Jose Maria Rodeller: “The two biggest dangers to the economy are public spending and protectionism.”

Spain is still on the tail wagon of economic recovery After experiencing the worst crisis in peacetime due to epidemics. As inflation erodes citizens’ wealth, with grossly unbalanced public accounts High unemployment rate in developed countries and with Govt PSOE Y We can Their actions stifle the productive economyThere is a lot of uncertainty in our country.

Thus, in all this whirlwind, The University of Francisco de Vitoria It has created its Economic Research Laboratory. This think tank will have the objective of analyzing the current panorama, making recommendations and providing forecasts to solve the serious problems affecting the Spanish economy. The director of the laboratory is a weekly collaborator Free market, Jose Maria RodellerIt’s together Pedro Schwartz, Francisco Cabrillo, Jaime Garcia-Legas Gregorio Izquierdo is part of this discussion group.

Question (Q): A certain free current is observed among the members of the lab…

Answer (R): Yes, we all agree on classical liberal or European liberal thinking. Our members are very powerful economists who have extensive experience in the public, private and academic sectors and know what it’s like to manage.

(b) While the left’s agenda is to further expand the tentacles of the state, the right has intensified its protectionist rhetoric and anti-free trade. Is liberalism more of a threat than ever?

(R): Yes, in recent times, we have seen a return to a certain degree of protectionism, as in the struggles the US had with China or the EU just before the start of the coronavirus crisis. We have also seen a return to the protection of national production, which is not favorable as it closes in on itself. This reduces the likelihood that a consumer will choose more variety, cheaper product and better service. In addition, confiscating businesses with tariffs makes firms less likely to move abroad and provides less incentive to do better and produce more. However, when economic crises occur, the first thing populism does is find someone to blame. And the easiest thing is to point out a foreigner.

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There are many examples that show that when protectionism was used, the world economy was worse. In Spain, we have seen the imposition of a tariff on Asturian or Leonis coal, or with the Combo Tariff, which was created to protect the Catalan textile bourgeoisie. The bubbles they created hindered the growth of these Spanish industries.

That is also true Liberalism is always deadlocked because it is a less easily marketable orientation than social democratism. Although experience supports it, In liberal discourse the fruits are seen in the medium and long termSo you have to wait. However, the social democratic orientation is seen in the short term, subsidies for train tickets or cinema tickets for people over 65 years of age, which means that in the end the citizen does not realize that he or she is paying for it through their taxes. High debt, whether they are deferred taxes or high inflation, creates more suffering for the most disadvantaged people due to an artificial tax and inflation.

For this reason, there are major risks to the economy and to get out of any Spanish party with a liberal-conservative inspiration. Unlimited public spending and protectionism.

Beatriz García, Editor-in-Chief of Libre Mercado and José María Rodeller, Director of the Economic Laboratory of the UFV

(b) Private property is the basic pillar of liberalism. Are you insecure in Spain now?

It is not attacked, it will be complicated, but Measures are taken to threaten it, such as the Housing Act of the government of Pedro Sánchez. In the case of rental price caps, if I own something and cannot dispose of it as I please, you are taking away my right to ownership. The same thing happens when I want my apartment vacant and the government forces me to rent it out. The government cannot tell anyone what to do with their property. Only the free play of the market must be managed so that supply and demand agree. If the government intervenes, the only thing it can achieve is to drive apartment owners off the market, and with fewer apartments available, prices will rise, which again hurts those with fewer resources.

It’s the same Attacks on funds investing in the housing market. Funds willing to invest in our territory will be less and less, which will directly harm construction and the jobs it is connected to, which will create the need to provide more unemployment benefits and more public spending. Ultimately, interference affects all branches of activity. It is a vicious circle that needs to be broken under role model Private property is sacred.

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(b) In addition to the report on the disastrous effects of the housing law that went into effect last Friday, in the observatory you also examined the pension reform of José Luis Escriva, which causes an increase in costs and social contributions. Is it necessary to de-index pensions from CPI to guarantee sustainability of the system? With more than 9 million pensioners, it would be extremely unpopular…

(R): Yes, we must speak clearly: the pension system must be reformed to make it sustainable. The steps taken by the PP were in the right direction with stability, but this government has reverted to indexation of pensions to the CPI and this adds more fuel to the fire as it creates a burden for the next few years. .

Jose Maria Rodeller

Moving towards a capitalization system is the right thing to do, but this is complicated by the fact that there are already two generations without sufficient storage capacity. At least one can try to move towards a system of fictional accounts similar to that of the Nordic countries. so be it, Pensions should be adjusted for lower contribution, which will incentivize companies to create more jobs and offer better wages. So there will be more contributors. It’s about broadening its base, not about having fewer people contribute and taxing them more.

(Q) Will the next government in power have room to cut taxes?

(R) Lowering taxes is always positive as much as possible, but for that you have to lower costs as well. Obviously we have the highest personal income tax, we have the highest corporate tax and the highest social security contributions. So, you should Minimize those taxes as much as possible to free up income This allows the economy to fend for itself, fixing all the unproductive and non-essential spending, which is a lot.

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Since Sánchez came to government, spending has increased by more than 75,000 million euros, more than 40,000 million if we take part of the European funding, which is a lot of structural costs in five years and it is unknown. Reflected in excellent public services. It reflects that resources are being allocated to unimportant matters.

Of course, raising taxes is never a positive thing, but if we get to the point of redefining the tax mix, raising indirect taxes like VAT will be far less distortionary than direct taxes like personal income tax. High risk of losing job opportunities.

(Q) Any other economic method which you think is urgent?

(R): Make it easy for companies to want to invest so they don’t get in the way and it’s not all horrible bureaucratic nonsense. Know that and face the economic situation We must adhere to budget stability and reduce debt, not only in percentage terms of nominal GDP but also in absolute values. We can’t have more than 1.5 million euros in debt because it’s a ticking time bomb when rates go up and finally nothing. Excess should be feared.

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