<![CDATA[Ara Balears in English - Josep Sintes]]> 10 <![CDATA[The invoice]]> Some politicians say that the Sustainable Tourism Tax should go up by two euros. Others want four. Tomorrow someone will propose six. Meanwhile, hoteliers look at it sideways, lest this auction end up going too high. On the other hand, there is a Government that tries not to get too involved, lest someone send them the bill in the next elections. I listen to both sides with a certain fascination, because I am always left with the same question: two or four, based on what? Why four and not three? Why two and not seven? What calculation has exactly led us to that figure?As far as I know, none. It is a very curious way of doing math: first we decide how much we want to charge and then we will look at how much it costs. If we go out to dinner and when we ask for the bill the waiter asks us if we prefer to pay two, four, or six, we will surely ask him for something more elemental: the invoice.Well, that is exactly what we are missing.When a tourist leaves the Islands, they have paid for the hotel, the restaurant, the plane, the rental car, and everything we have wanted to charge them for. But there is another bill that we do not know if they have paid in full: that of the effects their stay leaves on others. There are, therefore, many unpaid accounts. But they are not quite the tourist's fault. They pay what we ask of them. It is we who have not presented them with the full bill.Economists call them externalities: effects of an activity on third parties that are not reflected in the price. The bill we are looking for is the cost that these effects have on the well-being of those of us who live here. And it is not enough to simply add up the expenses of the administrations. Part of the cost appears in public budgets; another part we suffer in the form of congestion, pressure on housing, water scarcity, saturation of spaces or, simply, loss of time and quality of life.Not everything will be easy to convert into euros. What is an hour lost in a traffic jam worth? What is the cost of the fact that finding housing is becoming increasingly difficult? Not knowing how to put a price on something is very different from thinking that it costs nothing.There is another issue that is important to me. When I talk about tourism, I am not just thinking about those who sleep in a hotel or a vacation rental. I am also thinking about those who have a house in the Islands and come here to spend their holidays. The fact that they sleep in their own home does not make the effects of their presence disappear. That house is part of the residential stock, even if it is used only part of the year; and when it is occupied, it consumes water, uses roads, infrastructure, and services.The bill, therefore, should be quite indifferent to where we sleep. A hotel, a rented dwelling, or a second home may generate different costs, but they all must enter the account. If we only look at regulated tourist spots, we leave a part of the activity out of the picture.And counting heads is not enough either. It is not the same to come for three days as it is to spend three months there. It matters how many people come, but also how much time they are there, when they come, where they concentrate, and what pressure they exert on resources that are not infinite. Therefore, rather than the number of tourists, I prefer to speak about the level of tourist activity.Furthermore, the bill does not necessarily have to grow at the same rate as the activity. One more car on an empty road is barely noticeable; on a congested road, it is another story. With water, housing, services, and certain spaces, something similar can happen. When we approach the limits, adding more activity can become increasingly expensive for us.This is what we should know. I am not looking for a big figure that says “tourism costs this much”. I am interested in knowing what bill we have with different levels of activity and how it changes when it increases or decreases. Perhaps some costs grow little and others, a lot. We do not know. And this ‘we do not know’ seems to me quite a bit more rigorous than some figures that circulate with admirable certainty.And so we return to the two euros and the four. At times, the debate over the Sustainable Tourism Tax feels like an auction in reverse. I would start with something quite a bit less exciting: I would make the bill.I would do it, mind you, without deciding beforehand what result we would like to obtain. If there are positive effects that are not already included in the economic activity, they must also be taken into account. If there are things that we cannot estimate with sufficient rigor, it must be stated. We are not looking for the bill to come out big or small. We are looking for it to be credible.Then there are the hoteliers. The employers' associations represent their members and it is perfectly legitimate for them to be concerned about the margins, costs, and competitiveness of their companies. What would be more surprising is if they were concerned first about our profit and loss account. We must listen to them, naturally. They know the business and have information that we need. But it is one thing to listen to them and another, to hand them the calculator.When an employers' association says that four euros can harm competitiveness, it may be right. It could also turn out that four euros were too little. Without knowing the bill, we do not know one thing or the other. The bill for the Islands cannot be calculated by someone who has an interest in it coming out cheap. And it would not reassure me much either if it were calculated by someone who has an interest in it coming out expensive.I would entrust the work to a group of experts of recognized prestige, independent both of the affected sectors and of the Government. Economists and specialists in housing, water, mobility, territory, public services, and the environment. With the data, the methodology, and the possible conflicts of interest on the table. Let them calculate what can be calculated, estimate with rigor what must be estimated, and also state what we cannot know.Then we would indeed have an interesting political debate. What part of the external costs is already covered? Which part remains unpaid? Who should assume it? Does it make sense to charge the same for forms of activity that can generate different costs?Then we can discuss how we should charge for it.Until then we can continue with the two euros, the four, or the figure that brings the most luck that week. But let's not confuse a political position with an economic calculation.Two, four or forty?I don't know.And I am surprised that there are so many people who do.We will only know if there are two, four or forty when we have the invoice.It is time to do it. And only then will we know how much the unpaid bill that tourism leaves us each season really is.

