Interview with Francesco Giavazzi

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  • Timings and topics for this film are given below.

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    0.55 Giavazzi: 'Austerity measures which involve cutting spending can actually result in economic expansion'.
    2.00 ‘Greece is a special case, Greece is a country which has lived beyond its means for 20 years …’ talking about tax evasion, structural problems etc. Painful adjustment.
    3.00 ‘European social model we built since WW2 is no longer sustainable.’
    4.25 Approach re. the US, as per his book.
    6.00 European attitude toward the welfare state, as compared to in previous years.
    7.50 Inequality, and the roots of the financial crisis in the politics, rather than the bankers’ conduct, in the US. Bush and Clinton encouraging banks to lower their standards and give out sub-prime mortgages in order to integrate immigrants faster,
    10.10 Points out that the first bank to fail in 2007 heralding the start of the crisis was a German bank.
    11.10 What is the answer? Praises president of the ECB and Merkel buying us more time, until the German election – that’s when we’ll have the right time to rethink the European social model.
    12.20 Hollande plan has been shown to be a disaster for growth.
    12.55 UK solution is good. Cut spending, reduce size of govt and THEN cut taxes.
    13.40 Addresses situation in Spain. A big risk, that Cataluña runs a referendum and decides to leave Spain. Madrid attempting to block this but ultimately futile. Difficult balance between the regions in Spain. Compares to secessionists in Northern Italy.
    16.00 Big divide between Italy and the other troubled countries, as it didn’t have a real estate bubble and the corresponding current account deficit.
    17.00 Greece – in or out? ‘At some point it will obviously leave the euro – the issue is when.’ Thinks it will stay in at least until the German elections (2013).
    19.10 Federal Europe of nation states? Germany leading this debate as it’s the most federal state we have. Moving in that direction slowly, it’s difficult.
    21.00 Danger of extremist parties and so on? Fortunately so far, none have managed to convince voters when they’ve been voting. But it is dangerous and will be more dangerous, the more the crisis develops.
    22.00 Is there support throughout the continent for more Europe? No it will be a very difficult sell. But it was when we started all this in the 1950s.
    23.30 Shift in power to Asia? Yes, the drive to work and make money in China, Vietnam etc is so great that it has changed thing.
    24.30 Quality of life? Cites the northern countries like Denmark and Norway who have high Q of L, big government etc. But questions whether it’s possible in a bigger country.
    26.00 Disagrees with Bernard Kouchner’s financial transaction tax idea, it would drive transactions to the Cayman Islands. But admits to bad regulation as contributing to the crisis, and acknowledges need to rewrite it.
    27.30 Definitely need to cut down on tax evasion. In Greece, Italy, in many countries we lag behind, in antitrust law for example.
    28.30 Impact of lobbyists? Financing of political campaigns, oil, pharma, finance, all have a massive influence. Must have rules that limit the power of their influence. Puts pharma ahead of finance in how much damaging their lobbying does. Super PACs ‘complete disaster’.
    31.10 UN Security Council reform? Europe would benefit from a single Euro area representative. These geopolitical institutions are hard to reform but we must. By the end of the decade, non-European IMF director for sure, Chinese or Brazilian.
    32.45 'Do we need an end to modern capitalism as we know it?' Invokes Churchill, nothing else has managed to convince us yet to find an alternate system. Got to do the best with what we’ve got, try to change. Lot to learn from Scandinavia.