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Back to ¿Nos van a salvar los recortes? Por supuesto, no

Francisco Errasti, Director general, CIMA Universidad de Navarra

Are the cuts going to save us? Of course not.

Sat, 28 Apr 2012 13:32:16 +0000 Published in Navarra Newspaper

There is a perception that we are adrift in a troubled sea and there are many who, bewildered, contemplate the passing of 2012 with renewed fear. The data objectives that support this status hit us every day with insistent brazenness: the scourge of unemployment continues to rise, taxes are increased (the latest in the co-payment of drugs), the risk premium rises and leave but by the high band, the stock market, knocked out, staggers in a quadrilateral without knowing which side to lean on. The firmness with which the government is firmly establishing its position to convince us that all this is necessary is not confirmed by the messages coming from abroad, which simply do not trust us, that is to say, our country. Does all this have an explanation? Of course, although there is not a single one.

The government seems to have a strong will to take unpopular measures, which is uncommon among politicians and therefore praiseworthy, but at the same time there is a perceived lack of an overall strategy. Otherwise, it is hard to understand the improvisation with which the budgetary restrictions are being carried out in Education and health and the one adopted in relation to research. Particularly in healthcare, the measures are far from resolving a problem that is getting worse. The recent advertisement report that the 2011 deficit was higher than expected calls into question, for the markets, the reliability of the Spanish accounts.

One of the most visible problems is the lack of unity among the autonomous regions to seriously tackle the deficit. The loss of some political power by the governing party in the recent regional elections fuels the lack of credibility for the measures to be effective. Several voices have warned about the need for the central government to recover some transfers and even to abolish the state of the autonomous regions (a madness and, moreover, impossible). When one slowly analyzes the uncontrolled expense to which our autonomic system has led us, one cannot help but be amazed at the unconsciousness with which we are being governed.

The markets, that is, the analysts who advise and make decisions, respond positively to transparency and a clear future. When that does not happen, they respond accordingly. The daily turbulence to which we are unfortunately becoming accustomed is therefore not surprising.

However, all of the above, while real and of considerable importance, is not at the heart of this status. The question to which no one has a definite answer final is how to get out of this crisis and how long it will last. Because many cannot see the way out of the tunnel and hope is fading in a distant mist of unfulfilled promises.

The government is trying to convince us that the measures it is adopting - the country is in a state of fear, waiting for breakfast every day with new restrictions - are the right ones to get out of the quagmire. But others -among whom I count myself- consider that these measures, on their own, are precipitating us into a greater crisis. These two positions respond, in turn, to two different conceptions of monetary and fiscal policy: the one applied by the U.S., which can be defined as expansionary: in times of crisis, the government should invest and facilitate the credit in order to encourage demand. On the contrary, the one applied in Europe - one could say the one imposed by Germany - leads to reduce the deficit and the unproductive expense in order to gain the confidence of the outside world that will lead us to the path of growth. The accumulated excess debt (this is not the case in Spain) and deficit (in this we are worse off) are perceived as taxes that we have to pay in the future and, therefore, a significant reduction in these two components presages a better future that would help investment and expense and, therefore, recovery.          

This argument, which, in its formulation, seems impeccable, lacks something that makes it unfeasible or, in other words, does not allow the much desired recovery: access to financing by the private sector and the model growth we want for our country. Without these two premises together -to which we must add the recent labor reform- the restrictive measures will lead us to higher unemployment, lower consumption, more company closures, etc. And we will continue to be mistrusted by the outside world.

Other solutions? It is very simple: work more with the same salary or charge less for the same work, because we will stop living as we have been living for many years. At final, increase productivity which can also be achieved with more research and development sustainable, more innovation. What deviates from this is pure talk, silence in the night.