]]> <![CDATA[Tourism, at the service of whom?]]>

For years we have been breaking tourism records. The problem is that a growing part of the islanders no longer celebrate them. There is no need to explain much why. Housing, saturation, traffic, noise, pressure on services. The demonstrations have only made visible a discontent that has been there for a long time. That is why I believe that the debate is no longer whether we want more or fewer tourists. The debate is who should be at the service of whom.It would be absurd to deny all that tourism has contributed to Islands that owe a large part of their prosperity to it. But it is one thing to acknowledge it, and another to take for granted that the interests of our main industry always coincide with the interests of those of us who live here. A hotelier wants to fill more rooms. A restaurateur, more tables. An airline company, more passengers. It is quite normal. What is no longer so normal is to take for granted that we also need this growth.The question is quite simple. What does a tourist leave us more, what collective costs does their stay generate, and, above all, who pays for them? You only need to look at any tourist area: streets, asphalt, lighting, gardens, sewage, water networks, pumping, waste collection, cleaning, access roads. Many developments grew to accommodate a population that multiplies during a few months, but the town councils have to maintain them all year round. And this pressure has already entered our towns and cities in full force: squares, parking lots, water, cleaning, security, maintenance.Part of this additional capacity ends up being paid for with the same budgets that must meet the needs of those of us who live there all year round. And public money, if it goes here, cannot go to housing, kindergartens, public transport, care for the elderly and other needs. The OECD has long warned that tourism depends heavily on public infrastructure and services and that high pressure can affect the resources and quality of life of the host communities. It is curious that we worry so much about the destination being competitive and so little about who pays for this competitiveness.Then, there is the bill that does not go through any Administration. We find it when we look for an apartment, when our children cannot become independent, when certain prices adapt to the spending capacity of those who are on vacation for 15 days, but also in things harder to put into euros: the noise, the queues, the congestion, the loss of tranquility, and having to adapt our daily lives for months to a pressure we have not chosen. Tourist and second-home demand competes, even within our towns, with local families who have much less purchasing power. This is hard to swallow: we maintain our towns to make them attractive, we pay taxes all year round, and in the end, some of our children can no longer afford a house there. And all this wear and tear, even if it does not appear on any budget, also comes out of our well-being.This is why I think we are mistaken when we discuss whether the appropriate number is 15, 17, or 20 million tourists. The size of the tourism industry should not be decided from the outset. It should be a result. First, we should know what this activity really costs and ensure that the collective costs it generates are part, as much as possible, of the bill paid by those who generate them. Only then will we be able to know what size of the tourism industry is compatible with the general interest.This will increase part of the tourist offer. So what? If someone considers that coming to the Islands is worth that price, they will come. If a business continues to be profitable after paying the costs it generates, magnificent. And if it was only so because we were paying part of those costs, perhaps we should ask ourselves why we are so interested in preserving it. Surely fewer people would come. I don't see it as a drama. Less volume should not be the objective. It should be, if appropriate, the result of ceasing to charge residents part of the bill.And here we must also demand a response from our institutions. Why do we continue to govern tourism thinking so much about the needs of the sector and so little about the well-being of those of us who live here? The tourism sector has every right to defend more activity, more clients, and more profitability. That is its job. But the Government, the councils, and the town halls do not have this mandate. Their mandate is to defend the general interest of the citizens who live here. Always.A good government does not govern to maximize the interests of an industry, however important it may be. It governs to maximize the well-being of citizens. When the interest of the sector and the general interest coincide, perfect. But when they stop coinciding, there is not much room for discussion: the general interest must prevail. That is why we have the right to ask those who govern what criteria they use to decide if a tourism policy is good. Does more people come? Does spending increase? Does the sector bill more? Or do the islanders live better?We do not govern an industry. We govern a society. For too long we have asked residents to understand the needs of our main industry. Perhaps it is time to ask our main industry to understand the needs of the residents.It has been a long time since we passed the point where more tourist activity meant more well-being for the people here. Returning to a level that suits us does not mean arbitrarily deciding how many tourists should come. It means making those who enjoy tourism pay not only for the hotel, the restaurant, the car, or the taxes they already pay, but also for the share of the collective costs generated by their stay, which we continue to bear collectively today. Only then will we know what level of activity is truly compatible with the well-being of those of us who live here. In the end, this is the only measure that really matters: that tourism helps us live better, not worse.

