I believe that now, in the economic policy in Europe, the topics of inequality are not priorities. The discussions, the declarations of the europeans leaders are importants words on a new distribution of the wealth, but without an energic action for resolve the must important problem in Europe: the increase of the underemployment, and, of course, the derivation of this great problem. In this line, the differences between levels of age, the gender, and the difficulties for the mobility of people, are very strongs reasons that impose a new vision on the political economy. The Macroeconomics should change her planning, and leave for the moment in a corner all the theological indicators that moderate the economic debate in the European Commission. We need flows of capital for to design a type of European New Deal. Is don’t possible to reduce the inequality if we don’t are agree in this topic, in my opinion.
Inequality grows. Economic growth has mainly benefited a short social stratum. This approach is not ideological, but empirical. Recent research concludes so that inequality has increased between 1982 and 2014, under the provisions of the neoliberal paradigm. The rise in inequality is correlated with a drop in productivity of capital, progress in labor productivity, increased unemployment and, in turn, establishing two opposite processes: the fall of the rate of profit and the growth of the mass of profit. This is what makes it possible to continue with the economic model, in a scenario in don’t appreciate new possibilities for new investment.
The more developed economies now have a defining trait: they have an third sector more robust. This further complicates the analysis of the output of the Great Recession. In this respect, educational processes should be crucial, especially in the area of vocational training: health, aides, monitors, caregivers, jobs that do not necessarily require college, whose applicability is linked to childhood relationships with primary-schools , for example and with age -Residential gerontológicas- and pose a greater intensity of the workforce.
In this context, employers know something that the conventional economists ignored, rapt by his religion: that the market does not work perfectly, under pressures and influences that are essential and that the equilibrium points are not built only with good hands invisible. Privatize, deregulate, relax taxes, flexible labor regulations, all business requests narrow focus on unit labor costs; all speeches can even be politically correct, such as concern for research and innovation, youth training, concern about unemployment, elements, however, that are rarely transferred to the accounts of the companies. In southern Europe, the premise is clear: seek lower labor costs, regardless of worker training. That’s the goal. And the Great Recession it is initialed.
At the same time, other factors must be taken into account in the face of a new economic policy that exceeds the strictures and blockages of the current, and that facilitates the reduction of inequality:
- Urge most inflationary patterns in the north of the Union, to open more advanced wage differentials between the rich Europe and periphery, in order to avoid competition through wage policies. This idea follows the basic need for wages to rise to the point that inflation could be virtually double the established in the Maastricht Treaty. It will, in turn, guaranteed to stimulate domestic demand in those countries.
- Increased public investment effort, an increase of participation of States in the EU budget and the assistance of the European Investment Bank. In coordinates of sluggish private investment, the public sector should exercise lever for growth, given the multiplier recalculated by the IMF and even among 0,9 2,2 may even quadruple the most austere. That is, more public investment is more credit, more activity, more hiring and more jobs. And less inequality.
- Must rethink taxation, to make it more progressive. Falling incomes it has been the central cause that has unbalanced public accounts. Despite the insistence of many economists, the mainstream has followed in his almost pathological stubbornness: the fault is of the wasters of governments, who have squandered public resources in things as unedifying as hospitals, schools, research and social benefits. This destroyed the public economy. And compensate them imposes tax measures apply to the privileged income with the addition also two key areas: environmental taxation, with the adoption of fiscal figures also strictly tax collection purposes; and the relentless pursuit of fraud high-flying, from the elimination of banking secrecy and increased inter-bank communication regarding operations and accounts.
The Great Recession is part of a systemic crisis, since it is a clear trend in the change of leadership, questioning of existing economic areas such as the European Union itself, the temporary loss of ability to remake capitalism steadily, with decreases in benefits, and uncertainty in the investment strategy. But capitalism, as a system, is not terminally: it’s not over. The system will work if you increase the mass of profits, although the rate of profit can to fall.
My political recommendations in the short-term focus on just that I pose been advocating throughout this exhibition: the urgency of a new investment plan that falls mainly on young people (18-30) and in that segment of workers who have been most affected by the crisis (40-55 years).
The Great Recession is showing that the plans of political conservatism are returning to a historical inertia: the enshrining inequality. Lower wages, lay off workers, cut services, slimming benefits are, to my mind, one goal: to install fear and swell that «reserve army» allowing precisely keep labor costs in check.
Carles Manera (Palma 1957) holds a PhD in History from the University of the Balearic Islands and PhD in Economic Science from Barcelona University. Professor of Economic History & Institutions at the University of the Balearic Islands’ Department of Applied Economics, he has held the posts of Pro Vice-Chancellor for Financial and Administrative Planning at the University of the Balearic Islands (1996-2003); Minister for the Economy, Finance & Innovation (July 2007 to September 2009); and Minister for the Economy & Finance (from September 2009 to 2011) of the Regional Government of the Balearic Islands. He has received the following awards: the “Ciudad de Palma” Research Award (Palma City Council, 1983), Miquel dels Sants Oliver Research Award (Obra Cultural Balear, 2001) and “Premio Catalunya” for Economics Award (Societat Catalana d’Economia-Caixa de Catalunya, 2003). Recently, he was Visiting Researcher at the London School of Economics.