

If you have maximum-down tenders, by definition maximum-down tendering harms the weakest link in the chain. And what is the weakest link in the chain? The worker! Tenders at the lowest price have also taken them out of construction. I understand a place that has space, time or structure constraints and therefore having these constraints cannot have more visitors, but when you go to a place that is a prairie and therefore there is no spatial constraint, why can’t you have fifty thousand more visitors if you can attract them with new restorations, with new communication policies, with events that can attract and bring places to life? Why? It is not understood. It is obvious that if I have new revenues I can pay the cost of labor even more than what I was paying before, but if the possibility of having new revenues is taken away from me, it is obvious that the tenders are done at the lowest price, and then whoever wins the tender is whoever pays the workers the least, which is not a good satisfaction.

So the first thing that will be asked of Minister Sangiuliano will be to review even a little bit the rules?

That’s for sure. The problem is, meanwhile, that the current rules prevent new revenues and prevent new investments from being made at the expense of the concessionaire, and as a result, tenders are won by reducing labor costs, because if I cannot increase the number of visitors and I cannot increase the ticket price (both are decided by the ministry) it is obvious that the revenue remains the same, so the only way I can be more competitive than you is if you pay 9, I have to pay 8, after which maybe someone else comes along and pays 7 and will be even more competitive. However, since the contract does not require the worker to be paid 7, those who want to be competitive what do they do? It takes some workers at 9, and takes others directly at 4 with hybrid forms that are irregular, and this moreover is the first thing that private enterprise fights. Private enterprise has no interest in developing at the expense of the worker, especially in a profession like cultural services, where people want to be valued. If those inside the museum greet you with a smile or greet you with the face of someone who is going through trouble the quality of the visit and learning suffers. The quality of the offer is a key element in customer, user, citizen satisfaction. And so logic would want those who do that work to have a reward, not a punishment, but to give them the reward you need someone to invest in new infrastructure, new renovations, new promotions so as to attract more visitors, since he does not determine the price.

According to you therefore, the issue that should be discussed is not whether public or private is better, but how the asset is managed.

The only real underlying issue is to understand what the goals are. Whether the goal is to enhance the historical and cultural assets that the country has or not, if we want to enhance our assets, there is only one way: let’s do as much as we can, and that applies to both the public and the private. And there is room for everyone! We have a unique historical infrastructural offer, we have a world of people who want to experience that huge cultural offer: we just have to use the relationship between supply and demand on the quality of education, on the quality of service, on communication, on implementing every year a new restoration, a new moment of attraction that makes you come back to visit that site because you have one more thing, one new thing. And all this we can do by making the most of all the public facilities that are there and even those that are not! Do we want more people? Let’s hire them! But still, they are not enough if there is a disproportion between the size of the demand and the size of the supply, because no matter how much we expand the public supply, it will still be insufficient to meet the demand, and so if you want the demand to be met, and if you want the country to enjoy all corners of it, you have to use more and more of the private enterprise market as well. Period. The rest is all consequential, all logical.

Why then do you think on the part of many in the industry there is a strong distrust of private operators?

Because there is a culture (unfortunately widespread, but thank goodness I don’t think it is dominant) that thinks that where there is private interest, then there is no collective public good. And this, however, is not true: the collective public good is perceived by the citizen in the terms in which it exists: if you take it away from him, he is unable to appreciate it. So what happens is that those who have an ideological view of the problem do not accept the principle of seeing whether the collective public good realized through a public structure or a private structure is appreciated anyway or more or less well, but they avoid it being produced because they understand that if it were produced the citizen would appreciate it: consequently the criticism is not brought on the quality of the service, but on the nature of the organizational process because that is ideologically easier to sell. The collective public good is not only the direct one, but it is also the indirect one: the quality of life of citizens is not only given by the moment they enjoy the good, but it is given by the fact that the economy benefits from it. Then it is true that there are cases where the private has done worse than the public, because the private is not necessarily always better, but the real difference is that if in the private one doesn’t do well, then it closes down and another one comes in, whereas in the public it always remains that one. So if the private one does not work, the private one by definition is replaced by the market with another private one, whereas if the public one does not work, unfortunately that “not working” remains. But in the present case that is not even the problem! It would be a problem if the amount of public assets managed was defined but here it is undefined, because on the one hand there is no limit to the supply (we have in Italy everywhere pieces of history of archaeology, cultural routes to be built, environmental assets), and on the other hand there is a world that has begun to move.

