Just as Spain seems about to embark on seeking a bailout of, some say 480 billion Euros (but don't call it a bailout as the Prime Minister doesn't like that word and said he wouldn't ask for one!), I thought to share some observations from my recent trip, to the country.
Employment
The unemployment statistics talk of a rate of 25% unemployment but I don't think that British readers will fully appreciate what this means because in Spain, it is the Spanish that work. The waiters in restaurants and hotels are Spanish, the street sweepers are Spanish as are all of the hotel and shop workers. These jobs are not filled by grateful East Europeans, as in Britain but by locals. Perhaps it is the far less generous Spanish welfare system that obliges the Spaniards to take jobs that are 'beneath' their unemployed UK counter-parts? Or maybe it is just that the Spaniards understand the dignity gained by working rather than just taking State hand-outs?
What I see as worrying though, for Spain, is that this means there is no 'slack' in the system that can be used to swap migrant labour for locals.
Construction
I have been traveling in the Alicante/Granada/Malaga triangle and apart from one or two road building projects (and I mean one or two) there seems to be next to no activity on the many unfinished construction sites that one sees. What activity there is, is essentially 'hand to mouth' where a property is finished simply so that funds can be obtained to keep things just ticking over.
Given that construction has been such a large employer in the past, it is easier to understand the unemployment numbers, when you see so many dormant building sites and idle crane gantries.
Talking of construction - what roads there are in Spain! Great carriageways that allow you to be transported distances at speed and in comfort. And what nice looking and modern, public buildings! I am supposing that the ten years of access to very cheap Euro money was used to finance these but have to wonder if that has been money well spent? We all hear of stories of un-visited 'cultural and arts centres' and airports where no planes land but I don't understand why nobody is called to account for this.
Loss of spirit
Not quite sure how to say this but on this trip (I have had the pleasure of visiting Spain on a number of occasions, before), I have noticed that the Spanish seem more subdued or resigned. Maybe it is because it is not the 'high season' for tourists or because we went off of the beaten tourist trail but that Spanish zest for life just didn't seem to be there. If you have visited Spain before you may know what I am getting at. That boisterousness and vitality seems to have been sucked out of the people - something that won't show up on any Euro-based study or statistic or ever be used to bolster the (failing) Euro project but a great shame, nevertheless.
I promise not to bore you with vacation snaps but this has been a mixed trip. Good from a personal perspective but worrying to see how a Franco-German obsession with a fatally-flawed and doomed project can bring once proud sovereign nations to their knees and just plain suck the life out of the place! What a shame!
Finally
One thing Spain might want to think about - the Siesta. Maybe it is time to end this? I know about this but it is still frustrating to have stores closed when you want to look around and maybe buy something. I know that there is more to life than retail but.................
Employment
The unemployment statistics talk of a rate of 25% unemployment but I don't think that British readers will fully appreciate what this means because in Spain, it is the Spanish that work. The waiters in restaurants and hotels are Spanish, the street sweepers are Spanish as are all of the hotel and shop workers. These jobs are not filled by grateful East Europeans, as in Britain but by locals. Perhaps it is the far less generous Spanish welfare system that obliges the Spaniards to take jobs that are 'beneath' their unemployed UK counter-parts? Or maybe it is just that the Spaniards understand the dignity gained by working rather than just taking State hand-outs?
What I see as worrying though, for Spain, is that this means there is no 'slack' in the system that can be used to swap migrant labour for locals.
Construction
I have been traveling in the Alicante/Granada/Malaga triangle and apart from one or two road building projects (and I mean one or two) there seems to be next to no activity on the many unfinished construction sites that one sees. What activity there is, is essentially 'hand to mouth' where a property is finished simply so that funds can be obtained to keep things just ticking over.
Given that construction has been such a large employer in the past, it is easier to understand the unemployment numbers, when you see so many dormant building sites and idle crane gantries.
Talking of construction - what roads there are in Spain! Great carriageways that allow you to be transported distances at speed and in comfort. And what nice looking and modern, public buildings! I am supposing that the ten years of access to very cheap Euro money was used to finance these but have to wonder if that has been money well spent? We all hear of stories of un-visited 'cultural and arts centres' and airports where no planes land but I don't understand why nobody is called to account for this.
