Poverty And Recovery

Academic Counselor for Libertad y Progreso

CATO- THE REASON – Carlos Rodríguez Braun says that poverty in Spain is closely linked to unemployment and that unfortunately the adjustment seems to be taking place on the side of tax increases, which will harm growth and with it, the creation of employment.

Poverty in Spain, reported by La Razón, presents a bleak picture. It does not contribute to their relief that the authorities ignore the conditions for a rapid recovery of the economy and employment.

The data is bad, and it’s going to get worse. The forecasts for the year 2020 are adjusted downwards. The last example was the Bank of Spain, as we could read in our newspaper yesterday.

Meager consolation is the evil of many, and we also had news about it in the last hours, because the World Bank anticipates a collapse in world GDP of 5.2% this year, a drop that triples that registered in the worst year of the previous crisis, which was 2009.

Of course, there is coincidence that there will be a recovery in 2021, in Spain and in the rest of the world. It will not, of course, be enough to recover in one year what we will have lost in 2020. This will require a longer time. And in this recovery process, the key to fighting poverty is for governments to do things better, or at least not do them worse.

As for Spain, the signals we have are worrying in a double sense. On the one hand, we are heading towards an adjustment of the Public Treasury that will rest on the rise in taxes rather than on the containment of spending. Spending is going to increase, and it is not clear that European aid can balance the accounts. And, on the other hand, the social-communist tandem that governs us is intended to fix poverty with subsidies and not with a vigorous revival of employment.

Poverty in our country, as with inequality, is closely linked to unemployment. Given the explosion of people without jobs and without income, it is natural for the Public Administrations and civil society to turn to the aid of those most in need. The difference between the two, however, is very considerable. The religious who selflessly organize and care for the poor in soup kitchens have no responsibility either for people’s poverty or for their medium-term solution. They do enough to take care of them today.

On the other hand, the responsibility of the public powers is remarkable. Initially, because the increase in taxes will harm growth, and the generalization of subsidies will discourage job search. Furthermore, the repeal of the labor reform will considerably harm workers, making our labor market even more rigid, and leading, once again, to adjustment via amounts, that is, through higher unemployment.

Our politicians, therefore, more than fighting poverty seem to fight the poor who yearn to leave it behind.

This article was originally published in La Razón (Spain) on June 11, 2020.