Report on the crisis: a scenario analysis Notes on the distribution of income, growth and employment A. Berrini, Economist

The only positive aspect is that the 2011 was better than what does the 2012" J. Stiglitz

From the "V" to "L": the risk is depression The world economy now finds himself without a locomotive - The economic slowdown is a fact - Can we avoid a long depression? It is urgent a change with regard to economic policies and development patterns

The international economic scenario The recovery of the U.S. continues weakly The market does not support the dynamics of consumption The trend of development in emerging countries is low compared to previous years The trajectory of the EU economies differs from the path out of recession The indicators show that the recession in the Euro zone and the UK is widening

The European economic policy: the wrong prescription of austerity “ Austerity alone will kill the patient. No big economy has never recovered only with this medicine. In the few cases where it worked was for small economies and because of the factors on which Europe cannot count: devaluation or the economic boom of a country to which you export " J. Stiglitz

The European economic policy: the wrong prescription of austerity The liberal scheme has combined with an expansionary monetary policy to a restrictive fiscal policy in a context of deregulation of financial markets Effect: slow growth and speculative attacks on the sovereign debt Alternative: fiscal stimulus to support growth, strictly regulated to protect public budgets by speculative attacks

The Italian depression Example of Italy that "U" becomes "L"? Starting with the 100 since 2007, Italy in 2012 has: GDP = 93; CONSUMPTION= 95 INVESTIMENTS = 86 USE = 69

Income distribution, growth and employment Profit distribution of thr liberal three decades: POPULATION + rich (1%) = + 275% + poor (20%) = + 18% PATRIMONY 20 persons + rich = persons 1% population has 39% global wealth

Income distribution in Italy By a survey of Bank of Italy ( ) 10% of families receive 27% of total income PATRIMONY 10 Italian people+ rich = italians 10% italian family has > 40 % Net wealth in Italy

Distribution of income: the causes of inequality Within of developed countries, technological progress is seen as a cause of rising inequality Actually recent studies have shown a link between income inequality and financial deregulation

Distribution of income: the causes of inequality “The highest incomes are strongly influenced by social norms" “The sharp decline of unionization in the '80s has taken away one of the most important opponents of the rich salaries for executives” P. Krugman

Growth and Income Distribution The extreme concentration of income adversely affects demand, produces low growth and crisis The crisis produces unemployment which increases inequality that worsen the economic situation

Growth and employment We are in a trap. We know that we must increase productivity to grow back, but this requires to produce with fewer people. Only effective tools of welfare allows the market to be efficient, but unfair, at least enough to support growth.

Growth and employment "The problem of work is the drama of all advanced economies" "If such a system would necessarily imply instability, and the expulsion from the labor market of the future generation then there would be many changes both in market operations both in the role of the States" R. Prodi