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Religious Dick

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Spain Gets Smacked by Economic Reality
« on: June 21, 2008, 05:51:28 PM »

Published on The Brussels Journal (http://www.brusselsjournal.com)
Spain Gets Smacked by Economic Reality
By Soeren Kern
Created 2008-06-20 13:04
spanish-chronicles-soeren-k.jpg

A national truck driver?s strike in Spain is gradually winding down, but it has managed to bring the already-troubled Spanish economy to a standstill. In doing so, it has also highlighted what happens when a welfare state goes wild.
 
Some 90,000 self-employed hauliers say they are protesting the soaring cost of diesel fuel, which has climbed to 1.30 euros/liter (about US$8 per gallon) from 0.95 euros one year ago. Skyrocketing fuel prices are, clearly, a big problem all over Europe, and many Spaniards identify with their plight.
 
But what really irks Spanish truckers is their exposure to the reality of market economics. They are angry that an economic downturn in Spain has reduced the demand for their services. There is now too much trucking supply for too little trucking demand, which according to the basic laws of economics implies lower transport prices.
 
So the truckers want the government to bail them out via artificial price supports. They are demanding that the government impose a market-distorting minimum transport tariff, a solution that would allow hauliers to continue with business as usual while passing the additional costs over to consumers.
 
The government has proposed setting aside 55 million euros to encourage early retirements from the over-saturated sector. But the striking truckers are not interested in compromise. Indeed, they are betting that the government will cave in to their demands. After all, the Spanish government always gives in to labor unrest.
 
In the meantime, the truckers have been determined to share their pain with the rest of Spain. The strike effectively shut down a large chunk of the economy because most goods in the country are shipped by lorry (due to insufficient rail-freight infrastructure). Many factories were forced to close production lines for lack of supplies. Spanish consumers panicked that they would run out of food and emptied supermarkets in towns and cities across the country. As for petrol: Some 75 percent of service stations in Barcelona ran out of gasoline within days of the strike; nearly half of the service stations in Madrid were closed.
 
Spain Complains
 
But truckers are not the only Spaniards taking some extra time off. Indeed, job walkouts protesting exposure to market economics have become a national sport in Spain.
 
?    Spanish fishermen, who have been on strike for more than two weeks, are demanding government subsidies that would limit the price of fuel to 0.40 cents per liter for the fishing sector.
 
?    Civil servants in the Spanish judiciary system went on strike for more than two months in February, March and April, with demands for higher pay. The bureaucrats, who are already among the highest salaried workers in Spain, brought the country?s justice system to a near-complete halt when the government offered to meet their demands in two stages instead of one.
 
?    In Madrid, more than 50.000 school teachers went on strike on May 7 that kept more than 700.000 students out of the classroom. Teachers are angry about the ?privatization? of Spanish education. According to the OECD, Spain has one of the worst public school systems in Europe and private schools are indeed filling the demand for better educational opportunities. Some 8 out of 10 students in Madrid now attend private schools, compared with 7 out of 10 students who attend public schools in the rest of the country.
 
?    In Madrid, some 20.000 healthcare professionals at more than 400 healthcare centers went on strike in March and April with demands for higher pay. The walkouts caused the cancellation of more than 320.000 doctors? visits and 4.000 surgeries. In Spain, more than 42.000 patients are on waiting lists for surgery; thousands of patients have been waiting for more than 2.5 years to be treated. The demands for salary increases would cost the government more than 150 million euros a year, even though the average salaries for medical workers have already increased by 63 percent during the past four years.
 
?    In Madrid, garbage collectors threatened to turn the Spanish capital into another Naples, Italy, which has become famous for its mountains of trash heaps. The garbage collectors finally returned to work in mid May after accepting a 5.3 percent pay hike. The government agreed to pay a bonus of 30 euros to those employees who are forced to work on November 3, the festival of San Mart?n de Porres, the patron saint for garbage collectors.
 
?    In Madrid, some 8.000 municipal bus drivers went on a 30-day strike in April that affected some 1.5 million commuters a day. The bus drivers agreed to return to work after receiving a 100 euro pay increase plus additional subsidies to pay the dry cleaning bills for their uniforms.
 
?    In Madrid, 1.800 parking meter readers are on strike for all of June after having rejected a 33 percent pay hike as ?insufficient?. The walkout is costing the Madrid municipality some 400.000 euros a day in lost parking revenue.
 
