Spain: Throwing Out The Baby With The Bathwater

Por Alejandro Chafuen: Publicado el 20/6/18 en: https://www.forbes.com/sites/alejandrochafuen/2018/06/20/spain-throwing-out-the-baby-with-the-bathwater/#18830f707631

 

A couple of weeks ago, Pedro Sanchez, the leader of the Spanish Socialist Workers Party, PSOE, who in the last 2016 election garnered the least amount of votes in his party’s history, became the seventh president of the post-Franco era. He reached the presidency by forming a coalition with other leftists, separatist and other minority parties who decided to bring down the government of Mariano Rajoy. Rajoy’s Popular Party, PP, was further weakened by cases of corruption and what many of its voters regarded as poor leadership. Several relevant PP members would have preferred Rajoy to resign and call for new elections rather than leaving the government in a rush. And when I mean a rush, it is a rush. I was in Madrid during the week of the change and, in a matter of two-to-three days, the president and his team were out of a job. Thousands began vacating their offices and sending resumes the day after the vote.

Mariano Rajoy congratulates Pedro Sánchez, the new president of SpainBY MINISTRY OF THE PRESIDENT. GOVERNMENT OF SPAIN, ATTRIBUTION, HTTPS://COMMONS.WIKIMEDIA.ORG/W/INDEX.PHP?CURID=69626925

Realignment on the Right

Losing the government and support from big sectors of civil society is obliging current and former leaders of the Popular Party to think new strategies. Congressman Pablo Casado Blanco, is among those competing for the leadership of the party. He is in his mid-thirties, has been aligned with the more free-market and conservative views of former President José María Aznar, but has major competitors and obstacles to overcome.

One of the most active voices, former Popular Party Congresswoman Cayetana Alvarez de Toledo, is a promising political leader. In late 2015, seeing the writing on the wall, she decided not to run for re-election. Alvarez de Toledo has been an open critic of the past government. Regarding this new administration, she wrote that the only common bond the coalition has is its anti-Spain views. By Spain she understands a country that is united under its constitution and which, among other things, calls for a social-market economic order. She, like other serious analysts, knows that each time Spanish policies moved toward an increased respect for market order, Spain has done better than its European peers. Those who joined in this new governing coalition have major doubts about the market order, Spanish unity and even the Constitution.

In another recent piece, Alvarez de Toledo called for a merger of the two centrist groups, the Popular Party and Ciudadanos. The latter, being relatively new (founded in Barcelona in 2006), is more socially liberal than the Popular Party. In recent years, however, the PP did not offer much to conservatives other than betrayal, so an alliance seems possible.

This leaves the field open for a party such as Vox, which is favorable to economic freedom and traditional values. Founded in December 2013, it has a platform based on respect for property rights, family values, and eliminating racial and gender privileges. Vox champions economic liberalism, but opposes globalization based on an agenda set by Brussels, George Soros, the U.S. Deep State and their respective partners. It still has very little following at the polls. One of its first leaders, Alejo Vidal-Quadras, who had more name recognition than Santiago Abascal, the current head of the party, resigned early on. He was open to broader coalitions than Abascal. The latter is trying to earn more space in the minds and hearts of the electorate but does not want to dilute the conservative, free-market brand. Ricardo Calleja of the Club Tocqueville, tells me “as most Spaniards define themselves as centrists, to be more successful Vox should try to avoid getting to close to positions and styles seen as “Lepenists” or “Bannonists.”

The new Socialist-led government will have to work with a budget passed during Rajoy’s government. Just days before becoming Prime Minister, Sánchez criticized this budget as “attacking the welfare state, not defending women, workers, the unemployed, nor the youth.” So he started by strengthening the welfare state, trying to reverse the modest labor liberalization of the previous government, and increase the number of women in key positions.

Among the few who look upon this new government with optimism is Venezuelan dictator Nicolás Maduro. He stated that he “hoped that the government of the new president will be able to build a new vision about Venezuela and become an advocate for overcoming the bitter moments created by the departing [Rajoy] government.”

Maduro is hopeful because he has seen how easy it was for him to buy the support of José Luís Rodríguez Zapatero, the former Socialist prime minister. Zapatero’s love affair with those who are destroying Venezuela, and the laudatory comments by the leaders of “Podemos” the “yes we can” Chavista party in Spain, presage a Spain less aligned with the fight for freedoms in the Americas. Podemos, led by Pablo Iglesias, has expressed his desire for Spain to lead a European road to Venezuelan twenty-first century socialism.

Unless there is a call for early elections in the event Sánchez loses support from some of PSOE’s partners, the next general vote will take place in 2020. Naturally, Sanchez chose a team that he thinks would help him during the coming months. Some of his first announcements and appointments show that he will also endeavor to weaken the growing influence of Podemos by co-opting its leftist policies, and thereby retain the leadership among the left. His beginning was not without trouble with the Minister of Culture Màxim Huerta, already obliged to resign, and another, the Minister of Agriculture, with a pending judicial case.

What Next for the Economy and Spain

It was not the economy that brought down the government. During these last three years the Spanish economy has been growing at over 3 percent. This rate of growth is above the other Eurozone countries and higher than most large Western economies.

In addition to the higher growth rate, employment was also improving in Spain. In 2013, the level of unemployment reached 27 percent.  Today it is down to 16 percent. Salaries, however, have lagged behind increases in productivity. With those rates of unemployment it is understandable that economic growth did not have an immediate or even mediate effect on salaries in all Spanish regions. Due to special market conditions, such regions suffering the worse employment as Canarias, Extremadura and Andalucía have recovered the best. Employment did not improve solely due to economic growth but also due to modest but important changes in the labor laws which now run the risk of being reversed.

Salaries in Spain are, on average, 40 percent lower than in Germany and 30 percent lower than in France, so global companies have an added incentive to expand in Spain. But will this advantage continue with the new government?

Thanks to the relatively good shape of the economy, the current government has some breathing room before its renewed welfare-state largesse and the demands of special coalition interests, worsen the fiscal situation and weaken its rule. At a meeting I attended that gathered several free-market and conservative leaders, the only consensus they reached was on the fiscal situation: taxes need to be reduced. This meeting was one week before the collapse of the government. Perhaps being in the opposition will encourage them to seek other common causes.

Pablo Iglesias (left) leader of Podemos, and Pedro Sánchez, President of Spain. Now united in the government but competing for leadership of the left.CROPPED BY CARLOS DELGADO – OWN WORK, CC BY-SA 4.0, HTTPS://COMMONS.WIKIMEDIA.ORG/W/INDEX.PHP?CURID=66244128

Several of my libertarian friends, gathered around small but active think tanks, seemed very happy by the downfall of Mariano Rajoy and his brand of Popular Party. Most conservatives, who also favor a free economy, are extremely concerned that both the censorship motion and non-confidence vote that brought about the change in government can end up throwing out the baby (the recovering and growing economy) with the bathwater. But they are preparing for the challenge.

Alfredo Pérez Rubalcaba, the predecessor of Sánchez as head of the Socialist Party, used the name “Frankestein” to refer to similar government coalitions: a body built of multiple parts stuck together in an ugly-looking structure. Dr. Frankestein tried to choose good parts for his creation. Unfortunately, it is not easy to find many healthy parts in this new government beast.

 

Alejandro A. Chafuén es Dr. En Economía por el International College de California. Licenciado en Economía, (UCA), es miembro del comité de consejeros para The Center for Vision & Values, fideicomisario del Grove City College, y presidente de la Atlas Economic Research Foundation. Se ha desempeñado como fideicomisario del Fraser Institute desde 1991. Fue profesor de ESEADE.

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