Spain is famous for its
lotteries and the devotion of its people for gambling.
Therefore, we shouldn´t be surprised if the recent labor reforms ( Essentially deep
cuts of social and labor rights) announced by the Spanish
government look, more than anything else , as a huge gamble. Yes, a gamble but with a twist : They pay , We
win... what is called gambling with Other´s People Money ( “OPM”) or what I would call " The Spanish Roulette". I will try along the next few paragraphs to explain the lik between gambling and policy
First of all a few words on Gambling :
Gambling does not fit into the traditional definition of a rational
economic behavior. Why is that ? The explanation is simple : The
chances to win ( a lottery, for example ) are generally too small in
comparison to the cost of the ticket. So when facing an unfavorable perspective a "rational" person would prefer not be
involved. Some would even claim that gambling is basically an unfair business, but
no one would doubt that the “non rational” gamblers are fully
aware of the expected losses. Under normal circumstances the bets and the chances to win or loose are
transparent and measurable ( for example , the chance to win in a
roulette is 1/37).
However, the level of
“non rational” behavior can reach new highs. For example when
the gambler pays for a lottery ticket without knowing the odds and
/or the winning price. I guess that even the most heavy gamblers
would avoid such lottery. However there might be one small exception
: If the ticket is paid by someone else, while the prize goes into
the gambler´s pocket, gambling turns to be the most rational game in
town. Playing with OPM ( Other´s People Money) is the most lucrative
business.That is the business the Spanish Governemt is developing trough the labor reform.
This OPM gambling game is
precisely what the Spanish Government announced : The denominated
“Labor Reform” is equivalnet to a "bet" : The reform
includes the loss of labor rights such as the lower severance pay, the introduction of an almost arbitrary right to fire, the abolition of
collective agreements ( if a company FORESEES lower sales along 9
months..... ) and more. In “Gambling” terms, the cost of the
ticket of the national lottery is clear and palpable on particular
and collective terms , exclusively on the working class.
Now, any political ( or
economic ) decision that involves huge social or economic certain cost should be
weighted against future benefits for the Spanish society ( Example :
Churchill´s “Blood Sweat and Tears “ was the price, but the
reward was Victory) Otherwise, how can we evaluate the Reform? For
example, is there any minimal level of unemployment reduction that
justifies the reform? What is the timetable to begin to have some
positive results? Did the Government elaborate a “Plan B” in case
the actual plan does not work ? And so on....
So I looked around to see
whether any important politician and / or economist ( BTW most of
them supporting the reform) can enlighten our way with clear and
measurable objectives. Unfortunately the only thing you can hear
from them are pathetically vague slogans such as “ A step in the
right direction”, or “The results of the reform will not
immediate, it will have a medium term “ or “ The rationalization
of the Spanish labor market “ and so on. So the benefits for the
huge sacrifices are not so clear , lets say not
existing from a practical perspective. An if there are , please show
us …..So isn´t it fair to denominate the new gambling scheme “ The Spanish
Roulette”?
As a matter of fact such
behavior is typical for politicians which always avoid serious commitments to prevent future critics ( if the results are less than expected) and leave room
for maneuver. Fair Enough. However, what really surprises is the
reaction of the vast majority of my colleagues, the Economists. We
are trained to evaluate figures and facts, and in case we deal
with uncertain situations ( such as the future) the discipline developed tools
,models and probabilities to assess the benefits of uncertain economic
scenarios . Therefore aby automatic support (or disapproval) of a policy measure
without clear figures or model is closer to the field of beliefs and
religion than to the field of a social ( although inaccurate )
science.
Is the support for vague
and not quantified promises the result of a shallow, not critical
thinking of my fellow economists ? Or maybe this is not a question of
professional competence, but the recognition that the “Spanish
Roulette” scheme will be always “rational” as long as the
ticket for the lottery is paid by OPM ( especially the working
class) ? I will leave these open questions for the reader to answer.
