May 10, 2021

The losers of globalization | Economy

The losers of globalization | Economy

The economist Dani Rodrik has published an article where he elaborates historical series and comes to the conclusion that after a period of globalization and technological revolution, a period of protectionism follows. This would mean that Trump, Le Pen, Brexit, would be a historical normality. They all have local causes but share a global virus.

In Spain the phenomenon began with Podemos in 2014 and now the extreme right has returned to a Parliament. Podemos was associated with the economic crisis. Vox begins to rise in the polls since the motion of censorship in May that allowed Pedro Sanchez to reach La Moncloa with the support of the Catalan separatists. But without global analysis it is not possible to explain the phenomenon. The advantage of being late is that we know the dynamics of similar phenomena in other European countries.

Vox's electoral program is simple and direct to emotions, and we know that in other countries it has been very effective. Potential collectives are working men outside large urban centers and young people. Both groups are the losers of globalization and the crisis. The uberization and robotization invented by Silicon Valley causes fear of losing employment and is a breeding ground for protectionism. And young people in Spain are the ones who have suffered most from the crisis with less employment, precarious salaries, higher prices of university fees, and so on.

The problem of simple solutions to complex problems is the reality that over time is implacable. Vox's economic proposals focus on fiscal issues without an economic plan to face future challenges. They promise to improve pensions and subsidies for the most vulnerable groups and an intense reduction of income tax, which would be accepted by the majority of Spaniards.

The question is who pays it? Vox proposes to cut mainly by eliminating the autonomous communities. To eliminate the autonomies it is necessary to reform the Constitution, something that Vox is unlikely to achieve. And if they did, they would see that most of the public expenditure is the salaries of civil servants, mainly in health and education, and the expense would be maintained.

Spain has 1.2 trillion public debt and 20,000 million deficit. Tax rebates and unrealistic spending cuts would mean increasing the deficit and public debt by 50 billion dollars, which would more than triple the current deficit. It would mean increasing the risk premium. It would mean asking for another ransom from our European partners. And it would increase more the payment in interests, increases of taxes and cuts in health and education as Rajoy did in 2012. The same story of Alexis Tsipras in Greece in 2015 and Mateo Salvini in Italy now.

What the leaders of Vox have to explain is how would they pay the pensions and salaries of the officials in that scenario? The anger is understandable, but everything is likely to worsen. The paradox is that the crisis was generated in the housing bubble with José María Aznar and the ideologists of Vox began his political career with him in FAES and La Moncloa.


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