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Alfredo Pastor, Professor, IESE, University of Navarra
Slow, fragile, uneven
The most recent forecasts on the evolution of the Spanish Economics coincide: 2010 will not be the year of the beginning of the recovery. Growth will be zero or slightly negative for the year as a whole, although in the last quarter - how far away it still is - it may change sign. This is nothing new; we are where we expected, almost from the beginning of the crisis, that we were going to end up: at the beginning of a season of slow growth. We should say "we expected" because things could have been much worse: let us not forget that in September 2008, a generalized collapse of the financial system was likely, and today it is no longer likely, at least for this time.
In a recent lecture, an illustrious colleague described the recovery that will follow this crisis as "slow, fragile and uneven". How right he was! It will be slow, because our Economics is today a vehicle without an engine (the fuel of the public expense is exhausted), but with very powerful brakes: household debt is holding back consumption, our companies' debt is holding back investment, the financial system's debt is holding back credit , and our exports are weak abroad. It will be fragile, because we are exposed to shocks, coming from abroad (we do not know how much air there is under the growth figures of other countries) or born here; it will be uneven, because it will not occur at the same pace in all countries (everything indicates that we will be among the least agile) nor, within each country, will it affect everyone in the same proportion.
Let us finally adopt this perspective, today the most realistic one: it is preferable to wait -worse still, to preach- a recovery just around the corner; besides, the awareness that things are serious has allowed for a limited truce in a war between parties that was of no benefit to anyone. Something is still missing: the conviction that economic policy can do little to change the sign of the economic situation in the immediate future. It can withstand the demand, but it cannot swim against the current: in the field of the big figures, its room for maneuver, whether or not there is a State Pact, has disappeared.
State pacts should not be concerned with raising or lowering VAT, but with tackling those reforms that are indispensable for strengthening our Economics and giving cohesion to our society, but which are not addressed because they tread on too many toes, even if some of them deserve to be trodden on unceremoniously. Yes, we are talking about the so worn out structural reforms. That is what politics is for.
Tackling these reforms today will make the recovery a little (just a little) closer, more solid and more equitable; but, above all, it will give solidity to our Economics, as did the terrible industrial reconversion of the eighties.
Let us give three examples: to begin with, the decisive consolidation of our financial system (which everyone considers necessary when it comes to our neighbor) will not result in an immediate credit boom, although it will soften a little the restrictions that prevent many entities from giving more credit , and will give more room for investment recovery; but above all it will leave us with a system more resistant to future crises. Does anyone doubt that the main obstacles to this consolidation are political, that is to say, derived from power struggles between different administrations, in the hands of different parties?
The second example comes, naturally, from unemployment. In a recent lecture , one of our most competent and at the same time most balanced analysts of the economic situation literally said that the Workers' Statute had to be turned upside down. His words were an expression of society's growing irritation at the inoperativeness of those who arrogate to themselves the monopoly of discussion on the social issue: Trade Unions and the Government, with some intervention... from the employers? Well, from the CEOE. We already know that learning how to generate more employment, more productive and more stable is a very difficult matter, but this is no excuse for the fact that, during the last twenty years, the discussion has always been approached in the same terms, with almost no visible progress.
I am left with the image of some young people slapping their butts in front of the cameras to give their opinion on a CEOE proposal -it seems that it does not exist- of a youth contract without rights (I would have liked to ask them if they preferred to work with few rights or not to work at all).
This substitution of words for body language is the logical consequence of a social dialogue that to young people without employment must seem like a pantomime; and it seems so because of the behavior of its protagonists. Wouldn't this chapter give enough work to deputies, trade unionists and even to some director general?
The third refers to tax reform. Something will have to be done, on the tax side, in order to wipe out the enormous indebtedness incurred by our Administration to alleviate the fate of the unemployed and to repair our sidewalks. It will be necessary to do something more than playing with the VAT, because if we limit ourselves to that we will have a more inflationary Economics and a more unequal society. We will have to reform direct taxes, and that takes a long time to study, discuss, convince and negotiate. Is this something that should be in the Courts by 2015, and is it already underway today? Is this not something that should be the subject of a State commitment?
Let's forget the Moncloa pacts: the idea was good, but the occasion has been lost; moreover, they were made to stop a Economics, not to set it in motion. It would not be bad if the parties simply committed themselves to work seriously on the issues that really concern the country, among which -one would dare to say- the future of their politicians occupies, at most, a very discreet place.