In his book, War: What Is It Good For? Ian Morris quotes a dialogue between a Persian prince and his son around 1080 AD: "Understand this truth. The kingdom is maintained by the army, and the army by gold; gold is acquired through agricultural development, and agricultural development through justice and equanimity. Therefore, be just and fair.”

This counsel transcends the private (heritage and family legacy) and involves the public (the kingdom). It is interesting to analyse this dichotomy considering what we would advise our children today. In the private sphere, our nature compels us to provide our children with care, food, affection, medical care, and the best education possible. When we die, we try to leave them an inheritance, big or small, which as a rule comprises some assets and, occasionally, some debt-almost always minor in relation to the assets.

However, if we attempt the collective effort to escalate these ideas into the societal standard we can expose what we really leave to the next generation: a constellation of injustice and lack of equanimity, just the opposite of what the Persian prince proposed. Let us observe.

First. We leave them with a historically disproportionate public debt. Debt levels a generation ago were below 20% of GDP. Today they are above 120%. When we die, we will leave the highest level of public debt in human history as our "legacy" for the next generations. They will have to pay the interest on this debt (which will increase as interest rates normalize) and eventually repay it up to more sustainable levels, which may be around 60% of GDP. To do so, they will have to pay more taxes, in addition to reducing the expenditure items that in theory they should enjoy in their old age: spending on pensions and education. This, in a context of unprecedented demographic decline. As if that were not enough, the high level of public debt, among other factors, explains the unprecedented balance sheet expansions of central banks. They are causing money to shift from fixed income to houses, prices of which are already up 15% in the United States and 6.5% in the Eurozone. The consequence is that the next generation will find it extremely difficult to own a home.

 

  

Second. We cut the items that most affect them, in order to preserve those that favour us. When deep cuts in public benefits had to be made as a result of the Great Recession, of the three largest expenditure items—pensions, healthcare and education—the one chosen for sacrifice was precisely the third. Thus, inflation-adjusted per capita spending on pensions is now higher than it was before the crisis; spending on healthcare is more or less the same, and spending on education is one-fifth lower. We all say that investment in education is crucial to improve a country's future, but the public sector is doing just the opposite.

Third. We perpetuate an unfair labour system that preys on the youngest. For four decades now, Spain has proven to generate much higher unemployment than our neighbours (compare, for example, Portugal). The highest unemployment rate is among young people (due to, amongst other things, unsatisfactory training policies that do not match supply and demand), and those who do find work tend to work temporary contracts for substantially more years than the European average, something that limits their continuous training, their productivity and, therefore, their salary. The result is that we perpetuate a society with two classes of citizens: those who enjoy a permanent contract with protection, and those second-class citizens, especially young people, who are denied this possibility. This is the dual labour framework, a framework that to date no government has managed (and often has not even tried) to tackle. The reason for this betrayal can be analysed carefully. In my opinion, we tend to be neglectful when it comes to the substantial core of public actions, and the Government reacts to this neglect by considering actions that maximize electoral gains. In Spain, there are almost 10 million pensioners, some 12 million people with permanent contracts, 4.5 million young people with the right to vote and some seven million children and young people without the right to vote. This explains why pensions are prioritized over spending on education, and why the privileged permanent employees are protected against the young temporary workers. The result is a triple betrayal, a betrayal that generates electoral gains at the cost of leaving our children in the gutter. As I stated in this column a few months ago, the essence of democracy is to defend the weakest from the abuses of the powerful. However, we are moving in the opposite direction to the original intent. It is not surprising that support for democracy among the very young is in decline in many Western societies, as researchers at Cambridge University have shown.

If we fail to act, the future looks very bleak indeed. Let us remember the words of the Persian prince, "Be just and fair", and rethink whether we are living up to them. The Greek historian Herodotus wrote in the 5th century that the Persian nobility educated their children in two maxims. The first was not to lie. The second, not to incur debts, "because he who incurs debts ends up lying".

So there we are.

 

Published on Actualidad Económica