José Ignacio Conde-Ruiz (economist): “Politicians’ contempt for young people will cost us dearly”

2023-09-23 15:49:05

The Economist José Ignacio Conde-Ruiz –professor at the Complutense University of Madrid and deputy director of the Foundation for Applied Economic Studies (FEDEA) – has analyzed the national accounts in generational terms and has detected what he describes without euphemisms as “the perfect robbery”: Public spending is flowing massively towards the oldest age groups and is leaving the youngest unassisted, who are the ones who need the most help but will only inherit debts. He explains it with figures, arguments and graphs in ‘The Docked Youth’ (Península), the essay he has written with his daughter Carlota, whom he sees face a very different panorama than the one he encountered when he was her age (19 years old). : what were then continuous messages of confidence, today are gloomy omens for the uncertain future that awaits them. It’s not a social climate, it’s numbers.

If one looks at advertising, the media, the networks…, I would say that the cult of youth survives, that youth continues to sell. Is it a misperception?

Youth sells in terms of marketing, but the products that drive the economy are those that those of the older generation buy, who are also the great darlings of the system and the beneficiaries of public spending. It is an uncomfortable truth and it has visible expressions. In the last 30 years, pensions have improved markedly; However, child poverty is still among us, young people cannot access housing and our educational system has historic deficits.

In his book he points out a culprit: political demographics. What’s that?

We are on our way to being the oldest country in Europe and this has led young people to lose demographic and electoral weight. When I was my daughter’s age, young people were 35% of the electorate, but now they barely reach 20%. Furthermore, they vote less, and the only thing politicians care about is winning elections. For them it is more profitable to keep the elderly happy, who are more and go to the polls more. It is also easier: pensions are raised from one day to the next, but the result of improving investment in young people takes more than one term to be noticed.

Many of those older people are also parents and we want the best for our children.

In Spain we are very generous within the family. We would give everything for our children, parents or siblings. However, we do not trust the public system to claim that protection. In the Nordic countries, where family ties matter less, the state helps young people more and dedicates more money to training and emancipation. Here we prefer that the grandfather be the one to pay for the grandson’s driving license with the money from his pension.

We are the oldest country in Europe and this has led young people to lose demographic and electoral weight.

Today’s young people know more languages, have traveled more and are better educated than you and I were at their age. How is it possible that they are worse?

Because they have it more difficult than us. They have experienced three unprecedented global events since the Second World War: a financial crisis, a pandemic and a war in Europe. And per capita income has not grown since 2007. When this happens, social mobility stops and children end up living worse than their parents. On top of that, they call them the ‘glass generation’ and accuse them of staying at their parents’ house watching series. How are they going to leave if they can’t afford a home? The age of emancipation has been delayed five years in two decades, but it is not because they do not want to leave, it is because they cannot.

Where does that situation lead?

We are eating the future, because it is proven that policies that help young people are the most effective in improving the productivity of a country. The current model is a disaster even for the elderly, because the better the young people do, the more guaranteed their pensions will be. There is nothing more profitable for a country than lifting a child out of poverty so that they can develop, or increasing investment in education, which is the most effective social elevator that exists. The lack of interest of politicians in young people will cost us dearly, and we will pay for it. Because they vote with their feet, and if we don’t support them here, they will end up leaving. This generation is global and knows that it can be just as happy here as in another country.

How is this imbalance reversed?

From the outset, I would impose the rule of not investing a single extra euro for the elderly if another euro is not invested at the same time that goes to the young. In practice, the opposite is happening and the imbalance continues to worsen. We have seen it with the last revaluation of pensions. Raising them all equally by 8.5% is nonsense, but no one dared to point it out, not even the opposition, because it would have meant losing the elections. Low pensions should have been raised by 11%, but high pensions only by 3%, like salaries. This would have saved 7 billion euros that could have been dedicated to improving the educational system or facilitating young people’s access to housing.

There is nothing more profitable for a country than lifting a child out of poverty so that he can develop, or increasing investment in education, which is the most effective social elevator that exists.

In the last election campaign, summer He proposed giving 20,000 euros to each young person when they turn 23 to facilitate their emancipation. What did you think of him?

I was surprised that the debate focused on its cost: 11 billion. The revaluation of pensions cost 16,500 and no one protested. The measure seeks to correct the wealth inequality of young people when they are starting their lives and bring equal opportunities among them, but their shortcomings are so many that this money would be more useful if it were dedicated to improving education or providing them with housing. Well, at least we saw a political party proposing something for young people at a cost to the public treasury.

Proposes lowering the voting age. Would that improve the situation of young people?

It would not be able to compensate for the excess influence that the elderly have in the General State Budgets, but it would help to empower young people. I don’t understand that a 16-year-old boy can be responsible for working and not voting. Nor does it make sense for young people to be absent from debates that will determine their lives. Like that of the Toledo Pact: the debt we are generating will have to be paid by them, but their opinion does not count. It’s the perfect heist.

You are an expert in pensions. Is the current system sustainable?

The problem is that this debate is usually raised thinking about today’s panorama, not about 10 or 20 years from now, which will be different. Where today there are three workers to pay a pension, soon there will be only one and a half. The new longevity will force us to move towards flexible retirement models. There will be those who reach the age of 67 and want to work a few hours a week and collect part of their salary and part of their pension, and there will be those who need to retire earlier, but in the future we will exit the labor market gradually, not as drastically as we thought. we do now. We will have flexible retirements. This will force reforms.

Many of the measures he proposes to help young people cost money. Who pays for this?

The problem is that here we want to live like in the Nordic countries paying taxes in the United States, and that cannot be. Nor can we continue accumulating structural deficits for years, because we are passing that debt on to future generations. To maintain the welfare state, revenue must be increased.

Going up taxes?

Not necessarily. It is about improving the efficiency of the tax system. The problem is that ideology usually gets in the way of the design of the collection model, and it shouldn’t. It is good that it influences the way we distribute, but when it comes to collecting, we should be as efficient as possible, and that is not always the case. If we put super high taxes on the rich, they will go to another country and revenue will go down. Our problem is that we have very high rates, but the tax bases are full of exceptions, bonuses and special reduced rates, and in the end we collect little. There is room to increase revenue without raising marginal rates on all taxes.