But
advocating structural reforms risks becoming a futile exercise, unless one
accompanies the recommendation by suggestions on how to address three related
sets of problems.
First,
those derived from the “endowment effect,” that is, the well recognized pattern
in behavioural economics by which one tends to value more what one already has
in her possession than the same thing when it is owned by someone else. Hence
one will not easily accept losing something that is perceived as a right in
exchange for something new and uncertain (such as a more efficient economy).
Second, the
government is not an exogenous machine that one can activate at the suggestion
of some adviser. With an endogenous government, individuals embedded in social
relations and with a understandable eye on the next (democratic) election, are
the ones who make the final decisions. Some recommendations often have the
flavour of advising a monopolist to lower its price. You probably should
suggest something else that improves the prospect of the monopolist.
Thirdly,
distributive justice interacting with commitment issues play an important role.
In an increasingly disfunctional labour market, why the center-left does not
support labour market reform in Spain, if it has supported market
liberalization, NATO membership and so many liberal reforms? Perhaps because
the insiders of the labour market (a good proportion of center-left potential
voters) think that it is unfair to ask sacrifices from them in a country with
high tax evasion (which is not precisely concentrated on the workers) and
increasing inequalities. Something credible enough accompanying labour market
reform should be offered to them (tax reform, corporate participation…).
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