Wednesday’s plenary session of the Congress of Deputies met with the same polarization as usual, with explosive elements such as the very rapid exponential rise in prices and the first consequences of the invasion of Ukraine that had not entered daily life, with a lack of hope. Further inflation of goods and services. Tense debates, scattered parties, extraordinary situations.
The income settlements the government has attempted to negotiate with economic and social agents have been reduced. This returns to the loop of the Moncloa Treaties that, as is often considered trivial, were not only a stabilization plan, but also some capital reforms that were needed to move the country from a Francoist economy to a social market economy. Salary sacrifice in exchange for payment of taxes.
Two key principles that included those agreements are still valid at this juncture: demanding that each social group fulfill its responsibilities in the face of crisis, and that no ideology or political party has the answer and that the rest. Enough strength to impose itself. To remove further difficulties of the society.
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Previous generations, unlike their parents and grandparents, no longer needed to worry about strong price increases that eroded the purchasing power of job-seekers’ wages, and the resistance of the unemployed. those that reduce the potential (unemployment insurance) and the most vulnerable (minimum significant income).
During the mid-1977 months, at the start of the transition – and without the constitution yet signed – inflation in Spain exceeded an unimaginable percentage of 47%, typical of some Latin American countries that did not survive a military coup. In October of the same year, all parliamentary political parties (from Francoists to Communists) signed the Treaty of Monclou. The restructuring measures, originally, were the following: an income policy based on the principle that wage growth would be based on forecast inflation and not past inflation (the famous “de-indexation”); a monetary policy based on the control of the amount of money in circulation; a budgetary policy that reduced the growth of public expenditure and directed investment expenditure towards reducing the deficit; setting the actual exchange rate for the peseta, etc.
The reforms promised were very important: first, reforms in tax and tax administration so that all citizens pay taxes; general state budget and public spending, to achieve universalization of the former and control of the latter; Monitoring the solvency and liquidity of banks and savings banks, of the financial system through competition; Labor relations framework with a labor law, etc.
The Moncloa Treaties were described as the “historic Spanish Compromise”, advocated in Italy by Communist Party general secretary Enrico Berlinguer: a policy of alliance with other political forces (the Socialists and the Christian Democrats, above all). Addressing political and economic crisis and deepening democracy.
In March of this year, inflation soared to nearly 10% and all the effects of wildly rising energy prices or disruptions to distribution chains and some production factories have yet to be reflected. , Mainstream Economists working in governments, central banks, multilateral organizations, study services, private companies, universities agreed that inflation was a limited problem at the time. Federal Reserve Chairman, Jerome Powell, was among the first to admit that he was wrong, and that the concept of “transient inflation” was to be removed from common parlance.
He did not say that inflation kills governments. History supports this.
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