Wed. Apr 24th, 2019

Spain walks towards a caste society | Economy

Spain walks towards a caste society | Economy

In my young and vulnerable years, my father gave me advice on the one I have been thinking about ever since. "When you feel like criticizing someone," he said, "remember that in this world not everyone has had the same advantages as you." The initial lines of The Great Gatsby, the masterpiece of Francis Scott Fitzgerald, written almost a century ago under the echoes and flashes of the jazz era, teach two things: the world is unfair and unequal. It was in the 20s in the United States and it is today in Spain.

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The social elevator - the economic and social mechanisms that allow the new generations to progress with respect to the previous ones - is slow and makes eternal stops. Any Spaniard born into a low-income family takes four generations (120 years) to achieve an average income level. That is the suspended time that reveals the work. A broken social elevator? How to promote social mobility, developed by the OECD. The time span in ascending social class in Spain is less than the average of countries in this organization - the social elevator only goes faster in the Nordic countries - but there are clear signs that the situation in our country has worsened in the last years. Having a good family background in educational and economic terms is almost a guarantee of enjoying a better work perspective. The Great Recession demonstrated the axiom. "In the crisis, with a similar formation, suffered more who came from a lower socioeconomic space. And the inheritance is the future. If your parents are manual workers there is a 50% chance that you too will be, "says Luis Ayala, Professor of Economics at the Rey Juan Carlos University. The chance of birth sentences millions of working-class Spaniards to precarious, lower-paid jobs with fewer social benefits.

This space where children are what their parents were prosperity, limits economic growth, reduces productivity and talent is lost as embers on snow. "In a low-mobility economy, we are not only paying too much for the labor of a privileged group, but we try to prosper with less qualified workers," warns David Grusky, director of the Center for Poverty and Inequality at the University of Stanford. "It's just like aligning a winning soccer team under the rule that we can only sign players with 1.80 meters, brown hair, green eyes and a standing 44. If, however, we allow open competition we will have great athletes for each position. " The simile reflects the gaze of the American philosopher John Rawls. "Those who possess the same levels of talent and ability, and demonstrate an equal desire to use them, should have an equal chance of success regardless of their initial position in society."

But it's not like that. In Spain, mobility within a single generation is a stationary lift. A worker can develop his entire working life without jumping to the next rung. 66% of Spaniards, says the OECD, within the lowest quintile (the poorest 20%) of the income scale will remain, there, stagnant. An abyss. Well, the average in the richest countries is 57%. "The problem is not so much that the elevator does not work but the income inequality has increased, what is even worse. Because it has, above all, consequences for investment in human capital ", warns Clàudia Canals, senior economist at CaixaBank Research.

Growing inequality

Unfortunately, the capitalism of the 21st century is inexplicable without inequality. It has not stopped growing since the nineties. This descent into injustice has stagnated social mobility in rich nations by trapping millions of families at the bottom of the income ladder. A vital problem and a risk for all. "The worry of high inequality is that it fragments society and causes a phenomenon of polarization," says Branko Milanović, an economist and professor at the School of Public Policy at the University of Maryland. That is, ignites populism.

But before feeling the political fabric crack, the lack of mobility still has the strength to demonstrate its impact on the economy and life. "Fear and suspicion," says Brian Nolan, a professor of Social Policy at the University of Oxford, "is that greater income inequality runs concurrently with less mobility." It's the curve of the Great Gatsby. A postulate proposed by the economist Alan Krueger when he was an advisor to the former president Barack Obama. The name comes from the protagonist of Fitzgerald's novel of the same name. In it, Jay Gatsby plays an enigmatic billionaire famous for his ostentatious parties. The origin of his fortune is unknown, however, the story ends revealing the mystery: Gatsby is the son of poor farmers. The curve that bears his name relates low social mobility to high inequality. It is the measuring tape of injustice. "The reduction in Spain of inequality in the lower layers of society has had a brutal slowdown. Now the less qualified workers reduce their working hours, reduce their income and this affects the education of their children ", advises Gonzalo García, market expert of International Financial Analysts (AFI). That loss, in the first years of life, defines the future. "The care and training of children between zero and five years determines decisively that tomorrow they can have a good job and a good salary," observes the economist.

The rich, getting richer

The rich always win. There are more and more wealthy people in the world and each time your checking accounts are more generous. In 2018 there were 42.2 million people on the planet with financial assets valued at one million dollars or more. It is about 2.3 million more people than in 2017, according to the latest report on global wealth, prepared by Credit Suisse. In addition, all these fortunes add up to a total of 317 trillion dollars, the equivalent of more than 300 times the GDP of Spain. The US leads the ranking of wealth, with 41% of all millionaires. However, it is China where this group is growing fastest. Last year, he added 186,000 new millionaires to his list. These dizzying figures contrast with the fact that 64% of the world's adult population lives on assets less than $ 10,000.

