José Luis Feito, Narciso Michavila and Carlos Rodríguez Braun
The Rafael del Pino Foundation and the Civil Society Forum organised, on 17 February 2022 at 7 p.m., the dialogue "Spain in Perspective" with José Luis Feito, Narciso Michavila and Carlos Rodríguez Braun.
José Luis Feito holds a degree in Economics and Business Studies from the Complutense University of Madrid. Commercial Technician and State Economist and Ambassador of Spain. He has held various positions in public bodies: from 1978 to 1980 he was Head of the Foreign Sector Studies and Data Processing Service of the Ministry of Economy and Finance, and from 1980 to 1984 he was appointed Technical Adviser and Executive Director of the International Monetary Fund in Washington. From 1984 to 1986 he was Head of International Financial Institutions and members of the Monetary Committee (Brussels) and of the Committee of Governors of Central Banks of the European Union (Basel) for the Banco de España and from 1986 to 1996 he was a partner and member of the Board of Directors of A.B ASESORES BURSÁTILES, S.A. (MORGAN STANLEY) in Madrid. In 1996 he was appointed Spanish Ambassador to the O.C.D.E. in Paris, a post he held until 2000. He has been President of the IEE (Institute of Economic Studies), President of the Economic and Financial Policy Commission of CEOE. He is currently a member of the Board of Directors of the CEOE and a member of the Social Council of the Carlos III University.
Narciso Michavila is president and founder of GAD3, a Spanish research and communication consultancy based in Madrid with extensive experience in sociological research and strategic advice for the implementation of business and public policies. He holds a PhD in Political Science and Sociology and a Master's degree in Statistics from the Complutense University. He has taught public opinion analysis in postgraduate courses at various universities. Regular analyst in national and international media. Artillery Commander of the Higher Scale, on leave of absence. He was spokesman for the Multinational Brigade West in Kosovo in 2002.
Carlos Rodríguez Braun is an expert in economic thought and liberalism with international recognition for his publications and conferences. This Spanish-Argentinean PhD in Economics is characterised by combining academic rigour with a desire to disseminate information. He is a member of the National Academy of Economic Sciences of Argentina and Professor of History of Economic Thought at the Complutense University of Madrid, and combines the publication of books and academic articles with collaboration with the written and audiovisual media. He is a reference and opinion maker on economic, political and social reality, as well as a defender of globalisation and liberalism. As a journalist, he was director of España Económica and deputy director of Cambio 16 and of the television programme El Valor del Dinero on La2. He is currently a columnist for La Razón, Expansión, Libertad Digital and participates daily in Onda Cero Radio. He has published articles in prestigious journals such as History of Political Economy, American Journal of Economics and Sociology, European Journal of the History of Economic Thought or the Journal des Économistes et des Études Humaines, and he is also an evaluator and sits on the advisory boards of scientific publications in Spain and other countries. He is also the author of some twenty books and translator of figures in economic science such as Adam Smith, David Ricardo, John Stuart Mill, John Maynard Keynes and Friedrich A. von Hayek.
Summary:
On 17 February 2022, the Rafael del Pino Foundation organised the dialogue "Spain in perspective", in which José Luis Feito, member of the board of directors of the CEOE and of the Social Council of the Carlos III University; Narciso Michavila, president and founder of GAD3, and Carlos Rodríguez Braun, professor of History of Economic Thought at the Complutense University of Madrid, took part.
José Luis Feito: The great virtue of democracy is that it gives people what they want; its main flaw is that what voters want does not always coincide with the general interest of society. If we look at the period 1977-2020, the average annual unemployment rate in Spain is 14.5%. That is an aberration unknown in the rest of the world. There are periods in which the youth unemployment rate has fallen because they have reached the age of 65. The reason is that Spain has a low capacity to create jobs. When there were no temporary or part-time contracts, we created little employment and we had a lot of unemployment. The cause is a very low employment rate, which has been around five points below the OECD average and ten points below that of the benchmark countries. This is mainly due to an extremely inefficient labour framework, the highest firing costs in the world, unconditional unemployment benefits and very inefficient collective bargaining. The 2012 labour reform was the only serious attempt to try to correct this, among other things it reduced the temporary employment rate. It is therefore important to continue along these lines. The other factor is that employers' social security contributions are very high, which undermines job creation.
The second deficiency is the public deficit. We have a propensity for very high structural public deficits. We therefore have a tendency to accumulate public debt. What lies behind this is, fundamentally, a lack of culture, of budgetary discipline. One by-product of this, in the past, was a propensity to devalue. With the euro, the propensity is to risk premium crises. The lack of budgetary culture cuts across the entire political class. Increasing the size of the state does not imply having a deficit. The problem in Spain is the tax structure, so the parties try to pay for the increased size of the state by taxing the rich, which undermines the tax base and economic growth and, in the end, does not raise revenue. We have one of the highest taxes on capital in the world, also on property, on business and we have very low indirect taxes. Scandinavian countries have low capital taxes and very high indirect taxes. The right has hardly changed this inefficient tax structure. Private debt had grown because the public sector had had spectacular debt increases.
The last deficiency is a very low, or even negative, productivity growth rate. Productivity is what determines per capita income. If we want to have a higher per capita income, we have to increase total productivity. It is so low because of the above dysfunctions. The tax structure penalises innovation and capital accumulation. The mentality in Spain is profoundly anti-capitalist. This is what prevents us from doing what needs to be done.