]]> <![CDATA[To prosper is more than to grow]]> For decades, we have identified economic growth with prosperity. If an economy produces more, creates jobs, and generates more income, we tend to think that society is living better. In general, this is the case. Without wealth creation, there can be no well-being.

]]> <![CDATA[Residential continuity: the invisible heritage that we also must protect]]> For decades we have learned that there are things a society must protect, because they are part of its collective heritage. We protect the landscape, the coast, natural spaces, historical heritage, and biodiversity because we understand that their value goes beyond each person's private interest.

]]> <![CDATA[Who will build the residents' homes?]]>

A few days ago, the president of the employers' association of real estate developers in the Balearic Islands recommended that young people start saving 300 euros a month to be able to access, in five years, the thousands of limited-price homes that are planned to be built in Palma. The news, at first glance, even seems hopeful. Finally, a residential solution could begin to open up for part of the resident population. And it is probably true that many of these developments will be necessary. It is also true that without formulas like limited-price housing, a significant portion of residents could no longer aspire today to access housing in the current market. But behind this promise there is a question that is hard to ignore: what will happen during these five years? And, above all: who will build these homes?

]]> <![CDATA[When governments fail: the repeating pattern in the Balearic Islands]]>

Milton Friedman often appears in public debate as a label. For some, he is the symbol of neoliberalism. For others, an uncomfortable reference. But this way of reading him is not very useful. It does not help us understand the problems we have today. Friedman was not writing against the State. He was writing about government errors. His starting point was simple, but uncomfortable: public policies can not only fail, but they tend to do so systematically. Not out of bad faith, but because of how they are designed.Governments decide with incomplete information, respond to short-term incentives, and operate in environments where the effects of decisions are not always predictable. This is not ideology. It is a reality.And this is not theory. We see it every day. In the Balearic Islands, for example, in housing, measures designed to facilitate access can end up reducing supply or delaying new projects. In other areas, direct aid to pay for a service can end up increasing demand and causing prices to rise.The problem does not disappear. It changes form. And this is not an exception. It is a pattern. Policies that accumulate without review, regulations that overlap, decisions made in haste that are later left in place. The system becomes increasingly complex, more difficult to understand, and more difficult to manage.The problem is not will. The problem is design. These errors are not random. They respond to a logic. Public decisions are often made under pressure, with incomplete information, and with incentives that reward the short term. A measure may work today, but generate effects that will only be seen later. And when these effects appear, they are often responded to with new measures that do not solve the root of the problem, but rather add more complexity.It is not an isolated error. It is a dynamic that repeats itself.This dynamic has a clear consequence: each new policy not only tries to solve a problem, but also changes the system in which it is applied. And often it does so without being fully predictable. When the rules change constantly, families, businesses, and investors stop reacting only to the norm and begin to adapt to uncertainty. This translates into delayed decisions, less activity, and more caution than would be desirable.The system becomes more complex, but also less predictable. And this is exactly the opposite of what was sought.Friedman insisted that policies based on clear and stable rules tend to generate fewer errors than constant and discretionary interventions. Not because the market is perfect, but because government is not perfect either.This is the central point. It is not about choosing between State or market. It is about understanding that both can fail. And that government failures are not exceptional nor do they depend on a specific ideology. They occur under governments of all colors. Sometimes they fail due to inaction and other times, due to erroneous action. But, often, the underlying problem is the same: a mistaken diagnosis.In the Balearic Islands, this is seen especially well. Often the intention is to correct a problem, but what happens is that it transforms or is displaced. And the system, instead of simplifying, becomes more complicated.The question is not whether the government should act. It is whether it does so with a good diagnosis and with rules that prevent repeating the same mistakes.Because, if not, the problem is not Friedman. The problem is that we have not yet fully accepted that governments also fail.

