A more than an expert economist, always controversial and discerning, with strong roots in the United Kingdom and a keen supporter of liberalism; it could be some the features that best defines an economist such as Pedro Schwartz, whose presence is essential in forums, universities and media. It has been a long time since his arrival to London as a student, but he is still working between Madrid and the British capital while he has his own perspective on the situation in both countries. 


(Translated by ANA LUCÍA CERDÁN)

January 2022

It would take too long to start an interview explaining his extensive resume so it will be better start talking about his present and the projects he is working on today …  

What plans do I have now? Well, I continue working at the Camilo José Cela University teaching classes and seminars and, above all, supervising theses. It is an activity, by the way, that allow me catch up on what it is being talking about. And the last one I’m working on talks about chaos theory and its effects…

The chaos in general? 

I am referring to how it is understood the great crisis that took place in 2008. A kind of chaos, cataclysm, and it is vital to understand how such chaos works. Do you know how chaos is understood? how we suddenly find ourselves deeply immersed inside it? It can be explained in a simple way, by looking at when you bring water to boil. It gets warmer gradually, it’s not necessary anyone interfere at all, you let it continue heating by itself, without changing the temperature and suddenly water starts to boil. Well, chaos suddenly occurs without any agent of change having been introduced and everything stirs. And this is the thesis that I have directed.

But someone will have measured that temperature … 

During the last crisis, things were really poorly done. There was a bad organization of the financial world, especially in relation to mortgages. And there was a point when the number of mortgages granted were extremely large and they had also been distributed all over the world. 

And what is the diagnosis of the economy at this time?  

Right now, we’re living in normality, which is bad. I mean normality in this type of government. The government will be given a considerable amount of money which will be spend on buying votes either way. I can understand that there are people who have lost their business and that it is scary; but hand over those large amounts of money to the government that we know it is going to be wasted…

But also, another terrible thing is happening, it is that there is a new virus in the world, the authoritarianism. It is an international virus, that is not only exist here. For example, in the state of Victoria, in Australia, people have been confined in their homes, they are not allowed to go out and they must have the phone switched on so they can be phoned and check they are home. And if you are not at home, they send you the police. I think we have lost direction on these issues. Authoritarianism is a new virus that affects our lives.  

That is said by a consistent liberal, a timeless liberal because you have stand up for this ideology your whole life…  

I think the UK should have been an open economy like Hong Kong was. I have closely followed the Brexit and it has been a great disappointment because I think the UK should have attempted to be an independent actor in the world; never to be a small island again. In addition, it has returned to the paternalistic model, to the old paternalistic Tory policy.

Is Hong Kong your paradigm?  

I think the UK should have been an open economy like Hong Kong was. I have closely followed the Brexit and it has been a great disappointment because I think the UK should have been attempted to be an independent actor in the world; never to be a small island again. In addition, it has returned to the paternalistic model, to the old paternalistic Tory policy.

I suppose you have followed British news very closely for a long time…  

Yes, yes, I have always had a lot lots of connection with the United Kingdom. I studied there at two specific times in order to obtain two academic titles: one of doctorate and the other one of master in economics. I am now a visiting professor at the University of Buckingham. And, particularly, at the Institute for International Manager Research, which studies, among other things, inflation. And we have to prepare… because inflation will continue to rise and it will be hold up, which is quite bad because it makes people angry, against each other. It creates terrible social tensions because pensioners ask for more … and others ask for a salary increase … and prices go up … but farmers’ prices do not rise enough … Inflation is socially negative because it creates tensions. In this Institute I have also taught theory, international business, macroeconomics and monetary policy, in which, recently, I have specialized in.

Since you arrived to London to study until have become a professor at the University of Buckingham, you must have seen many changes and events in the UK… 

For me there is a memory that is a particular milestone, and it is the moment when I attended the coronation of Elizabeth II, I was all that night on the streets of London … It was a rainy night. That was an England very different from that of Mrs Thatcher. It was Margaret Thatcher who brought about the big change. At that moment in England unions had a great influence. Then the government made agreements with the unions about wages increase; it was all about defending the welfare state and the National Health Service and now it has become a religion

At that time was a very ordered England for Labourites and the Conservatives didn’t change anything only reduce taxes a bit. And she, Mrs Thatcher, transformed the country. Many of the railways had already closed; coal mines were closed by her in the midst of terrible strikes. She turned England into a more modern country. Now the Tory paternalism it’s back. I don’t agree at all with paternalism, I think that people should learn to organize their lives; by all means, it was necessary to help those who were starving, but not in the way they are doing now, spreading money blindly.  

