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PAUL JAY: Welcome to The Real News Network, and welcome to this week's edition of The
Bill Black Financial and Fraud Report with Bill Black.
Bill's an associate professor of economics and law at the University of Missouri-Kansas
City, a white-collar criminologist, a former financial regulator, and author of the book
The Best Way to Rob a Bank Is to Own One. Thanks for joining us, Bill.
BILL BLACK: Thank you.
JAY: So what do you got this week?
BLACK: Well, I just got back from Reggio di Calabria in Italy, which is that toe part
that looks like it's kicking Sicily, and a conference on modern monetary theory. I have
a prop on all of this. And we were talking about austerity, Italian style, and some remarkable
things.
The first, while we concentrated on Spain and Greece and their Great Depression levels
of unemployment, unemployment is very high and rising in Italy. But the real story is
among young adults. And the unemployment rate among young adults is surging, and it's already
in the--closely approaching 40 percent, which is to say, it's nearly at the levels of young
adult unemployment in Spain, and in Greece as well.
And so you have this paradox of Italy, where, you know, in the variant of the old joke that
there are three things that are important in terms of real estate, location, location,
location, there are three things important to Italians, it's always said: family, family,
family. But Italians are--first, they don't have a lot of kids. Their fertility rate is
1.3, so way below replacement rate. And second, they are increasingly causing their kids to
emigrate, because there is absolutely no prospect of a good job in Italy for younger people.
And, you know, in the old days, this was typically peasants who were leaving, but nowadays it's
their most educated folks. You get your university degree--which you're going to essentially
do for free, still, in Italy, minus some fees--and then you have to emigrate because there are
no positions. And those problems that I talked about are vastly worse in the south of Italy.
These are where the really poor places were.
So we were talking about that and the insanity of an austerity principle that is tearing
Italy apart and destroying family, left right and center. I mean, nowadays the only good
news is with modern technology you might be able to talk to your kids more cheaply when
they're 5,000 miles away.
JAY: How much of this is recent, in the sense these new austerity measures that have kicked
in over the last couple of years?
BLACK: Well, it's not entirely recent. In other words, it's a trend that's gotten much
worse. But that trend had existed for much of this century, because Italy was simply
not producing new high-tech jobs very well.
But for us the craziness was that we were talking with Italian professors of economics,
you know, perfectly intelligent people, but often big believers in austerity, even though
they said, yes, austerity is causing greater unemployment, yes, it's causing the kids to
emigrate, yes, we have no answer other than austerity, right, there is no alternative,
which is precisely what we then went down to say--well, in fact, there are excellent
alternatives; you shouldn't be doing this.
JAY: And Mario Monte, the prime minister who was sort of a technocrat--kind of almost appointed,
in some ways, when they dumped Berlusconi, by European finance. But even he a few months
ago--I saw a quote where he said, we've done everything you asked us to do in terms of
austerity measures and other--and all we've gotten in return is high unemployment.
BLACK: Yeah, they've gotten zero, in essence, in return from the European Central Bank,
and it's been a disaster for Italy. It actually is likely to make the deficit larger, not
smaller, because it's thrown Italy back into a severe recession.
And you're quite right. Berlusconi, of course, was a really terrible leader, but he was in
essence forced out in a fiscal coup by big finance, and Monti was put in without any
real democratic process, in terms of the voters ever being asked. And Monti is saying he'll
rule again, you know, but as long as he doesn't have to stand for any election. So (A) this
is a completely nondemocratic process, and (B), you know, the word technocrat is supposed
to mean you have technical skills, and so when your technical skill is I can create
mass unemployment among the youth of Italy, that's not something we usually recognize
as a technical skill.
JAY: But my point, though, was even Monti was complaining that I implemented all the
things you told me to implement, and instead of seeing growth, we're seeing recession,
so what's the point of this. Their own technocrat was saying that.
BLACK: Well, I understand that, but he's not changing anything, either. What he's saying,
simply, politically, is you've got to give me something in return if you want me to go
even further down the austerity road, or people will basically, you know, push me out of office
almost immediately. And the reaction of the European Central Bank is, well, tough--which,
by the way, is run by another Italian, Draghi, who is also described as a technocrat, even
though his skill set is also largely unemploying people of Europe.
So for us the strange thing was to see Italian economists admit that austerity had this effect,
but say, you know, we have to continue it, because if we spent money through the government,
we'd make things worse. You know. And this was so crazy to many of us.
Like, you know, my wife's side of the family is Italian entirely, relatives who came over
in 1896, the Saracenos. I have a recent piece on this that you probably have on your site
or will very quickly have on your site. And this was a illiterate peasant family which
is now in the United States with the opportunity for people to actually work and educate and
live real lives, done spectacular things, which are just plain normal in the United
States or Canada or Australia or any of the places that Italians have come to. So, you
know, now--that was when we were getting illiterate peasants that in three generations we were
turning into some of the top researchers in the world. If you send us now your most educated
university graduates, we won't have to wait three generations. You'll enrich all of the
rest of the world while further impoverishing Italy.
JAY: So when you're at a conference like this and you get into a discussion/argument with
someone who's defending these austerity measures, what is their argument? I don't get it, in
the sense that it seems obvious they're heading Europe and maybe (who knows?) the rest of
us into years of recession.
BLACK: Their argument is government bad, private sector good. Anything that reduces the government
must be good, even though they then concede that they've been running this experiment
and it has produced massive unemployment, massive loss of productivity, and bigger budget
deficits, right? So it's a completely insane policy. My metaphor that I used while presenting
there was this is the equivalent of bloodletting, right, when you bled a patient to make him
better, and then, of course, he didn't get better, so you bled him more, and when he
got sicker, well, you had to bleed them more. This is what passes for a technocrat, right?
This is not science. This is not technology. This is really extreme religious dogma that
has the faux appearance of economics.
JAY: But it also has a payoff: lower wages, less money on social safety net.
BLACK: Yeah, it is a payoff, but actually [crosstalk]
JAY: If you're rich it has a payoff.
BLACK: Yeah, but even for most people who are wealthy this is a terrible strategy that
makes them weaker as well. I grant you, there is the 1 percent, but it is literally only
about the 1 percent that benefits from these policies. Even the rich people, you know,
the 2 through 20 of the top percentiles, would be better off if there were more Italians
employed, buying more things from, you know, their auto dealership, and all those good
types of things. So this is a demonstration of just how much power the absolute plutocrats
have in a place like Italy.
JAY: Thanks for joining us, Bill.
BLACK: Thank you.
JAY: And thank you for joining us on The Real News Network. If you're enjoying these Bill
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