The landscape is even darker if we think that a new crisis and higher unemployment dawn on the horizon line. "When both parents are unemployed in a Nordic country has very small consequences for the access of their children to college. However, the opposite happens in the United States or Spain, "analyzes Markus Gangl, professor of sociology at the Goethe University in Frankfurt am Main (Germany). The reason is clear. The northern lands protect their citizens with a generous system of unemployment, scholarships and low tuition fees. Classic recipes of social democratic policies that become urgent in a Spain where 617,000 households no longer enter income and 2.6 millions of children are at risk of poverty.

Stagnation spreads its economic consequences like dandelions under a tornado. "There are many repercussions of this immobility - and the woman is one of the worst affected - but if I had to choose one, it would be the inability of talented people to prosper within the formal economy. So many end up underemployed or in the informal space, where they find it impossible to develop their potential or are forced to emigrate, "says Giles Alston, expert at Oxford Analytica. The poet Juan Gelman imagined verses for that helplessness. "People should not be ripped out of their land or country, not by force. People are in pain, the earth is sore. "

But the economy understands little of the pain of others. In Spain, the weakest adhere to precariousness, the rich adhere to abundance. It is the "sticky floor"; It is the "sticky sky". In a period of four years, says the OECD, those who are in the poorest 20% "have little chance of escalation". In fact, 66% of them, we have seen, will be stuck in the lowest. Meanwhile, at the other extreme, 72% will continue to enjoy the strength of privilege, compared to 68% on average in the most developed nations. Spain is a fractured and stagnant land. "The problem of lack of mobility is very serious," says Stefano Scarpetta, director of Employment, Labor and Social Affairs of the OECD. "It means, for example, that many investment opportunities remain untapped and potential businesses will never come to light. In addition, that castling in the upper part can be translated into continuous rents for a few at the expense of the rest. "

Without recipes 'miracle'

Although the challenge is elusive. There are no miraculous recipes to accelerate the social elevator. The economists propose to strengthen support for the unemployed, raise wages, increase productivity and improve GDP. This idea that is written in 18 words consumes a generation time in Spain. Hours that are so long that they have emptied classes and desks. Education should boost the lift. But the ballasts weigh. "Mobility in Spain is medium-high. The problem is that we start from a base with very uneducated parents ", Olga Cantó, professor of Economics at the University of Alcalá, assumes. In 2011 (latest data available), 80% of parents between 25 and 64 years old had low education. For comparison, Germany, which after Spain is the European country with the worst percentage, is around 11%. In addition -corresponding to the OECD- we continue to suffer (19.9% ​​in 2015) the highest level of early school leaving in the European Union. The circle closes at the extremes of worry. "The boys between 25 and 34 years whose parents had a low level of education in 2005 had a 40% chance of staying in that situation, and this percentage has worsened: in 2011 it increased to 45%," says Olga Cantó .

But all that accounting is even more complex. Education is a necessary condition for social ascent, although not sufficient. "In my studies I have discovered that in the most unequal countries like Italy, the United Kingdom or Spain there is still a wage gap in favor of the boys who, having the same education, come from a privileged family environment", says Michele Raitano, professor of Economics Politics of the University of Sapienza in Rome. "What counts is what the market rewards. If you only value people's "productive abilities", the best policy is to match these capabilities. For example, promoting the education of the talent of those who come from depressed areas or favoring the mixture of kids of different social origins ".

This finding brings consequences. It breaks the idea repeated a thousand times by educators to their students: "Work hard, work well and you will have a successful future with good job prospects". "Because everything is the same, and you know it," wrote the poet Luis Rosales. The privilege of birth weighs, the elite weighs. The United Kingdom is not that far from Spain. The territory suffers from chronic social immobility. Its system of 2,600 private schools (625,000 students) has produced 29% of all the Prime Ministers, 51% of the main journalists and 74% of the judges. The fog falls and the island is isolated by injustice. "The difference in spending between a private school and a British public school is huge. It is in a ratio of three to one. That's why most Britons consider it unfair, "summarizes Francis Green, professor of Labor and Economic Education at University College London.

Elite training

In Spain, your negative may well be the exclusive business schools. "They are engines of inequality," admits, sincerely, Gayle Allard, professor at IE Business School. "It's an expensive training. It is placed in the upper part of the market. We give scholarships and loans but it is still an elite education ". So, how to react when the desks feel, above all, the privileged? "Sometimes you may not have equal opportunities, but if the economy grows very quickly it is possible to compensate," says Jorge Rodríguez Menés, professor of Political and Social Sciences at Pompeu Fabra University.

This phrase is difficult to fulfill in a world that slows down your prosperity. In the United States, the decline in social mobility between 1970 and 2014 was due to the increase in inequality. In other words. "If we wanted to reverse, only with economic growth and without changing the distribution, the fall in the percentage of children who, in adulthood, have more income than their parents, it would be necessary that over the next 30 years the GDP will increase to rhythms over 6% ", describes a work by CaixaBank Research.

