How to Fight Unemployment with the Minsky Alternative in Italy and in the EU

The paper examines how to fight structural and short-term unemployment in Europe using the “Employer of Last Resort” program originally envisaged by Minsky, by which the State offers a job to anyone willing to work. In replying to the many criticisms it received, we show that ELR is the best suitable alternative in terms of effectiveness in curing unemployment, public finance soundness, social and financial stability, long-term growth and international economic imbalances. Although on the theoretical side laissez-faire policies are not riding high these years, the institutional design of the proposal is the key to its political viability. State accountability and efficiency are vital issues and we try to address them deepening the analogy with lending of last resort. In particular, we propose to set up a State regulator similar to a central bank, to supervise ELR projects along with local controls from below ensuring the cost-effectiveness of the scheme. We also show, operationally, that the cost of an ELR program for Italy and for EU would be in the range of 1.5-2% of the GDP, a small fraction of what EU put in place these years to save its banking system.