Draghi’s answer to Euro depression

Australia’s Treasurer, Joe Hockey in Draghi, champions austerity for the working class – especially the poor, the unemployed, calling them leaners, not lifters. The whole of the Abbott government – like Draghi – are for an attack on workers incomes, direct and indirect, and associated with that, a direct attack on their collective power to bargain. This is the bit in this article that strikes a chord: So the two arms of Keynesian macro policy, cheap money and fiscal spending, either don’t work or won’t be used, or both. The third arrow of policy action, to use the phrase of Japan’s Abenomics, is what is euphemistically called ‘structural reform’. “I am uncertain there will be very good times ahead if we do not reform now,” said Draghi. “Potential growth is too low to lift our economies out of high unemployment. Thus, while stabilisation policies that raise output towards potential are necessary, they are not enough. We need to urgently raise that potential.”

What Draghi means by ‘structural reform’ is ‘deregulating’ labour markets, removing labour rights, increasing the power of employers to sack workers, to impose new technology that loses jobs; to remove restrictions on shop hours, rent and price controls – indeed anything to allow market forces complete reign over all. This neoliberal policy is supposed to boost productivity, but in reality aims at raising profitability (which is not the same thing).