One puzzling aspect of the public debate in Portugal is the considerable disagreement about key parameters of the economy. There are widely different views across (and sometimes within) the political spectrum on major questions such as the optimal size of the public sector, the link between minimum wages and employment, the importance of state-owned firms, the degree of employment protection, the importance of low public deficits, teacher evaluation and many other issues. This stands in considerable contrast with other Western countries, where the benefits from flexible markets are acknowledged by most and the public debate tends to be focused on relatively minor issues.
It is true that these disagreements in Portugal are not that relevant these days: given the slow growth of the last 10-15 years and the current huge debt levels, several reforms are most likely going to be imposed from abroad anyway. However, the sustainability of such reforms may be at stake if many in the country find them at odds with their own views of the economy. It may even be that the legality of those changes would be successfully challenged, for instance at the Constitutional Court, and subsequently reversed. In any case, the introduction of the reforms would be much more straightforward if a persuasive case could be made of their importance and fit with the parameters of the economy.
So why are there so many contrasting views of the Portuguese economy in the country? Is this because the Portuguese democracy is relatively young and more time is needed for public opinion to converge on a more restricted range of parameters? A recent paper by Gilles Saint-Paul - on occupational choice and the political economy of reform - offers some possible answers, based on two views of F. Hayek on the role of the intellectuals. First, there is a selection bias in occupational choices: talented pro-market people prefer business sector jobs, while talented anti-market people prefer intellectual professions (as these tend to be sheltered from the market, which is regarded as unfair). Second, the nature of the intellectual occupations (e.g. teachers and professors in the public sector) is such that they insulate the people that take them from the reality of the market - if the market is regarded as unfair or wrong in some way, then those occupations would want to follow a different framework.
If this approach is appropriate for Portugal, then the April 25th revolution - despite its major achievements - probably played a large role in the current status quo of very heterogeneous views of the structure of the economy. Many new intellectual occupations opened up after 1974 as the welfare state expanded and most of them were taken by those with anti-market views (which were popular at the time). In this case, time by itself will not necessarily promote a significantly better understanding of the parameters of the economy in Portugal. However, one way forward may be a changing, more open-minded nature of the intellectual occupations. A general acknowledgement of the great advantages of analyses based on representative empirical data - rather than subjective views or simply the clichés from the past - would also be a step forward.