?    In Madrid, some 1.500 ambulance drivers have called for a strike to begin on 18 June. They are demanding higher wages and less working hours.
 
?    In Barcelona, 2.800 municipal bus drivers have carried out repeated strikes since December 2007. They are demanding higher wages and less working hours. When the municipal (Socialist) government refused to meet their demands in April, the bus drivers began vandalizing their own buses.
 
?    In Bilbao, the largest city in the Basque Country and a major seaport and industrial center, metro train drivers and municipal bus drivers are striking for higher wages and less working hours. Bilbao already has the most expensive public transportation system in Spain after Barcelona. The strikers are believed to have sabotaged at least 60 buses since their walkout began.
 
?    In Zaragoza, Spain?s fifth-largest city which has just invested 1.5 billion euros to host the Expo 2008, more than 10.000 workers charged with cleaning public buildings, including the airport and the train station, have decided this is a good time to press the regional government for a pay raise.
 
?    In Valencia, Spain?s fourth-largest city, metro train drivers have threatened to shut down the system for 12 days in June if the regional government does not meet their demands for higher pay.
 
According to the Spanish Confederation of Employers? Organizations (CEOE), Spanish workers held 334 strikes during the first four months of 2008, which resulted in the loss of 14.3 million man-hours of labor. These figures represent a 72 percent increase over the same period in 2007. During all of 2007, there were 852 strikes in Spain that resulted in the total loss of 22.5 million man-hours.
 
Nor is this a new trend. According to a special report published by The Economist in March 2005, Spain ranked third among developed countries (after Denmark and Canada) for the number of workdays lost as the result of labor conflicts during the previous decade. Spain lost 254 days, three times more than the EU average of 73 days (calculated as the number of days lost per 1,000 employees). By way of comparison, the UK lost 20 days while Germany lost 10 days.
 
Considering all these grievances, it seems strange that Spanish voters in March gave Socialist Prime Minister Jose Luis Rodriguez Zapatero another four-year term in office. After all, pre-election polls showed that the majority of Spaniards knew full well that Spain was not on the right track (economically or otherwise).
 
Maybe they allowed themselves to be persuaded that everything would somehow be okay, thanks to Zapatero?s post-modern relativistic political discourse (which posits that all problems are by definition imaginary). Or perhaps they were bribed by the 22 billion euros (a whopping 2.1 percent of Spain?s GDP) in handouts that Zapatero promised to bestow upon them if re-elected.
 
In any case, Spain?s myriad market disequilibriums are coming home to roost, and all at the same time.
 
For example, Spain has been reeling from the collapse of a housing bubble that for the last 15 years has enabled the notoriously uncompetitive economy to post some of the highest growth rates in the European Union. Millions of Spaniards are now struggling to accept the fact that they were lulled into a false sense of never-ending prosperity.
 
At the same time, the generous financial subsidies that Spain has received since joining the EU in 1986 are drying up. During the past 20 years, Spain cashed in on some 100 billion euros (equivalent to nearly 1 percent of its GDP every year) by way of EU Structural and Cohesion Funds, which are designed to narrow the gap between the EU?s wealthy and poor countries. But now that Spain has reached a per capita GDP of 98.5 percent of the EU average (it was 72 percent in 1986), the country will begin paying more into the EU than it receives back.
 
The implication is that Spaniards will have to strike less and work more if they want to maintain their current standard of living. But that seems an unlikely prospect. Spain recently led a bloc (that included Belgium and Greece) that sought to prohibit British workers from working more than 48 hours a week. In an interview on Spanish National Radio, Zapatero said working 65 hours a week was ?unacceptable? and ?retrograde?.
He is worried that if Brits may choose to work more than Spaniards, Britain will have an unfair competitive advantage.
 
And what about the nearly one million illegal immigrants that Zapatero ?regularized? in 2005 with the justification that they would pay into the financially unstable social security system? Many of them are now drawing unemployment benefits, so much so that the Socialist government wants to pay them to leave Spain if they promise to stay away for a minimum of three years.
 
Problem? What Problem?
 
Just before the March elections, Zapatero insisted that the Spanish economy would grow by 3.3 percent in 2008; since his re-election, however, the government has revised that figure downwards on an almost daily basis. Indeed, Spanish economic growth has slid to 0.3 percent in the first quarter 2008 from 0.8 percent in the last three months of 2007. The Spanish Banking Association says that Spanish growth will probably be negative in 2008. The Spanish economy grew by 3.8 percent in 2007.
 
