Great stagnation – ECO

Great stagnation - ECO

Above all, a special mindset is needed to recover from the recession. People need to believe in the power of meritocracy and invest in themselves.

The political debate in Portugal seems to be changing, and economic development seems to be taking over the debate. Unlike in other times, when discussions about the economy have caused many emotions, voters today are beginning to realize that the fate of our economy will be different with other policies. This is a development that we should welcome. On the one hand, it reveals Portugal’s integration into a worldview, which prompts citizens to compare their small town with the world around them. Narrowness thus gives way to cosmopolitanism. On the other hand, this sense of liberation also reveals the need (will?) Of the citizens to get out of the great stalemate that the country has been in for the past two decades.

Between 2000 and 2021, the average wealth per capita in Portugal increased by 10%. (At fixed prices; Ameco). It’s almost nothing. Despite the significant age of the population structure, the total population remains unchanged. The average age in Portugal is now 44 years. We are one of the oldest countries in the world. Where is the lowest wage in the eurozone? Instead, other countries made better bets than ours. For example, between 2000 and 2021, Ireland achieved its per capita GDP growth of 115%. Citizens of Ireland now enjoy an average wealth (per inhabitant) that is more than four times our own. Surprisingly, the population of Ireland has increased by 30%, with an average age of just 36 years. People, especially young people, continue to vote on foot and go where they have the greatest chance of winning.

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What do countries like Ireland offer that Portugal does not provide? I will highlight three main qualities.

  • First, An economy based on private enterprise and free competition.
  • Second, A small-sized state (and no tax).
  • Third, Because it is lean, a state that adequately plays the important role it can play: the role of the mediator of economic activity, in which only exemptions should be granted, as opposed to the impossible mediator. Exemption.

That’s not much to ask. In fact, it’s worth asking a little and getting a lot later. A competitive economy is an economy that produces and distributes, mediated by a competent mediator and free from conflicts of interest. It is an economy that frees society from the need for state intervention, which is antithetical to state diarism, which feeds itself and subjugates the private sector.

What should be the priorities in Portugal? First, understand the cost-effectiveness of public spending in all areas of state intervention in the economy. For each euro of public expenditure, find out what you intend to achieve with the same public expenditure and what the taxpayers are getting in return. Without this exercise, as the Court of Auditors pointed out a few days ago, it still does not exist in Portugal, and we cannot argue in the sense that the state should be removed from areas where it should not be called. One player, for referee position only. Second, a judicial reform to eliminate administrative and contextual spending that distorts the functioning of the national economy. The reform of justice is a structural reform Recent OECD report on Portugal, More likely GDP to grow in the long run.

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Productivity in Portugal represents only 75% of the average OECD member state, and unfortunately there is no consolidation in this domain. Conversely: fewer productivity gains are 20% less than OECD space. What is the way to escape from this? It is about increasing the overall value of the economy, which requires different regional specialization, which requires retraining of workers and investment in new technologies. However, qualifications are low, and only 10% of seniors in the workforce are involved in job training programs; In Sweden it is 35%. Public support for vocational training is virtuous if well designed, but the initiative must come from the people themselves. In this regard, how many people read a book from end to end last year? And last month?

Above all, a special mindset is needed to recover from the recession. People need to believe in the power of meritocracy and invest in themselves. Examples from other countries show that this is possible. This may take some time. But, anyway, better than never late, maybe we’re closer to that day.

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