See you again in Spain in elections...
In the best countries, elections do not change the really relevant things. And you here should try to make it so.
Here the politician thinks more about the last survey than about the next generations.
Well, I have dedicated my life to demonstrating, with Prescott, that in order to generate shared prosperity it is necessary for all of us to think in the long term and not in the last vote.
Has your theory of time consistency never failed in any country?
I've only seen it more and more demonstrated.
Is it putting numbers to common sense?
My favorite example of it working is my own country, Norway. There we had decades of center-left government, then right-wing... and the difference was barely noticeable.
And that does not prevent correcting what is necessary?
What is necessary to guarantee those who risk their money and their work in a country, like the citizens themselves, is to be able to predict in the long term that all their effort and savings will not be squandered in electoral gestures that trigger the debt and then the taxes.
But without taxes there is no justice.
Sure, but when you invest in a country in a factory, in technology or in jobs, you want to be sure that there will not be a politician who suddenly raises taxes in a gesture to win votes.
What if that tax increase is fair and necessary at that time?
The greatest enemy of shared prosperity is uncertainty. Life already has enough uncertainty for politicians to increase it by changing the economic rules according to the polls.
And in Spain?
Spain made enormous progress with its entry into the euro precisely because it meant less uncertainty for investment in it. That kind of guarantee is what you should be after today.
As?
Achieving long-term State pacts that will assure everyone that there will be no electoral swerves that modify the forecasts for years to come: being predictable.
How difficult!
Take Ireland, for example: it has achieved huge investment and a massive increase in its well-distributed prosperity thanks to its commitment to a long-term fiscal framework, more than a decade, and it is delivering. And in just 12 years it has doubled its GDP. I have demonstrated it in the RACEF.
Is not this taxation too advantageous at the expense of other EU countries?
Respect the rules. The Spanish could too. Investing in Spain is risky: that the elections do not increase the risk.
To do?
A mature civil society must transcend dependence on electoral cycles and manage long-term consensus that does not depend only on the short-term game of parties to create solid and independent institutions that make the country predictable.
For example...
The Federal Reserve that I advise is independent, because its governor is appointed for twelve years. So he listens, but doesn't obey the politician. Also in its day the Bundesbank –and now the ECB– consolidated that prestige. Another example that I often cite is the Norwegian Petroleum Fund.
But in Spain we don't have oil.
Russia, Iran or Venezuela also have oil and an oligarchy appropriates it. The Norwegian one, on the other hand, is distributed among all Norwegians, because we do not let a politician in the campaign squander it to improve in the polls.
And aren't the Fund managers under pressure from other powers?
And some reasonable ones: why not spend more this year on operating rooms or nurseries? Why not build more highways?
I would say after driving in Norway that they need them compared to Spain.
But that Fund is also for our children and grandchildren. And a country loses its reputation by borrowing too much in a day of bad government, but it takes years to get it back.
What would you advise the Spanish for their children and grandchildren?
Improve productivity and avoid accumulating deficits and year after year public debt due to partisan mismanagement.
Why is a public debt so bad if it is necessary to invest and grow?
If too much debt accumulates, investors often assume that if they invest in that heavily indebted country, sooner or later taxes will be increased there; and they will have to pay for it, losing their investment. That way they don't invest in innovation and the best talent in the country disinvests theirs by emigrating to another and everyone becomes impoverished.
And Norwegians don't evade taxes?
Taxes are high; but on the whole it pays to pay them to live there.