But that?s not all. Annual consumer inflation jumped to a 13-year high of 4.6 percent in May. And according to the Labor Ministry, the number of registered jobless shot upwards to 2.35 million in May, the worst figure since post-Franco recordkeeping began in 1979. The National Statistics Institute says the unemployment rate jumped to 9.6 percent in the first three months of 2008 from 8.6 percent in the previous quarter, the biggest jump since the first quarter of 1993, when the Spanish economy slipped into recession. Some financial analysts fear the unemployment rate could spiral to 15 percent in 2009.
 
So far Zapatero?s post-modern approach to Spain?s economic crisis seems based on three reality-evading pillars: denial, passing the blame, and more denial. His Plan A has involved a pop psychology campaign advising Spaniards that ?pessimism does not create jobs.? Plan B blamed ?radical liberalism? which in euro-speak means the free market. Zapatero now wants to implement Plan C, a global advertising campaign in the world financial press designed to highlight his economic non-crisis management skills.
 
Spaniards, having grown accustomed to three decades of spoon-feeding by Socialist largesse, are in for a long, hot free-market summer.

 

 
A short version of this article was published by Pajamas Media on June 14, 2008. Soeren Kern is Senior Analyst for Transatlantic Relations at the Madrid-based Grupo de Estudios Estrat?gicos / Strategic Studies Group

 
Source URL:
http://www.brusselsjournal.com/node/3348
I speak of civil, social man under law, and no other.
-Sir Edmund Burke

Michael Tee

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Re: Spain Gets Smacked by Economic Reality
« Reply #1 on: June 21, 2008, 06:15:19 PM »
Sounds to me like what those Spaniards need is a dose of good old-fashioned Communism.  Control by the people of the means of production, allocation of the entire national resources and their profits on an as-needed basis, the elimination of the profit motive, rationing of imports like gasoline and state-mandated transportation alternatives.  An end to private ownership of the means of production.  From each according to his ability to each according to his needs.  Obviously this is an early-warning failure of the capitalist system brought on by the oil crunch but inevitable anyway.

Amianthus

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Re: Spain Gets Smacked by Economic Reality
« Reply #2 on: June 21, 2008, 06:55:37 PM »
Obviously this is an early-warning failure of the capitalist system brought on by the oil crunch but inevitable anyway.

Spain's economy is a mixed socialist / capitalist economy.

Obviously what is needed is to eliminate the socialist portions so that the free market portion can blossom.
Do not anticipate trouble, or worry about what may never happen. Keep in the sunlight. (Benjamin Franklin)

Plane

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Re: Spain Gets Smacked by Economic Reality
« Reply #3 on: June 21, 2008, 07:21:19 PM »
Sounds to me like what those Spaniards need is a dose of good old-fashioned Communism.  Control by the people of the means of production, allocation of the entire national resources and their profits on an as-needed basis, the elimination of the profit motive, rationing of imports like gasoline and state-mandated transportation alternatives.  An end to private ownership of the means of production.  From each according to his ability to each according to his needs.  Obviously this is an early-warning failure of the capitalist system brought on by the oil crunch but inevitable anyway.

How would any of that help?

Xavier_Onassis

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Re: Spain Gets Smacked by Economic Reality
« Reply #4 on: June 21, 2008, 08:03:52 PM »
The price of Diesel is not in any way the fault of a Socialist economy. It is a combination of the law of demand and supply and speculation. Spain produces much less petroleum than it uses. I suppose if I were Zapatero, I would begin to make nice with Hugo Chavez.

The free market is not going to blossom in Spain or anywhere else due to huge increases in the price of petroleum products.
"Time flies like an arrow; fruit flies like a banana."

Plane

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Re: Spain Gets Smacked by Economic Reality
« Reply #5 on: June 21, 2008, 08:32:26 PM »
The price of Diesel is not in any way the fault of a Socialist economy. It is a combination of the law of demand and supply and speculation. Spain produces much less petroleum than it uses. I suppose if I were Zapatero, I would begin to make nice with Hugo Chavez.

The free market is not going to blossom in Spain or anywhere else due to huge increases in the price of petroleum products.

So partial socialism doesn't free a country and its people from the law of supply and demand.

Does total socailism free anyone from the law of supply and demand?