We have three open wounds, which are artificial and can be resolved. All it takes is for there to be a group of people with the intelligence, the capacity for persuasion and the capacity of spirit to make politically possible what is economically necessary.
Carlos Rodríguez Braun: How do we know that what we say is true? We have the nonsensical and the rational way. The nonsensical way is hilarious, for example, a Lewis Carroll character who says that if you repeat something three times it is true. From the point of view of reason, we have logic and empirical testing. Hence the importance of data. We have problems with both the one and the other, with deduction and with induction. We have these weaknesses in our ways of reasoning. We never know if we are in the truth, it's a horizon we tend towards, but we are never in the truth. But this does not mean that we do anything. When it comes to arguing we have to do it with logic and with data.
There is a liberal tradition of distrusting democracy, because democratic government can become the paternalistic state in the worst possible sense, so that people always remain dependent on it. But democracy has an old virtue, which is the bloodless replacement of rulers. We can change power periodically. This has merit and virtue. The moment states become redistributive mechanisms they inject the greatest poison into society because they always rely on taxes being paid by those who have the most. This is ingrained in society, it feeds the worst instincts, the worst of which is envy. If we took envy out of the world, socialism would disappear and the possibility for states to grow seems rather limited. People no longer believe so easily the idea that it doesn't matter if taxes are raised because they are going to be collected from the rich because the more taxes are raised, the harder it is to believe it. Because people have a say, they can vote and express their ideas. Then the rulers are going to govern in a different way.
Narciso Michavila: What cannot be measured cannot be improved. Data allow us to demonstrate that the truth exists. Elections are a challenge to show that electoral polls are fine-tuned. In 2014, when we saw Podemos burst onto the scene with great force, it was already visible in the polls because there were people who said they were going to vote, but not for the traditional parties. We would have given three seats to Podemos and it was five. We had always analysed the vote. We measured according to the electoral history in Spain, but there had been a total disruption in Spain and in all countries because the problems of Western societies are very similar. We learned that the best ally is technology, that data is fundamental and that you always have to see it in perspective. You need a longitudinal perspective, a geographical perspective to understand that we live in a global world. If you raise taxes in a global world, capital will leave. You also need a human perspective. We tend to focus on economic data, the euro, and we don't think about human capital. This human vision of the data is missing. The perspective also of not falling into the error of measuring the efficiency of things in terms of spending, saying that little is spent on whatever. A book should be written to educate people about data. The debate on the minimum wage and once again we hear that any businessman who is not able to raise the minimum wage by 50 euros should close the company. The pedagogy that needs to be done is to talk about the cost to the company of each job. To these fifty euros, social security contributions and severance payments must be added. When this is done without seeing the data in perspective, in the end it ends up destroying the productive fabric. The data never speaks for itself; it responds to what the researcher asks it. This requires humanism, reading history, having an idea of society. The worst mistake we can make is to think that data is the absolute truth. A percentage is not the objective truth, but the result of the response of many subjects. But when you give citizens accurate information, collective decisions are the best. If people make wrong decisions, it is because the information they are being given is wrong.
José Luis Feito: Since the beginning of the 21st century, Spain has been falling in terms of per capita income in relation to the European Union and is being overtaken by nations such as the Czech Republic, Slovakia and Slovenia. Spain is falling because productivity is falling in relative terms. It did not fall before because between 12997 and 2002 Spain increased in population as much as the total population of Ireland. No country has ever done that. We were able to grow a lot because the labour force increased. But those structural deficiencies were operational. Unemployment never fell below 7%. The tax structure didn't change. With so much immigration, we should have had a budget surplus.
Carlos Rodríguez Braun: In the long-term statistics in Spain, one of the conclusions you get is that Spain is more or less like southern Europe, it is not a story of a failure. In 1975, Spain's per capita income was equal to that of Argentina. When you play with institutions, as the Argentines have done, it explains the paradox that the richest countries have the largest states. The French state takes half the income of the French, but leaves the rest to them, has legal certainty, etc.
Narciso Michavila: If you look only at income, it seemed that Spain was getting poorer, but there was immigration because immigrants live better here than there. Immigration, moreover, has left much more than it has. When things have gone wrong, they have returned to their countries of origin. This is how we have greatly reduced unemployment. To understand any human phenomenon you have to look at the data, but you also have to understand the perimeter. By far the biggest factor of inequality is unemployment. There is only one bigger one, which is health. But nobody here loses their home because they are ill. In the United States, inequality comes from illness.
The Rafael del Pino Foundation is not responsible for the comments, opinions or statements made by the people who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their sole responsibility. The contents included in the summary of this conference, written for the Rafael del Pino Foundation by Professor Emilio González, are the result of the debates held at the meeting held for this purpose at the Foundation and are the responsibility of the authors.
The Rafael del Pino Foundation is not responsible for any comments, opinions or statements made by third parties. In this respect, the FRP is not obliged to monitor the views expressed by such third parties who participate in its activities and which are expressed as a result of their inalienable right to freedom of expression and under their own responsibility. The contents included in the summary of this conference, written for the Rafael del Pino Foundation by Professor Emilio J. González, are the result of the discussions that took place during the conference organised for this purpose at the Foundation and are the sole responsibility of its authors.