Loss of spirit
Not quite sure how to say this but on this trip (I have had the pleasure of visiting Spain on a number of occasions, before), I have noticed that the Spanish seem more subdued or resigned. Maybe it is because it is not the 'high season' for tourists or because we went off of the beaten tourist trail but that Spanish zest for life just didn't seem to be there. If you have visited Spain before you may know what I am getting at. That boisterousness and vitality seems to have been sucked out of the people - something that won't show up on any Euro-based study or statistic or ever be used to bolster the (failing) Euro project but a great shame, nevertheless.
I promise not to bore you with vacation snaps but this has been a mixed trip. Good from a personal perspective but worrying to see how a Franco-German obsession with a fatally-flawed and doomed project can bring once proud sovereign nations to their knees and just plain suck the life out of the place! What a shame!
Finally
One thing Spain might want to think about - the Siesta. Maybe it is time to end this? I know about this but it is still frustrating to have stores closed when you want to look around and maybe buy something. I know that there is more to life than retail but.................
Hello Tom,
ReplyDeletePlease don't post any photos of you in your speedos!
It's interesting to think why nations like Spain, and the other so-called PIIGS, are in such bother and yet other nations like Germany are doing rather well. It there something in their culture? Are people from southern Europe generally lazy? The so-called siesta-nations?
People like Niall Ferguson think it might have something to do with work ethics - the protestant work ethic versus the catholic work ethic. Or perhaps, it has something to do with geography and climate?
Acemoglu and Robinson in their book "Why National Fail" dismiss cultural or geographic theories. Instead, they posit the theory that the success or failure of any nation is entirely down to the quality of their political and economic institutions. The use economic history to prove their point. Nations fail because their political and economic institutions are "extractive" in nature so that the nations elites hold onto power and accumulate wealth. Successful nations have "inclusive" institutions where creative destruction and innovations are allowed to flourish.
For instance, the authors believe the industrial revolution started in England because the political and economic institutions allowed inventors from humble backgrounds like Cartwright to invent the loom. Critically, they were allowed to patent their inventions and become rich.
Think about two countries with contrasting fortunes: rich USA and poor Mexico. In the US, Bill Gates is taken to court for uncompetitive business practices. In Mexico, Carlos Slim is allowed to use his power to maintain a monopoly so he can stiff the population for telecom services. The poor quality of political and economic institutions are the reason why Mexico is poor and the USA is rich.
I'm not an expert on Spanish affairs but you do hear about corruption in government and there must be a reason why all these white elephants (airports with no planes) are allowed to be built. Could it be that people see political power as a way to gain wealth (extractive)?
Perversely, one of the reasons that Germany has done well, in the Euro era is that the Euro is 'under-valued' from a German perspective. That is, their exports are priced in a currency, the Euro, which has a lowish value because the PIIGS are seen to devalue the currency and so they can increase their exports and strengthen their economy. This doesn't help the PIIGS who have essentially service based economies such as tourism or local construction.
DeleteI do think that 'extractive' policies have played a part as has local corruption - why would people pay taxes (e.g. Greece) if these just go to line the pockets of sticky-fingered politicians. Bear in mind also, that Portugal, Greece and Spain only recently returned to the 'democratic' fold and Italy has never been what you might call a stable democracy.
A further thought is that maybe the 'solution' would be for Germany to leave the Euro (maybe along with Netherlands and Finland) and leave the rest of the weaker economies with this flawed currency (France is border-line, in my view but would benefit from the consequent devaluation)
DeleteCorruption does come in many forms and sometimes it isn't just about 'lining your pocket' at the expense of the voter - sometimes it is just about promoting projects that allow you to hold onto power and to push a particular agenda.
I have posted before about the lack of courage and, in effect, honesty, of politicians who don't want to take the necessary steps to heal their country's economy. I do think that most people are prepared to accept some hardship, if they can see that there is a plan and it makes sense and if there is some sort of equity in application - i.e. the suffering is spread around - the thing is though, people see current austerity programmes as hitting the middle class most and banks being cossetted.