La Jornada:
León Bendesky
Translated by Stuart Taylor
When considering the performance of an economy and introducing public policy measures to steer it in a given direction through adjustments or more firmly with reforms, the issue of the timescale in which such actions may have an effect inevitably surfaces.
Given that social behavior is always changing - starting with demographic changes and technological innovations - and that GDP growth is not unlimited but rather cyclical thus facing different limits, it is simpler to consider the short term (around one year). Dealing with the long term is more difficult; uncertainty is greater since, in essence, the future is unknown and more complex.
On the long term, structural and institutional aspects may be considered, which are more rigid and affect public and private decisions made in order to assign available resources in the most productive way. Although political continuity is a determining factor, it can be very scarce in some current democratic societies. The market is failing, just like the Government and politicians.
These are key aspects in formulating theories and economic policies. Static conditions can be managed more efficiently than dynamic conditions in nature; partial analysis more efficiently than systematic; and short-term can be more efficiently managed than long-term conditions.
One of the characteristics of the world economic recession is precisely the political challenge of meeting immediate needs such as widespread unemployment, punishing social services and pensions as well as developing a long-term vision.
Such friction makes it unfeasible to build systematic scenarios that orientate intervention measures as well as tax, monetary, labor, industrial or financial policies. All of this is clearly warned against in the management of the crisis in the European Union and, in particular, in the Eurozone. For five years, the Eurozone has been sinking into an economic recession and political stalemate.
It can be safely said without risk of sounding naive, that Keynes was right to maintain that it was just as perverse as it was stupid to allow there to be unemployment. Also, as he said, they must tackle political lies headfirst. That is another of the phenomenon that is on the rise in European societies - although admittedly they are not an isolated case.
A debate has arisen on this topic that highlights how certain political positions force recessive adjustments to be made that fundamentally affect the State's ability to fight the recession, as they desire to diminish resistance to the reforms that they are suggesting as a result of that same recession. This is a relevant issue for political and economic analysis.
From this perspective, that would be the case of the management system that has been rigorously and consistently implemented by the German government in the Eurozone in order to impose the type of adjustment that politicians, large companies and banks prefer. Many countries admitted this to be the case as a governmental guideline: Spain, France, Italy and the UK may be considered in this group, but they are experiencing increasingly more difficulties in maintaining extreme austerity.
Other countries such as Greece, Cyprus and Portugal are, quite simply, out for the count. The situation is unsustainable, the conditions on which the region will come out of this recession may be very different to those presented by the dominant political ideology.
This does not mean that capitalism is not a beneficial system for some or that it has been gravely injured. The recession has a relevant feature and it is the inequality used to hit different sectors.
And yet, the president of the Federal Reserve System of the United States has openly warned that a new bubble is emerging in the prices of various assets, because of the essentially speculative activities of the banks to profit from the very expansive monetary policies that maintain low interest rates.
On the other hand, everyone is talking about the lack of credit for SMEs and the concentration of the loans from the largest lenders, so as not to affect the profitability of financial institutions' capital.
This happens in Mexico particularly with the largest banks rather than the smallest ones. The reform initiative that will be discussed until September in Congress aims to influence these issues. The door is now open for a deep debate on the architecture of the country's financial system. There is an opportunity for legislators to be at the height of such a debate, as there are many elements that have presented themselves, but they are not necessarily articulated to make sure that the financial sector is positively linked to an increase in GDP.
Once again the timescale in which policies must meet their objectives and the type of financial, economic, labor, product and legal system that it would establish is relevant. The history of recent economic reforms has promoted a financial system that contributes to macroeconomic stability, but one that has no force for increasing continuously. The recent production unemployment figures from the first trimester of the year once again confirm this fact. Spanish Original