Friday, April 17, 2009

THE SPANISH GOVERNMENT is not only incompetent; it's also a bully. The Bank of Spain's governor -- a highly respected economist who knows a thing or two about the economy -- made some sensible comments about the prospects of the Social Security system and the future of pensions, in a moment when unemployment is skyrocketing and people are living longer, saying that it may enter into deficit some time in the future if reforms aren't done, and this is what he got:
Spain's Labour Ministry has dismissed a Bank of Spain warning the country's social security system could enter deficit, marking the latest clash between the government and central bank over fiscal policy. Labour Minister Celestino Corbacho said the comments by Bank of Spain Governor Miguel Angel Fernandez Ordonez were alarmist and social security accounts would remain in surplus. "You can't question the stability of a system that works, nor play with the peace of mind of more than 8 million pensioners," said Corbacho in comments to Spanish national radio late on Thursday. "I hope it's the last time I have to disagree (with Fernandez-Ordonez)."
Easy, Don Vito, easy. Listen to Fernández Ordóñez and you may learn a little about the problem from someone who can teach you (after all it's not like you are a money expert: before being the Labor minister, you were a mayor of a town outside Barcelona, and macroeconomics is not your strong point). It's not a good idea to dismiss the downside of things. You may get the citizenry happier (the happiness of the ignorant) but the problem is still there.

(It's not the first spat between the government and Fernandez Ordoñez -- incidentally, a Socialist too --. A few weeks ago, the latter suggested that the extremely rigid labor system -- still based on the Franco era, over paternalistic on workers, who are almost impossible to fire... and consequently, companies think twice or thrice before hiring them -- should be made more flexible. He was instantly shouted down by the government and the trade unions).