The world economy, and the Spanish economy in particular, are going through a supply shock that could once again take us to the threshold of economic recession, unless the sovereign states themselves, monetarily speaking, launch massive injections of liquidity to meet the demand of various economic agents. Fortunately, in the EU the fiscal rules have been kept in a drawer and it does not seem that the obsession with the deficit and the debt will truncate this new phase in the intelligence of public managers, something that those who dealt with the crisis of 2008.
The effects of the conflict in Ukraine, which is lengthening alarmingly, are leaving a trail of collateral effects that are already affecting almost the entire planet. The drifts on energy prices, whose inflation has no economic explanation and is speculative as there is no supply problem, are once again launching the Central Banks into irrational decisions such as the recent rise in interest rates in the US , as if this would facilitate the reduction of energy prices. Likewise, there is talk again in Spain, as in the 1980s, of a great income pact to distribute the costs of the boost in energy prices. Once again, the old ghosts of second-round effects are dusted off, that is, the price-wage spiral in a context of declining labor income shares. The chosen formulas are very hackneyed. Workers must waive part of their rights and transfer in an orderly manner a not insignificant percentage of their meager salaries to the large oligopolies and rentiers, that is, electric companies, oil companies, and large and small owners of rental housing.
The reality of the different governments is that they have realized that the tenacity of the EU to safeguard the great abuses in the form of exorbitant income, some fallen from the sky, by the large corporations is undermining the artificial social peace that reigned, especially everything, in the countries of the South, anesthetized by the slogans such as freedom, fiscal anemia and cultural struggles, with the seasoning of internal struggles between the center and the periphery that wisely feed the media and governments complicit with the extreme right.
This break with the mirage of the free market, as false as it is disastrous for consumers, is leading former hooligans of liberalism to question the enormous profits that fell from the sky, legalized through formulas for calculating energy prices more typical of a permanent upheaval that devastated to lawmakers at the time. The impact of fear due to the enormous loss of purchasing power and the return to a situation of poverty, as indicated in the Foessa Report in Spain, have made possible an express course on price control, whose most advantaged students are Borrell and President Sánchez, as well as like the leaders of the South of Europe, although France and Germany have also requested a scholarship for the summer.
The big problem with pricing is determining the scope, whether transitory or permanent, and quantifying the maximum amount. For example, President Sánchez’s proposal for Spain to set the maximum remuneration price in the electricity market at 180 euros, although it seems beneficial given the current level, is still a joke if we consider the enormous benefits that it would entail for what remains of coal, nuclear or hydroelectric. These flashes only demonstrate the lack of preparation of the EU to defend consumers and channel a method of setting prices for energy, but also for fuels that allow limiting atypical benefits, which are still a real scam for consumers and companies .
Other measures try to suddenly lower the price of fuel, so necessary for the transport and fishing sectors, which are seeing their activity and income level being strangled. This does not explain the minority lockout that we are suffering in Spain and that is aggravating the sensation, which does not coincide with reality, of shortages uniting all the factors as a cocktail amplified in a very free way by some pens of the Madrid press and television. At the moment, and only before the announcement, it seems that prices have begun to fall without substantial falls in the reference Brent.
All these interventions, to which should be added and included the establishment of maximum housing rental prices in the most problematic areas, and even in a generalized way. We must not forget that the expense that most chronicles the new forms of poverty is housing, which without a doubt, even before electricity, should be intervened until the Administrations have a substantial stock of affordable housing. Here they could begin to explore alternative fiscal formulas to the fiscal looting that we are all perpetrating against the State and the Autonomous Communities. One of them could be a levy on the ground, completely neutral and efficient, which could throw large amounts without suffering the working classes, nor the misnamed Middle Classes. For example, a 2% tax on all existing land, and taking into account 80% of the commercial value of the land, would result in a collection in the threshold of 100,000 million euros. This will guarantee that the investment and spending projects can be carried out.
This combination of public policies to support sectors and maximum prices in some oligopolies is a great novelty and would require that little by little we must consider that this approach to price formation problems and its derivatives imply that the EU must become part of of the most advanced societies. The relentless fight from politics to combat the inflation of energy costs is the only short-term solution to be able to intervene in those sectors where they are perpetrating abuses against the weakest chain, the consumers. The reasonable doubt that arises is whether or not these measures will be maintained over time, once the inflationary episode disappears from our lives.
The quantification of all these measures to combat inflation are very complex to estimate, and there is no consensus on how much growth will drain. The most optimistic say that the impact of the war is barely one tenth of GDP, while others, without revealing sources, point to up to 1 percentage point in the event that it is delayed with interest.
Ultimately, the EU has discovered that there is atypical profit in the figures of the energy sector and that now we will be able to cut and intervene in these dividends by establishing maximum prices, although it will be necessary to establish mechanisms that discriminate between energy sources so as not to irrigate unnecessarily to cheap and amortized energies.
In short, the war between Ukraine and Russia has unleashed the current that you cannot trade social peace for large atypical income. The formula established and announced in Spain to remunerate the electricity market at a fixed price has come as a surprise and caused some outrage. The consequences of all this, the lack of specific aid for SMEs and the Self-Employed, is that the purchasing power and wealth of workers is being reduced, so there has to be a transmission of income from the State to the most vulnerable sectors , whose funds should come from the elimination of profits fallen from the sky. While all this arrives, the EU, but also the US and Germany, have to start showering funds on all those economic agents that are considered to continue to be profitable.