Although Spain needs to
improve coordination among its regulatory agencies, the creation of a
National Commission on Markets and Competition would seem to be the
opposite of what the European Union had in mind. The controversial move merges eight agencies and commissions responsible
for competition, telecom, energy, mail, railways, airports, gambling
and audiovisual media. I argue in a working paper of IESE that neither the purported savings nor the need for greater
coordination justifies such total integration. What's more, government projections that this will save millions derive
more from changes to the merger as originally planned, rather than from
efficiencies gained through the merger itself.The European Commission has stated all along that it was
concerned about the loss of independence that would result from an
all-encompassing regulatory body. The most serious warning came in February 2013 from Neelie Kroes, vice
president of the Commission, who threatened sanctions unless Spain made
substantial changes to its original plan. The Spanish government responded by changing some of the most
questionable aspects. The whole summary of the working paper and a link to it can be accessed here.
The journalist Beatriz Silva (my wife) and the photographer Lorenzo Moscia have produced a wonderful portrait of Barcelona. Beatriz writes "The monumental transformation undergone by Barcelona with the
1992 Olympic Games has failed to make the diverse
working-class city full of contrasts disappear where Pablo Picasso began
painting in 1896. It is not necessary to venture too deep into the
narrow streets of the El Raval or El Born neighborhoods to discover the
Barcelona of the belle époque where prostitutes wore the best clothes to welcome the sailors and where it is still possible to get drunk on absinthe. Despite being one of the richest cities in Spain, Barcelona has a
poverty rate of around 18%. This figure is even worsening due to an
economic crisis that has pushed up unemployment in Spain to 27%. This
situation particularly affects vulnerable groups such as the elderly and
immigrants who are forced to search for scraps of food or beg to
survive. The number of people sleeping on the street has grown by half
in just five years."
One of the
most encouraging trends of modern economics is its expansion to cover topics
that are close to other social or other scientific disciplines. In the past,
these trends were associated to economic imperialism, but more recently
economists accept the importance of being influenced by other disciplines. The
trend is most clear in the evolution of public economics or political economy.
In public economics, from a sub-discipline being dominated by tax and
expenditure theoretical issues, nowadays it focuses more on empirical work that
takes a more micro approach and that accepts the importance of bounded
rationality in the frontier between psychology and economics (behavioral
economics). This evolution can be observed in an empirical analysis of papers
covered by the National Bureau of Economic Research in the
recent past. Another sub-discipline that is evolving from a simplistic interaction
between politics and economics towards more complex and interesting issues is political economy. Today, it has also expanded
to cover issues about the importance of culture and history, as explained by
Alesina also for a recent NBER survey. A fascinating example of this incursion
of political economy in the territory of history is a paper that shows that the
density of civic movements and associations in Germany contributed to the rapid
expansion of the Nazi Party. The quantitative methods of modern economics provide the best service when they are associated to topics of a moral dimension.
These days many Spaniards have to leave their country to find a job abroad. For many, this is a sad experience, but it also has a positive side. When I lived in Italy and England to complete my graduate studies I was judged by objective evaluators and I learned from their impartiality and objectivity. I had to cooperate and compete with other very good professionals and I was tested against high standards, professionally and ethically. This will also happen to Pep Guardiola, the successful soccer manager, who has just started his project at Bayern Munich in Germany. The German press has expressed its surprise by the news that the first and so far only player that Guardiola has recommended his new club to sign (Thiago Alcántara) is a player that has Guardiola's own brother (Pere Guardiola) as representative. The local Spanish and Catalan press almost never touched on these issues, because local myths are never submitted to the ethical standards of other mortals. Guardiola is an excellent manager, and I think that in his decision to work abroad there is something in himself that wants to submit himself to these high standards. When he left Spain as a football player to play in Italy (and later in Qatar and México), the experience as a player was a failure on the pitch, but he learned about sport and life, and surely that made him a better professional, which later showed in his carreer as a manager. In his spell as a player in Italy, he was accused of doping, and was judged in a trial, in which he was acquitted. I'm sure that he learned from that experience. It's good to be judged by people that think that you are just another mortal. Now Guardiola will learn from the high standards of a better and more impartial press, and at some point about the judgement of a more demanding fandom and society.
A group of citizens sent the US White House a petition to support a referendum for Catalan independence. This is the kind response of the White House: "Thank you for your petition regarding the people of Catalonia. The
United States recognizes the unique culture and traditions of the
Catalan region, but considers the status of Catalonia to be an internal
Spanish matter. We are confident that the Government and the people of
Spain will resolve this issue in accordance with their laws and
Time to face reality and try something else (and better, like federalism).
Last week we had in the Department of Applied Economics of the Autonomous University of Barcelona our PhD workshop where our doctoral students presented their work in progress. For the first time we decided that the students themselves would be the discussants of their colleagues. I feared that there would be some degree of collusion, as the presenters themselves were allowed to propose the name of their discussants. However, they proved me wrong, and both presenters and discussants did a great job and we learned a lot from their ongoing research and the ensuing discussions. Most of the theses are empirical, and as always many issues revolve around the issue of the potential endogeneity of the explanatory variables. In the absence of pure experiments with human beings, ideally, one would like either to find exogenous instruments that explain the explanatory variable and are uncorrelated with the dependent variable, or perform natural or random field experiments. Along these lines, I warned (not only in this workshop but also on other evaluation sessions at the Master or PhD level) that I find an excessive tendency to call some policy reforms "natural experiments" when they are not such. Natural experiments should be exogenous events that are uncorrelated with the dependent variable but are correlated with the "problematic" explanatory variable. Policy reforms are hardly exogenous and are usually the result of long public debates and interest group battles. Natural experiments are policy changes that are uncorrelated with the phenomenon that one wants to explain, or natural phenomena such as climate or catastrophes. In other cases, I suggested caution with simplistic institutional explanations, such as those based on legal origins or other formal features. But these were only suggestions. At the PhD level, the hyerarchies between faculty and students fortunately start to vanish and we have the opportunity to learn together in what should be a cooperative profession.
I very much recommend the last paper by Dani Rodrik, "The Past, Present, and Future of Economic Growth." He summarizes some of the ideas that he already presented in The Globalization Paradox, for example that to grow strongly in the short run it is not necessary to change all institutions, but that sound institutions are needed to consolidate growth and development in the long run. However, sound institutions are not easy to introduce and take time. He also argues that nation-states need breathing space to find their social consensus to make market economies acceptable, even if this means some reversal of globalization. To us Europeans this should be translated into trying to find the European consensus that makes the necessary integration more acceptable to everybody. But my preferred bit of the paper is the ironic reference (p. 31) to a speech by Anne Krueger, "Meant Well, Tried Little, Failed Much," which Rodrik believes is paradigmatic of the view of orthodox reform proponents that the to do list was designed to ensure that policy advisers would never be proved wrong. The advise of the orthodox was essentially that "if you want to become rich, you need to look like rich countries." It is difficult to avoid the feeling that this is precisely what those that recommend "institutional reform" as the great reforming idea have in mind.