Last week I participated in a forum on the Galician economy organized by this newspaper in Santiago de Compostela. The topic that was most vividly debated was that of renewable energy, particularly wind energy. The position of the project promoters, the regional authorities, and many of the experts are favorable. The arguments are not to miss the train of this new energy revolution, investment, growth and employment. But there is a strong social protest that has taken many of these projects to court and blocked them. The arguments are the negative environmental impact and the limited benefit for the communities. Its motto is “Wind power, yes, but not like this.”
Continuing in Galicia, there is also a very intense debate around the possible installation of a pulp macroplant for textile fiber – to be used by Inditex – in the Ulla region of Lugo, included in the Natura Network. The promoters, the regional authorities and some experts argue the benefits for the reindustrialization of the Galician economy and for employment. But also in this case there is strong citizen opposition based on the potential negative impacts on the natural and agricultural resources of the area and on the contamination of the waters of the Umia river and the Arousa estuary.
Similar conflicts between growth and sustainability can be found in many places in Spain. And in different economic activities. This is the case of tourism and the impact of its massification on the natural and landscape resources on which it is based, as well as local ways of life. There is no economic activity that does not face this dilemma between growth and sustainability today. Added to these challenges of growth regarding environmental sustainability is the challenge of new technologies and their possible impact on employment, if they are used to replace employment with machines, robots and algorithms instead of being used to improve capabilities. and worker productivity. Similar challenges have also emerged in the geopolitical sphere: globalization versus national technological industrial policies; subsidies for green technologies versus free trade; decarbonization versus maintenance of the means of production and livelihood of agriculture and livestock. The publication of the Draghi Report has put another new challenge on the table: competitiveness versus the European social model.
What do all these policy dilemmas have in common? That choices must be made between objectives that are in themselves desirable, but that have elements of conflict. Economists call it trade-off economics, but we could also call it “Augustinian economics,” recalling the dilemma of Saint Augustine when in his book Confessions he prayed: “Lord, grant me chastity, but not right now.” Chastity is decarbonization, sustainability or competitiveness, but not right now, because it must be made compatible with the maintenance of the current means of production and with the European social model.
By the way, I like how Draghi has posed the dilemma of European competitiveness: “As our societies age, our social model is increasingly put to the test. At the same time, I want to say at the beginning of this speech, for Europeans the maintenance of high levels of protection and redistribution is not negotiable” (Carlos V European Award Speech. Yuste Foundation). And, “competitiveness should not consist of using wage repression to reduce costs. It is rather about incorporating knowledge and skills into the workforce” (The future of European competitiveness).
You have to choose, even if it is painful. The philosopher Isaiah Berlin expressed it in an unparalleled way: “There are moral, social and political values that clash with each other (…) so you have to choose. Choosing can be painful. If you choose A, you despair of losing B (…). There is no way to avoid the choice. No matter how torturous they are, elections are inevitable (…). In a pluralistic liberal society, commitments cannot be avoided, they must be achieved; By negotiating it is possible to avoid the worst. So much of this and so much of that.” Who has to choose these balances? There are three strategies: technocratic, autocratic and democratic. It seems logical to think that it should be the governments that, helped by experts, make these choices. And for some it is tempting to think that they are better off as autocratic leaders acting with benevolent dictators. But both paths are inefficient. Choosing a balance between desirable but conflicting objectives is not a technocratic decision, but rather a social one. An enlightened government or autocratic leader does not know what the people’s preferences are about those balances, because those preferences are formed in the process of dialogue and negotiation.
The economic problem that governments now face has changed. Before, in the era of (exaggerated) certainties of neoliberalism, in which it was assumed that citizens’ preferences were known, the economic problem for governments was how to maximize some variable that was supposed to be related to prosperity (GDP, wind, the number of tourists, etc.). Now, in this new era of uncertainty, the economic problem is how to achieve balances between objectives that are socially accepted. This change in the economic problem renders useless part of the instruments of normative economics that governments used to design economic policies: free markets, cost-benefit analysis, “optimal policies.” The Augustinian economy of trade-offs needs new instruments that encourage dialogue and negotiation. It has to be a democratic economic policy, from the bottom up (Down-Top), which through negotiation must seek “suboptimal balances” and compensations between the affected actors.
The role of experts also changes. Instead of speaking to power, experts now have to speak to society, helping it form its preferences on these dilemmas. Only in this way will we have an informed society, capable of distinguishing pragmatic policies, with their benefits and costs, from populist or ideological policies, which offer easy and quick, but wrong, solutions to complex problems.
Decisions about the balances posed by the new challenges must be made by those actors who are legitimate to do so, be they governments or parliaments, but the formation of these decisions has to go from the bottom up. This new democratic economic policy needs new spaces and instruments for dialogue and negotiation with society. This dialogue with civil society is not a waste of time or an ornament, it is the condition for the legitimacy and effectiveness of the policies.
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