Pedro Sánchez: To Govern Is To Spend

Just Sanchez

Fernando González Urbaneja | Pedro Sánchez concluded with the authority that La Moncloa gives him the debate on rent control his ministers and coalition associates were unable to settle after months of negotiations. The Prime Minister’s intervention to implement measures, rather than using arbitration, is more noticeable than before. It leaves aside the opinion of affected ministers and resolves the debates with authority, which does not mean that it is well-founded. The case of the electricity decree, cooked up in Moncloa, is exemplary.

The issue of rent control forms part of the short list of firm demands made by Unidos Podemos until it became the first entry point for passing the 2022 Budget. This is how Sánchez understood it, and he paid the toll. Now it remains to satisfy the other allies in order to compose the parliamentary majority which will pass the law.

Sánchez has apparently made very important concessions to his partners. Although we do not know the details of the regulation, the basic lines of the new law are more sound than fury. The scope of application is limited and conditioned, it will affect a very small housing stock (large tenants in stressed areas) and does not target the core of the problem: the shortage of rental housing.

A (presumably unintended, but very likely) consequence of the law will be that private investors will keep well away from the risk of falling under the law’s radar. So either the public sector assumes the cost and responsibility of creating housing or deploys incentives for someone else to do it.

What has allowed this round is the photo of the Prime Minister with the partner at the front of the line, strolling around the Moncloa to convey a message of unity. In passing, it has pushed the opposition into the grumpy exercise of angry and bombastic disagreement, so pleasing to those in government. It has also stirred up the demagogic struggle of the poor and the rich, of the government chasing after those “big holders” (what a concept!) whom the Prime Minister then goes courting in New York.

The law will be passed in Congress over the next few months. It will probably worsen in order to gain the necessary votes, and its effectiveness (or failure) will be felt in the distant future. The experience of European cities which have gone down the same road is not encouraging. It reflects more ideology than efficiency and pragmatism. However, it serves to stir up political debate and attract votes.

To add his personal stamp, Sánchez has revived Zapatero’s penchant for handing out stimulus cheques. To govern is to spend. Although the end result, as Zapatero’s experience shows, leads to losing elections in a spectacular fashion, the temptation is irresistible. Zapatero handed out cheques with debt at 60% of GDP. Sánchez is doing it with levels of 140%. May Saint Rita look after his eyesight!

About the Author

Fernando Gonzalez Urbaneja
Over 30 years working in economic journalism. Fernando was founder and chief-editor at El País, general editor at the business daily Cinco Días, and now teaches at Universidad Carlos III. He's been president of the Madrid Press Association and the Spanish Federation of Press Associations. He's also member of the Spanish press complaints commission.