If education is not enough and economic growth is not a guarantee either, what can be done? "The best strategy to increase mobility is to reduce inequality in families," sums up Suresh Naidu, professor of economics at Columbia University and one of the founders of the Economics for Inclusive Prosperity (EfIP) network. which aims to promote the debate on the inclusive economy. It is a trial and error approach. An urgency on a planet where the 26 richest people accumulate as much as the poorest 3,800 million.

Because the elevator stops. The doors do not open and the air is scarce. Given the lack of social mobility, Spaniards hardly trust meritocracy. 53% of respondents - in the work of the OECD - believe that having parents with better income and education is an essential factor to prosper in life. A percentage well above the average (37%) of the richest countries. It is easy to understand that number in a land of revolving doors, families enriched during Franco's regime by printing press of the Official State Gazette (BOE) and in which the best "LinkedIn" are still family relationships. The heraldry of those who occupy political, financial or business power These days, or until very recently, remember the one lived more than 40 years ago. Families like the Cortina, Carceller, Gay of Montellà, Lara Bosch, Samaranch, Suqué-Mateu (Peralada Group), Vilarasau, March or Abelló bring that murmur. If we travel to the present, the Stock Exchange and its surroundings, they look like the playground, among others, of the Durella, Villar-Mir, Del Pino, Grifols, Ortega, Andic, Entrecanales, Escarrer, Lladó. And in a time that claims a new policy, for years Spain has not stopped listening to surnames (Cabanillas, Ruiz-Gallardón, Fernández-Miranda, Arias-Salgado, Dancausa, Trillo-Figueroa, Rato, Posada) that were already relevant in the dictatorship. The dead, the philosopher Auguste Comte would say, still rule the living. "It is true that family nepotism continues to be maintained. But the labor market is changing a lot. Less and less, the son does the same work as the father, because perhaps the father's work does not even exist anymore, "argues Clàudia Canals, of CaixaBank Research. However, until that bridge is crossed, the sun does not come out the same for everyone. "Nepotism and the absence of meritocracy have direct repercussions on productivity and potential growth, and it is one of the challenges for Spanish companies and also for university and politics", reflects economist José Carlos Diez.

Wrong way

For years now, in Garrigues they know that this is the wrong way. The founder's son, Antonio Garrigues Walker, closed the law firm to the perseverance of the family. It commands merit and not genetics. "The nepotism of families is connected to the family business. It is a difficult phenomenon to correct. And, of course, that repetition of surnames is not good. But in

From the dream to the American nightmare

If an American wanted to live the American dream maybe he should travel to Spain. This is one of the conclusions that between figures and words can be filtered from the OECD report. A broken social elevator? How to promote social mobility. A Spaniard takes about 120 years to move from poverty to average income, compared to 150 for an American. The distance that exists between four and five generations. Maybe it does not sound like a lot or maybe it sounds like a whole life. The fact is that if we also analyze the so-called Great Gatsby curve, which relates low mobility to high inequality, the land of opportunities reflects a more unjust image than the Spanish one.

It is the disfigured portrait of one of the most inequitable societies on the planet. In Spain, the 1% of the richest people in the country receives 8.6% of the national income. The percentage, on the other side of the Atlantic, rises to 20.8%. But the country supports it because that inequality permeates the essence of its mythology. The United States loves the good stories that lead from nothing to wealth. The one of the presenter Oprah Winfrey, for example, has been counted a thousand times. His ascension from a poor childhood in the rural south to a multi-millionaire star of the media. "The American dream is alive, with more obstacles, but alive," defends Jorge Pérez, 69, one of the richest Latin American entrepreneurs in the world, who has forged an empire in the real estate sector through his company, located in Miami, The Related Group. "I am a perfect example. I was born in Cuba, I lived in Colombia and I went to the university in the United States, without having a penny, thanks to the scholarships. There I opened a business out of nowhere that today builds billions of dollars in real estate. "

However, the dream sometimes melts black. Since the Golden Age (1870-1890) the greatest economic power in the world did not have such high levels of inequality. The average US salary has been stagnant for almost fifty years and fewer and fewer young people think that they will do better than their parents. "There is a very clear example: 90% of the children born in 1940 in the United States earned more than their parents, but only 50% of the kids who were born in 1980 have been able to achieve the same," warns Ryan Rippel, Director of Economic Mobility of the Bill & Melinda Gates Foundation.

This stalemate has many culprits: the labor market, accessibility to housing, neighborhood class, structural racism. "When children grow up in the same neighborhood, with parents who have similar incomes, African-American kids fare worse in life than white people in the same environment," says Ryan Rippel. And everything can get worse. The impact of "radical innovation" is still awaited. "We may be approaching a revolution defined by full employment, low productivity, high business margins and high inequality," predicts Christophe Donay, director of macroeconomic analysis at Pictet WM. This inequity and the post-industrial decline justify, for example, the human and economic cost (some 69,000 million euros per year) of the opium epidemic in the United States. An anguished account of how the oldest analgesic known to man anesthetizes the pain of the most advanced liberal democracy on the planet. The broken world driven by its own contradictions.


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