Bill Black: International Monetary Fund and European Central Bank are pushing countries to accept a pro-corporate agenda that entails pushing down workers’ wage across Europe
JESSICA DESVARIEUX, TRNN PRODUCER: Welcome to The Real News Network. I’m Jessica Desvarieux in Baltimore. And welcome to this edition of The Black Report.
Now joining us is Bill Black. He’s an associate professor of law and economics at the University of Missouri-Kansas City. He’s also a white-collar criminologist and a former financial regulator. He’s also a regular contributor to The Real News.
Thanks for joining us, Bill.
BILL BLACK, ASSOC. PROF. ECONOMICS AND LAW, UMKC: Thank you.
DESVARIEUX: So, Bill, you recently wrote an article detailing the severe economic crisis gripping Spain’s economy. Can you just explain to us how budget cuts and labor market changes are damaging Spain’s economy?
BLACK: Sure. Spain had, as a percentage of GDP, the second-largest real estate bubble in the world after Ireland. And the response when all of this went down, of course, was to cause a very serious recession.
Instead of using economic policies that we know will get you out of recessions much more quickly, what in the U.S. context we call stimulus, the European Union and the European Central Bank and the International Monetary Fund, the IMF, the so-called troika, insisted that Spain impose austerity in the–so cutting down on spending.
And they didn’t just do that. They also said, you need to get rid of your labor laws that protect workers, because we want to cause workers’ wages to fall sharply in Spain.
But, of course, a recession occurs when demand is inadequate, and if you cut workers’ wages, they have less income, and so their demand for goods and services goes down. So this is every bit as intelligent as a doctor attaching leeches to your body to bleed you to make you better, and then, when that doesn’t work, put more leeches.
DESVARIEUX: So, Bill, you have officials from the European Central Bank and the IMF claiming that the goal of austerity is really to balance the federal budget, these budgets of these companies. But you also are saying obviously demand, with lower wages, is going to wane as well. So what is really the hidden goal with these austerity programs?
BLACK: Well, it’s not so hidden. They want to reduce wages substantially, which will increase corporate profits. And they want to lock the nations in the periphery in a competition, so that Spain has to reduce its wages so that it can out-compete Portugal, and Portugal has to do it so it can out-compete the Italians, and they have to do it to out-compete the Greeks. And, of course, the progression of all of this is that–we call it The Road to Bangladesh. You know. You’re going to drive wages down to the extent you can globally in order to make corporate profits rise, but also because it will have the effect of crushing labor unions.
DESVARIEUX: Alright. Bill Black, thank you so much for joining us.
BLACK: Thank you.
DESVARIEUX: And thank you for joining us on The Real News Network.
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