Taking advantage of the current economic situation
There are countries whose economies are growing at a rate of above four percent, yet where poverty can be seen on every corner. Getting out of the recession is nothing more than a mathematical derivative; other variables are required to allow us to say “we’re doing alright”. It is true that Spain will come out of “the crisis” in a little over two years; it is true that comparatively speaking, we can predict things will go up and down according to season but that in some magical way, macro data will continue to show positive trends.
As of today, we can identify some signs supporting the idea that we are at the end of a tunnel. A tunnel that some people call a crisis with significant changes, while others among us call it the dawn of a new era with the recession just being a trigger. Either way, what matters is that this is a historical moment and we must live, perceive, and work in it as such.
Getting out of the recession, fiscal consolidation, increased foreign sales with better commercial balance, increased foreign investment, tourism yields beating all records, an automobile industry gaining momentum in a way that hasn’t been seen for a very long time, surprisingly increasing consumer confidence, the recovery of the industrial production index, the Ibex leading the European exchange markets, the reduced cost of public debt and, to sum up, a number of other factors suggest we are on the verge of another opportunity tojump on a winning train.
There are also significant red flags, such as that the estimated annual inflation of the Consumer Price Index (CPI) in October 2013 was -0.1%, according to a flash estimate prepared by the National Statistics Institute of Spain (INE). This estimate provides a preview of the CPI which, if confirmed, would imply a decrease in the annual rate by four-tenths, given that in September this variation was 0.3% and, so technically we would be entering into deflation. That´s a bad thing because, perhaps, it shows this consumption data is derived from a successful touristic season and not from a sustainable economic model. Very similar to the fraudulent data on unemployment we hear about every so often. Are we really entering into deflation?
Unfortunately those who claim to be responsible for these improvements have surely been caught by surprise and assure us that, if we’re patient, everything will come around. The universal laws of the economic pendulum play in favor of those who are able to hardily resist the bad times. Eventually it all comes to an end. However, this time it’s different. This is not a crisis and it’s different in that you can’t just take advantage of the momentum generated as soon as the economy jumps out of the crisis. This is about the systematic improvement of an economic model that we can either join in, or be left out of.
Spain is on sale and is offering bargains to foreign investors. That allows foreign investment to get in but without engaging in risk, because the image projected outside of the country is still quite grim. We have a political class that causes a great deal of harm in terms of how we are perceived. Havoc has been wreaked and there are still many indicators used by professional investors which show shameful data about us.
If the ones in charge of bringing about change, stimulating improvements and taking our whole economic model straight into the competition continue to worry themselves more about covering up their inefficiency and mediocrity, we won’t achieve anything. The latest Doing Business report prepared by the World Bank, and which ranks 189 countries by their advantages for business activity, certifies it: Spain dropped from holding the 44th spot on the list in 2012, to the 52nd this year. That’s eight positions down, putting us at our lowest position since 2006, the year the list was first created, and the sharpest annual decline yet.
This is basically because leg-pulling has been inseparable from Spanish politics since the beginning of creation. I do not think there is any politician, banker or member of the social aristocracy that doesn’t say the word entrepreneur in every other sentence. Entrepreneur, entrepreneur, entrepreneur — that’s the magic word if you want to be cool. They no sooner make a new law than they organize an event full of aspiring entrepreneurs. But the truth is what it is. Setting up a business in Spain is dramatic due the difficulties in get started, for how complicated it is to sell and how expensive it is to finance.
Despite the repeated announcements boasting reforms to facilitate business creation, Spain remains to be one of the most difficult countries in the world in which to set up a business. Specifically, Spain is ranked 136th out of the 185 countries surveyed in the report I mentioned before, “Doing Business 2013”, in terms of how easy it is to start a business. Although it has improved in recent years, it still involves 10 procedures and 28 days, at a cost equivalent to 4.7% of the nation’s GPD and a minimum capital representing 13.2% of that GPD. It’s just absurd. So many things could be done to improve this.
Today La Vanguardia published an interview with me, part of which explains how I interpret the current economic times. I believe that this moment of relevance and potential arrival to a new destination relies on understanding where the true starting point lies.
- When it comes time to assess unemployment numbers in Spain, are you one of those that looks for people to blame in the government and institutions, or are you one of those that prefers to self-criticize our collective attitude as a society?
-I have a personal take: I don’t believe that we are living through any specific crisis or that the data could be characteristic of something that could be considered a crisis. I do believe that it is actually something very intense, a revolution on all terms: society, economy, human relations and our relationships with technology.
-Are you trying to tell me that we aren’t going through any financial or economic crisis?
-Back in the day, when a steam engine got into a factory of 400 workers, making it possible for just two people to do the same work, there were 398 people who thought they were in an absolute crisis and didn’t know what to do. Society eventually learned how to allocate these people to different sectors. We are learning to change our ways of life, economy, society, and politics so that people can join in this complete revolution. Blame is distributed in different amounts and at different levels. Clearly, there are governments that have done less than others; there are societies that abused credit and speculation. It is also true that Spain did not take advantage of its economic booms to push for a change in its growth model. Still, the answer to the current situation is not to recover anything, nor even to speak of crisis, but to intervene, keeping in mind we are experiencing a revolution in every sense.
-You were one of the first to predict this situation on your personal blog. Do you think you could tell me now how much longer it will be till Spain gets out of this pit?
-I deducted, rather than predicted. And what I said is that it would trigger, as it has, an economic process that would have an unhappy ending. What was not clear was that it would be brought about as a result of what I try to defend. Something that has to do with a more systemic change linked to different aspects, especially technology, which is changing every field, ranging from the transmission of knowledge to the distribution of labor. I would like to say that change is imminent, but it isn’t. We still have a long period of economic and social stagnation left that could go on for about 4 or 5 more years. Comparative analyses (which are going to be all the rage from now on) will say that we are starting to have good news — a good idea to embed in our speaking, because a positive outlook on the part of society helps to improve things faster.