Thanks to my friend Mathew Rose, uno strano americano a Berlino.
Interview with Sergio Cesaratto: Draghi and the Italian Melodrama
Sergio Cesaratto is Professor of Growth and Development Economics and of Monetary and Fiscal Policies in the European Monetary Union, University of Siena. Many of the topics of this conversation are developed in his latest book: Sergio Cesaratto, Heterodox Challenges in Economics – Theoretical Issues and the Crisis of the Eurozone, Springer, 2020, http://www.springer.com/9783030544478 that will be reviewed on BRAVE NEW EUROPE in the near future.
Can we say that the “Vincolo Esterno”, the neo-liberal EU straitjacket Italy’s oligarchy and technocrats imposed on their nation, has failed or has it achieved the success they sought – or has it done both?
Both. It succeeded in the sense that an icy discipline descended on the working classes, trade unions and fiscal policy. It failed in the sense that discipline brought with it the stalling of growth, later aggravated by the 2008 crisis and the pandemic. Many foreign readers do not know that Italy has a record of discipline in public accounts, measured by budget surpluses net of interest expenditure, unbroken from 1991 until the pandemic. This, together with the loss of a competitive exchange rate, has led to stagnating productivity and growth in Italy since 1995. Public debt was reduced from 120 to 100 % of GDP before the 2008 crisis. But at a very high price (cuts make growth less and nullify the budgetary effects of cuts in a Sisyphean effort). No country in Europe has been as frugal as Italy (read https://www.ineteconomics.org/research/research-papers/lost-in-deflation). Moreover, private debt is very low in Italy, Italian households are also frugal, contrary to what is portrayed in Northern European media.
