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Chapter Fifteen - Europe and Italy: Expansionary Austerity and Expansionary Precariousness
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- By Davide Antonioli, University “G. d'Annunzio” of Chieti-Pescara, Paolo Pini, University of Ferrara
- Edited by Marcella Corsi, J. A. Kregel, Carlo D'Ippoliti
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- Book:
- Classical Economics Today
- Published by:
- Anthem Press
- Published online:
- 03 February 2018
- Print publication:
- 26 January 2018, pp 201-222
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- Chapter
- Export citation
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Summary
Forgive the candour of these remarks. They come from an enthusiastic well-wisher of you and your policies. I accept the view that durable investment must come increasingly under state direction. […]. I regard the growth of collective bargaining as essential. I approve minimum wage and hours regulation. I was altogether on your side the other day, when you deprecated a policy of general wage reductions as useless in present circumstances. But I am terrified lest progressive causes in all the democratic countries should suffer injury, because you have taken too lightly the risk to their prestige which would result from a failure measured in terms of immediate prosperity. There need be no failure. But the maintenance of prosperity in the modern world is extremely difficult; and it is so easy to lose precious time.
I am, Mr. PresidentYours with great respect and faithfulness,
J. M. Keynes.GDP Growth, Employment and Labor Income Share
Assessing the Scenario: The Trend of Selected OECD Macroindicators
The Organization for Economic Cooperation and Development (OECD) forecasts do not show a favorable trend for European Gross Domestic Product (GDP) growth. The OECD countries are supposed to grow by 2.5 percent in 2014– 15, while Eurozone growth is forecast to be about 1.4 percent, with Italy and Greece bringing up the rear. Even worse is the forecast employment trend, with a feeble 1 percent growth per year for OECD countries and 0.4 percent for the Eurozone, with Italy in the last group (the only country with negative growth). Thus, the OECD forecast for Europe is marked by a weak recovery without job increases. On the unemployment side, things are not better. As for the OECD countries, the unemployment rate is forecast at 7.4 percent, and the Eurozone rate is forecast to reach 11.5 percent. It is worth showing four further indicators. If we look at inflation as an indicator of the pressure of aggregate demand, we notice that in the Eurozone the PIIGS (Portugal, Ireland, Italy, Greece and Spain) show an average annual inflation rate of under 1 percent in the two-year period 2014– 15, with marked deflation in Greece.