So in essence you are telling us that beyond the businesses already operating in the market, there is a world, which perhaps does not emerge or is struggling to emerge, of potential businesses that would like to operate in the cultural sector but cannot do so at the moment.

I can say that as AICC president I represent but a small part of this world. But there is a world of potential supply, of startups (because a startup is not only beautiful if it operates in the technology sector, you can make a startup even by organizing the opening of an abandoned place: startups can be opened even in very traditional sectors) that remains unexplored. We have great potential for startups in the creative or cultural heritage sector. When I was president of Confindustria in 1993, I used to say that we have to fight rents, but the fight against rents is not only financial rents, because there are different kinds of rents. There is financial annuity, but there is also oligopolistic annuity (when a few people control the market), there is bureaucratic annuity (when a man who has the power of the state decides that one does as he pleases), there is welfare annuity (when one gets paid and does not work and thus takes work away from those who would like to work and cannot work), there is ontological annuity (that is, the annuity of those who exist versus those who do not exist). The point is this: those who do not exist never have representation, be they those who have yet to be born, those who have yet to start a business, those who have yet to start studying. And for the others who do have representation, it is much easier to expand. We live in a country with such a large number of cultural enterprises that we can also live with the current situation of “stand-by,” where everyone has their own work, does it, wins one competition, loses three, but still manages to make a living: the problem, therefore, is not so much for the enterprises that exist, but for those that do not yet exist and could be there. And this is in an industry where you have a demand that is potentially in the billions. Businesses in other sectors have a problem: that of manufacturing a product and finding people to buy it. But here they neither have to make the product nor find who buys it, because they have so many assets from the past, which are infinite and are still modern (in fact they are even more modern) and they have billions of people who want to come and learn about these assets. So you just need to organize the relationship between supply and demand, a seemingly very simple thing in a country where there is room for everyone! Does the state want to manage some of them directly? Do it! But let others do it for others as well. And let it organize itself in such a way that those who do it respect the rules, because if then you don’t respect the rules then that is no longer work, it becomes exploitation.

At this point, however, to conclude our interview, the reader might rightly reflect on the fact that, as this debate is not new, there are obviously limits that hinder the process you are describing to us: what are they and what kind do you think these limits are? Are they structural, are they ideological, are they of another nature...? ?

In some cases they are ideological but they are mostly cultural. The previous minister, Dario Franceschini, understood that the sector has economic value, and if a sector has economic value, by definition those who develop it can only be businesses. He thought it was possible to develop it with the public, and he was the first to understand the economic value of the sector, but he was unable to develop it using market rules. So these are not ideological limitations, because we cannot say that the environment is against the private sector in general terms: if anything, it is culturally accustomed to an approach whereby the collective public good is done by the state, and the individual good or service is done by the private sector. However, logic dictates that there should be a significant private presence because the state has a limit (of invested capital, organizational strength, increased needs). Collective public goods increase in value because before competition was at a low level, you had to give the minimum, now you have to give more, and if you don’t use the market for collective public goods you force your country to have a lower quality of life. Otherwise it’s like when you say the operation was successful but the sick person died, but the sick person doesn’t care about that statement: the sick person cares about living! And here it is exactly the same. We are faced with a society in which collective public goods acquire greater value: we all want a clean environment, we want cleanliness in the streets, we want there to be an adequate level of education, we want there to be an adequate level of public health service, and so we use the public as a driver, and the private as a complementary driver. And in fact our health care system works because we have good public service and good private service. This is a classic case: despite what you may say, health care still works on average, and on average it works because if one goes to a public hospital in Italy he knows that he has qualified doctors, but he also knows that if he goes to a private hospital he still has a service comparable to the public one. Even in education there is a fruitful co-presence of public and private, with a strong public presence. I myself am the president of LUISS Business School but I went to university at Sapienza, so it’s logical and it’s fine. But when we talk about cultural heritage, shouldn’t we apply the same principle? Why is that? Because people think that cultural property should be managed only by those who have the public function, whereas people think that if a private person manages it, the private person is likely to ruin it. So it is a cultural problem. It then has ideological tips, but it is not the ideological constraint that prevents the market from flourishing. The difference between a public manager and a private manager is that if the former does not produce results there is no one to send him away, whereas the private manager is sent away by the shareholder. It is not that the private manager is by definition better than the public manager, however, he has a problem, which is that he has someone behind him who gives him a push or a caress, and so he has to be careful.

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