tag:blogger.com,1999:blog-2761684730989137546.post8067275904678088800..comments2024-03-29T09:32:34.853-04:00Comments on Mike Norman Economics: Italian PM Enrico Letta Urges Move From Austerity to Growthmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-2761684730989137546.post-6172121145865346332013-04-29T22:59:56.635-04:002013-04-29T22:59:56.635-04:00Get rid of austerity in the Euro periphery? Brilli...Get rid of austerity in the Euro periphery? Brilliant idea! Why didn’t I think of that?<br /><br />I’m afraid the blunt reality is that when a country in a common currency becomes uncompetitive, it just s*dding well has to get its costs down. And that is currently done in a thoroughly ham fisted way in the EZ, i.e. via austerity. So Enrico Letta’s idea is pie in the sky (unless he’s got some brilliant solution not mentioned in the Telegraph article).<br /><br />My guess is he knows it’s pie in the sky, in which case he is smart but dishonest. Alternatively he doesn’t realise it’s pie in the sky, in which case he is dumb.<br /><br />There ARE ALTERNATIVES to austerity: one is proper fiscal union including German subsidies for Italy, etc. But German taxpayers just won’t wear that. Another alternative is a short sharp burst of central economic planning during which wages, profits and prices in a periphery are FORCED DOWN by administrative fiat. But there are obvious problems there.<br /><br />Another solution or at least partial solution is to adjust sundry taxes in periphery countries. More details here:<br /><br />http://ralphanomics.blogspot.co.uk/2013/04/euro-periphery-competitiveness-can-be.html<br /><br />But frankly I doubts about all the above solutions, austerity included. I.e. Italy might just as well leave the Euro.<br /><br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com