Article published by Félix Fdez-Claverie in Diario de Avisos on 04/20/2014.
I recently read Luis Garicano's book "The Dilemma of Spain. Being more productive to live better." Luis Garicano (Valladolid, 1967) is a professor of economics and strategy at the London School of Economics and a doctor in economics from the University of Chicago. He has been a visiting professor at the Massachusetts Institute of Technology and the London Business School. He has held the McKinsey Chair of the Foundation for Applied Economics Studies (FEDEA) and has been editor since its creation in 2009 of the prestigious economic blog “Nothing is Free”. Since 2007, Professor Garicano has dedicated a large part of his time to thinking about what Spain needs to get out of the hole it currently finds itself in. In his book, Professor Garicano proposes a refoundation of capitalism and democracy in Spain with the aim of adapting them to today's new globalized economy, and putting them less at the service of the powerful and more at the service of the Spanish people.
It is a reality that Spain is emerging from the economic crisis. The only ones who deny it are the same ones who did not recognize at the time the magnitude of this crisis that has devoured us in recent years. Economic takeoff is not going to be easy and we must continue with the reform process that we have recently started. The worst decision we can make as a country would be not to continue with the reforms, to think that we are already out of this. The option of not continuing on the path started is very tempting for the political ruler. Even more so taking into account that in 2015 we will hold general elections and regional elections in our country. We all know that the word reform in our country is unfortunately synonymous with political wear and tear.
Why should we continue with reforms? Well, because Spain has a serious productivity problem. Although the cliché says otherwise, life in Spain is hard. In Spain we work too many hours and get little sleep and it is difficult to reconcile work with family life. In the most productive societies of northern Europe, workers work fewer hours, have more vacations and all this with high productivity. In addition to the problem of our low productivity, Spain will be affected in the near future by two factors that will limit our growth: demographics and debt.
According to INE estimates, Spain will lose a tenth of its population in forty years (we will go from 46.2 million in 2012 to 41.5 million in 2052) and we will reach a life expectancy of 90.7 years for women and 86.9 years for men. These changes will cause the dependency rate to double, that is, it will go from five inactive people for every ten of working age to ten inactive for every ten of working age.
According to the BdE, the debt of all public administrations has reached a new record last February, totaling 987,945 million euros, 96.5% of GDP. By 2014, the Government of Spain estimates that the debt of all public administrations will approach 100% of GDP. And the problem is not only that this money must be returned, but that interest must be paid to whoever lends it to us. The interest on the debt that we will have to pay in 2014 will amount to 38,000 million euros, or in other words, almost 70% of what public health costs us each year in Spain.
This is why Professor Garicano advocates carrying out reforms in at least three priority areas: i) reduce the size of the state substantially ii) open the political system to facilitate not only civil servants and professional politicians access to positions of political responsibility and iii) profoundly change the educational system that allows Spaniards to acquire the necessary training to be able to compete in the modern knowledge economy.
Reducing the size of the state is a priority. Autonomies with responsibility for expenditure and not income are not efficient, so we should think about reforming the autonomous system. We have to go deeper into eliminating the duplication of powers between city councils, councils, autonomous communities and the central government. In Spain there are many companies and public organizations. The Cabildo of Tenerife is a clear example and has started on the right path. On the other hand, Denmark is a model to follow, since it converted the 1,389 municipalities it had in 2007 into 98, and forced all municipalities to have at least 20,000 inhabitants. Spain could convert its 8,116 municipalities into 600, which would reduce the number of councilors from 68,462 to 5,000.
Since the transition to democracy we have designed a system of political parties and rigid social representation, incapable of letting in fresh air. This rigidity is responsible for the absence of accountability and the continued decline in the capacity and training of political elites. The regulation of parties in Spain, unlike in other EU countries, is very weak and not very prescriptive. They are allowed to report their finances six years late and before a friendly Court of Auditors. The measures to be taken must favor internal democratization and transparency in the functioning of the parties, such as the introduction of internal primary elections, annual audits and biannual congresses with a fixed date not controlled by the management bodies.
According to INEM data, of the 6 million unemployed people in Spain, almost 5 million have only studied up to secondary education or less, that is, they do not know how to do practically anything. Unemployment in Spain has a strongly structural component related to poor educational quality. Our educational system is archaic. It is a system in which memory capacity, repetition of tasks, the passive attitude of the student and the complexity of the exams prevail. Mathematical knowledge, the ability to write and present an argument correctly, and languages are not promoted. By the way, I still don't understand why English-language films are not subtitled on our regional television. In our country, the professional career of teachers and school leaders is linked to their seniority and not to their productivity or results. And it is better not to talk about our universities. Spain is home to two of the ten oldest universities in the world, but currently there is no Spanish public university among the top 200 in the world. Our university has a serious governance problem. As long as the rector of the universities continues to be elected by the professors, administrative staff and students of the university itself, he will continue to be a “captive” leader of the university's elite. The change in governance of the universities would involve the rector being appointed by a board of trustees that was made up of both people of recognized prestige from outside the university and the academic members of the faculty. Just one fact, currently the Faculty of Philosophy of the University of La Laguna has more professors than students.
And therefore, it will depend on us if we want to be the Florida or the Venezuela of Europe in the not-so-distant future. With skyrocketing public debt, I believe we have no choice and we will have no choice, although some may not like it, but to continue down the path of reforms. We have to take steps to do more while spending less money. And don't doubt it, it can be achieved. Otherwise, think about the country that we are going to leave to our children, and it is not their fault that mediocrity instead of the search for excellence has expanded in our society.
