Sunday , November 24 2024
Home / Real-World Economics Review / On Spain, Catalunya and former Yugoslavia

On Spain, Catalunya and former Yugoslavia

Summary:
What I did not expect: In my lifetime I’ve seem countries in and around Europe disintegrate. The Soviet Union. Yugoslavia. Czechoslovakia. Iraq. Syria. And, work in progress, the UK. Spain seems to be next in line. In many fo these countries this process was accompanied by war. Vaclav Havel was the last president of Czechoslovakia and strongly opposed splitting up. Being a wise man, he resigned instead of using violence when he saw that it had become inevitable. Thanks to him we know that splitting up a country can be a relatively orderly and, especially, peaceful process. Spain and Catalunya are heading the other way. At this moment, provoking the opponent is a winning strategy for radicals at both sides which means that the radicals have all reasons to ‘cooperate’ with the other side

Topics:
Merijn T. Knibbe considers the following as important:

This could be interesting, too:

John Quiggin writes Trump’s dictatorship is a fait accompli

Peter Radford writes Election: Take Four

Merijn T. Knibbe writes Employment growth in Europe. Stark differences.

Merijn T. Knibbe writes In Greece, gross fixed investment still is at a pre-industrial level.

  1. What I did not expect: In my lifetime I’ve seem countries in and around Europe disintegrate. The Soviet Union. Yugoslavia. Czechoslovakia. Iraq. Syria. And, work in progress, the UK. Spain seems to be next in line. In many fo these countries this process was accompanied by war.
  2. Vaclav Havel was the last president of Czechoslovakia and strongly opposed splitting up. Being a wise man, he resigned instead of using violence when he saw that it had become inevitable. Thanks to him we know that splitting up a country can be a relatively orderly and, especially, peaceful process.
  3. Spain and Catalunya are heading the other way.
  4. At this moment, provoking the opponent is a winning strategy for radicals at both sides which means that the radicals have all reasons to ‘cooperate’ with the other side when it comes to this.
  5. Many Catalunyan companies have already moved their headquarters out of Catalunya
  6. Soon, the despised tourists will tay away. Yes, the number of overnight stays of tourists in hotels in Barcelona quadrupled in a few decades and such increases do change cities into theme parks. Not funny. But what if they stay away? Even despite Multi year double-digit growth of tourism, unemployment in Catalunya is still high.
  7. Foreign companies will move away, too.
  8. Don’t forget that in an economic sense, Catalunya is a city-state, centered on Barcelona! Romantic ideas about small scale organic family farms and grocery shops which will save the day are wacky – these won’t buy you modern healthcare, let alone a Volkswagen and can’t sustain a city economy.
  9. Spain, backed by the EU and the USA, has every incentive to increase such economic havoc, for instance by reducing flows of government money. Catalunya may be a net contributor to the Spanish government but that does not mean that there are no gross flows which can be halted. Brussels will follow suite.
  10. Mind that as Catalunya won’t be a member of the EU its citizens will not have free rights of entree into the EU labor market.
  11. Even if Catalunya is a net contributor, it still profits from the 4,5% budget deficit of Madrid.
  12. Mind that after Yugoslavia split up its constituent parts experienced rates of inflation of 30, 40 and even almost 50% (Kosovo). Brussels did not come to the rescue (and citizens of these states are basically not allowed to work inside the EU). If companies move away, tourists stay away and money from Brussels and Madrid is halted such rates of unemployment are not inconceivable. Brussels won’t come to the rescue.
  13. Catalunya will, for a time, probably still use the Euro. But its banks will be cut short from the Target2 system which enables international payments. International payments will be, ahem, difficult. It does not have to be this way, but Rajoy does hold all the cards. All of them. Catalunya is at his mercy.

I can go on. Nothing good will come of this. Rajoy will have to ponder about the wisdom of Vaclav Havel. Catalunyans will however have to ponder about the possibilitiy of 40% unemployment. And the relative merit of being a paid guardian of a themepark instead of an unemployed citizen of Catalunya.

Merijn T. Knibbe
Economic historian, statistician, outdoor guide (coastal mudflats), father, teacher, blogger. Likes De Kift and El Greco. Favorite epoch 1890-1930.

Leave a Reply

Your email address will not be published. Required fields are marked *