]]> <![CDATA[When we grow too much: Keynes's lesson that the Balearic Islands cannot forget]]> In the Balearic Islands, we don't just have a growth problem. We have a problem with how we manage it. This debate is often presented as a discussion between more intervention or more market. But that's not the issue. The issue is when, how, and with what limits each policy is applied.John Maynard Keynes is remembered as the economist who advocated public intervention in times of crisis. But his central idea is more uncomfortable than is often presented: to be able to spend when everything is falling, you must first have been able to not spend when everything is growing. This is the part we have forgotten.In the years leading up to 2008, public revenue increased sharply. However, a significant portion of this income did not reflect structural economic growth, but rather an exceptional moment in the real estate cycle. The income was high, yes, but unstable. The problem was not spending. The problem was spending as if that income were permanent.This is not a one-off anomaly. It is a recurring pattern. When public revenues grow rapidly, the illusion is generated that more spending can be permanently sustained. But part of these revenues depends on exceptional factors – prices, credit, activity concentrated in certain sectors – that cannot be maintained over time. Spending, on the other hand, does remain. And this is where the problem begins.When the cycle turned, revenues plummeted as quickly as they had grown. And with them, the fiscal margin.At that moment, an expansionary policy was attempted to compensate for the fall in private demand. It was coherent. It was necessary. But it was not viable on the terms that the situation demanded.The increase in the deficit, market distrust, and tension over public debt forced a premature adjustment. Keynesian policy was interrupted ahead of schedule. And the cost was transferred to the real economy: job destruction, business closures, a deeper recession than would have occurred with sufficient fiscal margin.The theory had not failed. What had failed was the moment when it had been decided to be prudent.This pattern is not exceptional. It is recurrent. In expansion phases, extraordinary income is incorporated into the budget as if it were structural. Spending grows on this basis. And when the cycle reverses, the system is left without the capacity to respond.The problem is not ideological. It is institutional. No government –of whatever stripe– has incentives to contain spending when all is well. It is much easier to spend current income than to reserve room for future crises. But without this room, counter-cyclical policy becomes theoretical.In territories like the Balearic Islands, this dynamic is even more accentuated. A significant portion of public revenue depends on sectors very sensitive to the cycle, such as construction and tourism. This makes the good years very good… and the bad ones much more difficult to manage.The question is not whether the public sector should intervene in a crisis. It is whether it will have the real capacity to do so. And this capacity is not decided in the recession. It is decided in the good years.The debate about economic policy is often framed in terms of more or less intervention. But perhaps the relevant question is another: are we capable of designing rules that compel us to be prudent when we don't need to be? Because, without this discipline, fiscal space does not disappear by accident. It disappears by design. And then, when the crisis arrives, it is already too late.Being Keynesian is not just knowing when to intervene when the economy falls. It is knowing not to spend when the economy grows.

]]> <![CDATA[Samuelson, Friedman and the politics of labels]]> Do we really believe that the economic problems of the 21st century can be solved by choosing between two T-shirts?

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