See you again in Spain in the middle of an election...
In the best countries elections do not change the things that really matter. And you here should try to make it so.
Here the politician thinks more about the last poll than about the next generations.
Well, I have dedicated my life to demonstrating, with Prescott, that to create shared prosperity we all need to think long-term and not about the last vote.
Has his theory of temporal consistency never failed in any country?
I have only seen it demonstrated more and more.
Is putting numbers to common sense?
My favorite working example is my own country, Norway. There we had decades of centre-left, then right-wing government... and the difference was barely noticeable.
And doesn't that prevent correcting what is necessary?
What is necessary to guarantee those who risk their money and their jobs 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 shoot up the debt and then the taxes
But without taxes there is no justice.
Of course, but when you invest in a country in a factory, in technology or in employment you want to be sure that there will not be a politician who will suddenly raise taxes in a gesture to win votes.
And if this tax increase is fair and necessary at that time?
The great enemy of shared prosperity is uncertainty. Life is already uncertain enough for politicians to increase it by changing the economic rules according to the polls.
And in Spain?
Spain achieved enormous progress with the entry into the euro precisely because it entailed less uncertainty for investing in it. This kind of guarantee is what you should be chasing today.
With?
Achieving long-term State pacts that would assure everyone that there will be no electoralist coups that will modify forecasts years in the future: be predictable.
Very difficult!
Take Ireland, for example: it has achieved huge investment and a huge increase in well-distributed prosperity because it committed itself to a long-term fiscal framework, over a decade, and is delivering on it. And in just 12 years it has doubled its GDP. I have shown it to the RACEF.
Isn't that taxation too advantageous at the expense of other EU countries?
Respect the rules. The Spanish could do it too. Investing in Spain is risky: let the elections not be the biggest risk.
What should be done?
A mature civil society must transcend dependence on electoral cycles and manage long-term consensus that does not depend only on short-term party play to create strong and independent institutions that make the country predictable.
For example...
The Federal Reserve that I advise is independent, because its governor is appointed for a period of twelve years. So listen, but don't obey the politician. Also in its day the Bundesbank – and now the ECB – consolidated that prestige. Another example is that of the Norwegian Petroleum Fund.
But in Spain we don't have oil.
Russia, Iran and Venezuela also have oil and it is appropriated by an oligarchy. Norway's, on the other hand, is shared among all Norwegians, because we don't let a campaigning politician squander it to improve in the polls.
And don't the managers of the Fund have pressure from other powers?
And some reasonable ones: why not spend more this year on operating theaters or nurseries? Why not build more motorways?
I would say after driving around Norway that they need them.
But this Fund is also for our children and grandchildren. And a country loses its reputation by taking on too much debt one day of bad governance, but it takes years to recover it.
What would you advise Spaniards for their children and grandchildren?
Improve productivity and avoid the accumulation of deficit and public debt year after year due to partisan mismanagement.
Why is a public debt so bad if it is necessary for investment and growth?
If too much debt accumulates, investors usually deduce that if they invest in that heavily indebted country, sooner or later they will raise taxes; and they will have to pay it themselves and lose their investment. So they don't invest in innovation and the country's best talents disinvest theirs and migrate elsewhere.
And the Norwegians do not evade taxes?
Taxes are high; but overall it pays to pay them to live there.
