“The market is not the enemy of the planet, but its savior with innovation”

The economist Luis Garicano has become one of the great observers of the “chaos” which reigns in the European economy and in poor design what is there classic neoliberalismas the cause of all evil.

Populism, protectionism and political polarization They have generated fear of technology and artificial intelligence (AI).

Faced with this, Garicano assures that “the market is not the enemy of the planetbut its savior through innovation.”

In his opening speech on Freedom and markets warns that the issue behind these two words is “the future of our coexistence.”

Luis Garicano participated in the conferences on Freedom in the 21st century on the occasion of the 10th anniversary of EL ESPAÑOL at the Camilo José Cela University (UCJC), to defend classical neoliberalism and disrupt the dark and negative content that they want to attribute to him.

Garicano engages in a real analysis of what is happening, without more or less utopian ideal scenarios: “Politicians look for votes and bureaucrats look for budgets, just as businessmen want profits. Ignore this. rational selfishness That’s a recipe for failure.”

To deal with this situation of “imperfect institutional arrangements”his formula suggests letting the market function and prices bring order to each of the situations that may arise between supply and demand.

It is not a question of ignoring the State, but of reducing its participation in this context to the minimum necessary. But “limited does not mean weak”. You need to focus on what matters most: “Protecting property rights, enforcing contracts, and maintaining public order.”

If instead of playing this guarantor role, the market intervenes in markets such as that of rental or protects the industry, on the one hand there will be fewer accommodations offeredand on the other you can make products more expensive to the most vulnerable population.

Professor Garicano firmly believes in a concept of society in which individual freedom consuming, working or undertaking is the basis of human dignity.

The perfect complement to this classic neoliberal theory is to understand that “supply and demand constitute the most sophisticated communication system that human beings have invented.”

In this realistic conception of things, Garicano admits that there are many situations to correct. A classic example of this focuses on a banking system which had to be bailed out with public money in 2008, instead of assuming its own losses. “I win heads, tails, it’s the taxpayer who pays,” he warns.

The public policy professor is also betting on London School of Economics limit the power of big tech companies by increasing competition. It is the price war that must put everyone in their place, he says.

Garicano assures that when the businessman is at the top he does not like competition, but the true liberal position is to fight against these privileges. “The best antidote to big business power is to have the freedom to compete“, sentence.

Let us reject the pessimistic vision of certain great economists who believe that as long as the profitability of money grows more than the economy, social inequalities increase.

Faced with this, for Garicano, the key is to reinvest capital to generate more competition and for the price to moderate exaggerated profits due to market imperfections.

Talent and education

In this situation, this is where the the worker uses his talent and education becomes the key to more egalitarian development.

“The answer to inequality is to radically invest in human capital, so that the supply of talent catches up with technological demand. If talent abounds, inequalities decrease“explains Garicano.

It is in this scenario that Garicano sets out the basis from which we must begin to improve employment and reduce the scourge of youth unemployment that is causing so much damage in Spain.

According to him, “history shows that the best protection for workers is not a decree prohibiting dismissalbut a dynamic market.

Garicano believes that companies will fight to recruit talent, raise salaries and improve working conditions. Neither the benevolence of the businessman nor the pen of the legislator will achieve this. Well-understood work flexibility is not precariousness“, sentence.

“There are those who, in the face of inequalities or climate change, propose to throw overboard everything we have built. They propose less freedom, no more walls and no more state control. But the solution is not withdrawal. The solution is a liberal counterattack,” said the economist.

This is the proposal that the expert proposes against the “elongated shadows reminiscent of the 1930s”. “We need a rideological weapon. We must explain, with the patience of data and the force of history, that freedom works. »

In this role of the market as savior of the planet, social justice would not be obtained by punishing success, but by investing in education so that everyone can participate in the technological race.