Michael Tee

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Re: Spain Gets Smacked by Economic Reality
« Reply #6 on: June 21, 2008, 09:27:30 PM »
<<Does total socailism free anyone from the law of supply and demand?>>

Sure, it allocates resources and effectively squelches demand.  For example, it decides how much gasoline the nation can afford to import for its essential uses, and it defines "essential uses."  This probably means that all the non-commercial powerboat owners are told to put their boats into drydock or lose them.  For everyone else it devises plans for alternative transportation - - public mass transit (which eats some of the "essential use gasoline") bikes, etc.

Socialist government can intervene decisively to shape the demand side of the equation.  As XO suggested, it can also engage in independent foreign policy which is not subject to U.S. control - - trading what it can (if it can) with Venezuela or Iran. 

Plane

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Re: Spain Gets Smacked by Economic Reality
« Reply #7 on: June 21, 2008, 09:34:16 PM »
For example, it decides how much gasoline the nation can afford to import for its essential uses, and it defines "essential uses."  This probably means that all the non-commercial powerboat owners are told to put their boats into drydock or lose them. 


That is the most succinct statement of why Americans should hate socialism I have ever seen.

Michael Tee

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Re: Spain Gets Smacked by Economic Reality
« Reply #8 on: June 21, 2008, 10:21:11 PM »
LOL. 

I hate powerboats.  Now if a socialist government ever told me to put my canoe in permanent drydock, I admit it, we'd have a problem.

Plane

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Re: Spain Gets Smacked by Economic Reality
« Reply #9 on: June 21, 2008, 10:31:26 PM »
LOL. 

I hate powerboats.  Now if a socialist government ever told me to put my canoe in permanent drydock, I admit it, we'd have a problem.

My Canoe is a Pelican , made in Canada.

There needs to be places where no motorised boats are , so that Canoes are not swamped in wakes , This should not be a problem in Georgia or Canada tho , lots of swamps and lakes , many too shallow for speeding.

Michael Tee

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Re: Spain Gets Smacked by Economic Reality
« Reply #10 on: June 21, 2008, 10:46:54 PM »
I was kidding about "my canoe."  My wife and I just rent at the marina or the outfitter rather than buy one and haul it around.  I've never seen a lake or river in Ontario with a powerboat ban, I think the cottagers are just too powerful a lobby and more of the cottage-owning types are likely to favour engine power over wind or paddle. 

It's not just the wakes, though, it's also the noise and the pollution.

Plane

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Re: Spain Gets Smacked by Economic Reality
« Reply #11 on: June 21, 2008, 10:51:09 PM »
I suppose it depends on the circumstance at each time and location some Georgia creeks are off limits altogether because they are on priviate property.

Xavier_Onassis

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Re: Spain Gets Smacked by Economic Reality
« Reply #12 on: June 22, 2008, 01:40:33 PM »
For example, it decides how much gasoline the nation can afford to import for its essential uses, and it defines "essential uses."  This probably means that all the non-commercial powerboat owners are told to put their boats into drydock or lose them. 

===============================================
That is the most succinct statement of why Americans should hate socialism I have ever seen.

What percentage of Americans actually own powerboats that are not in drydock? I would guess under 2%, maybe under 1%.

Of course, this is simply speculation about what the Spanish government might do.

The percentage of Spaniards with motorized powerboats tied up at anchor is probably much smaller than the number of licensed bullfighters. Spain has few large lakes and fewer rivers than the US.

I would not hate anyone who told me to take my boat out of the water or lose it. Actually, nature tells us to do that. It rains, boats fill with water and sink. If anchored in saltwater, they get shipworms and sink. It is never wise to leave a boat in the water for extended periods of time.

"Time flies like an arrow; fruit flies like a banana."

Plane

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Re: Spain Gets Smacked by Economic Reality
« Reply #13 on: June 22, 2008, 05:56:47 PM »


http://www.nmma.org/facts/boatingstats/2005/files/populationstats2.asp


Most of my freinds have a boat, I wonder if a majority of these are in Georgia?

Amianthus

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Re: Spain Gets Smacked by Economic Reality
« Reply #14 on: June 22, 2008, 09:23:35 PM »
What percentage of Americans actually own powerboats that are not in drydock? I would guess under 2%, maybe under 1%.

The stats Plane posted show about 6% of Americans - including children - own boats.

When you only include adults in the calculation, the number more than doubles.

So much for your guesses.
Do not anticipate trouble, or worry about what may never happen. Keep in the sunlight. (Benjamin Franklin)