England today is very different from the England of when I was studying. They have loathed Thatcher even though it is no longer talked about her. It has returned to a benefit and funding system. What is happening now with the COVID-19 is that everyone has to be subsidized. That meant the transformation of England, but now piece by piece, it is being destroyed.

It is amazing how people don’t understand economy at all. The minimum wage has increase and it has produced unexpected events such as the bankruptcy of companies that were in charge of the elderly because of the inability to pay the minimum wage.

With what you had seen in England, what plans did you have upon return to Spain? 

I returned to Spain, I finished my law degree, I took the competitive examination to the diplomatic corps, I passed it, but I was erased from the Diplomatic Office because I was a somewhat rebellious student; we are talking about Francoism. As professor, we also lead protests because we started working in October and they started paying us in March… And those protests had a political hue as well. Diplomacy was the family tradition and I thought to apply, but my father told me that this way I would never become a diplomat and, in addition, I would be allocated at the worst places. He offered to fund my studies at the university of my choice, so I opted for the London School of Economics.

And so it was, because when I was studying Law, I remember very well the Labour Law class in which it was taught to advocate for increasing the minimum wage. I wondered, why just increase it just a little, it would have to be multiplied by 5 or by much more … Then I was told: that is not possible because the economy cannot sustain that. So, at that very moment I decided it: I have to study economics, of course. And that was how I travelled to London not only to study economics, but also to study political thought and philosophy. There I met Karl Popper. I had read one of his books without understood anything. It was called “The open society and its enemies” and one day it happened that I was going to the refectory at mealtime and I saw a door holding a sign with his name. I got in and asked him if he was the author of that book, he answered yes, and the I requested him if I could attend to his classes. I began to collaborate with him and we became friends.

Over there I studied political thought, I attended to economics classes …  I returned to Madrid and then I went back to London to do a master’s degree in economics because I considered I didn’t know enough. Therefore, I am a doubly graduated of the LSE.

And how would you define it? 

It was a glorious establishment, with extraordinary professors, great professors. Not only Popper, but also Lionel Robbins, and many others who later became famous as economists.  I did a thesis there, that was directed by Lionel Robbins.

My England university was not only for English people; there were many foreigners as well. For example, there was a Hungarian who had fled in ’56 and was a great, great thinker, great professor… there were many foreign professors, among others, Popper.

Besides all this, you engaged in politics in Spain at some time… 

Yes, of course.  I was a legislative representative. I tried to do something that did not work out in 1982, it was to join a coalition with Fraga with the idea that, as it had been done in England, liberties were included in the Conservative Party. But Fraga was adamant. The point is that people do not understand the issue of market and competition freedoms, they do not understand it.

You are talking about law, economics, diplomacy, education, politics … the resume we had mentioned earlier.    

Yes, well I relish it…Anyhow, I have done my best; certainly, the torch of freedom has held high. Surprisingly in Spain, and in the Royal Academy of Moral Sciences itself I observe today that those who defend freedom are the  Administrative Law professors because they argue that a well-regulated State have to be created beside regulate  well the issue  of economic freedoms and that, if there is no competitivity, you have to create it …There is something that an American economist told me and  must be taken into account: freedoms are protected by technological progress, technology cannot be controlled. What happened with the fixed-line telephone monopoly of Telefónica? …no one uses it anymore.

We always like to ask about what the Foundation ought to do at this time.  

Definitely its main function should be the sharing of the British civilization that is very special and very positive in many respects. Now Churchill is very much in vogue and the Second World War, events which were unquestionably very important, but we must also think about literature, mind-set, the union with the United States … history is very important although it has also been misrepresented by many who have written about it.

Do you have a retirement plan in mind?   

¿Retirement? That is awful! You wake up in the morning and you have to leave home because it has to be vacuumed.