Monday, 22 January 2018

Catalonia? I am confused

Published on 17/9/17:

This weekend I realised that some of my international friends are confused by what's happening in Spain with Catalonia. I hope this helps:
-Spain is a western democracy and its Catalan citizens vote frequently. In fact, between European, national, regional and municipal elections we have voted 6 times in the last five years.
-In the last regional election, pro-secession parties decided to unite around a single issue- independence- and not only failed to win a majority of thevote, but also lost votes relative to the prior election. Polls, even those paid for by separatists, show support for independence is a minority and in decline.
-Catalonia is not "oppressed". It is one of the most prosperous regions in Spain and its citizens enjoy a high standard of living and one the highest degrees of self-rule of any region in Europe.
-The party that traditionally ran the regional government of Catalonia has, for the last 30 years, used public money to promote a separatist agenda through education and local media and has illegally funded itself with a corrupt scheme where contractors had to pay bribes of at least 3% of any public work.
-The region of Catalonia has never existed as an independent political entity and was a part of the Kingdom of Aragon, which merged dynastically with the Kingdom of Castille in 1492 to create the Spain we know today. There is no "union", as in the UK- Catalonia is to Spain what Rousillon is to France or Cornwall to England.
-Spain is a parliamentary democracy, with a constitution that can be amended. A vote on territorial secession would require such amendment and the support of a qualified majority of Spaniards.
-Not a single country or international organisation, with the exception of Nicolas Maduro in Venezuela, has supported this movement. 
So why the fuss? As the economy improves and support for independence wanes, the separatists are afraid of "missing the train" and, breaking Spanish and regional laws, have embarked on a campaign to present the central government as "evil", for not allowing a regional referendum which does not comply with the constitution (overwhelmingly approved throughout Spain, including Catalonia). This noise also conveniently masks regional corruption scandals and sets up the separatists as victims for the next regional election.

Social engineering and the "Programa 2000"

Most foreign observers believe that many people in Catalonia have a deep-rooted historic love of their region which makes them have spontaneous nationalist emotions. I think they have missed the fact that, for over thirty years, a carefully designed social engineering programme has been executed by the nationalist regional governments which have ruled the region for most of that period. These plans were kept mostly in the dark, but already back in 1990 it emerged that a plan named “Programa 2000” had been put in place by the leaders of the main Catalan nationalist party, “Convergencia i Unió”, with the objective of promoting the long-term “recatalanisation” of society. This plan, whose main details are attached here, included taking control of education, regional media, administrative, political and economic institutions and using these to create a “national collective identity”. The success of such a policy has been globally apparent in the events of the last weeks, but for those of us who live here, it has been the case for many years.
One may ask why the central government let this happen, if it was so obvious. In fact, one of the main culprits of our current predicament has been a decentralised political system which encouraged an exchange of votes, whereby the regional nationalists supported whoever was in power in the national government, in exchange for laissez-faire in the regional government. Such short-sightedness has cost us dearly and contributed in no small measure to lead us to where we are today.

The "Tabarnia" construct

Yuval Harari pointed out in “Sapiens” that humans are unique in their ability to create abstract constructs such as religions, corporations and nations.
The region known as Catalonia has recently ceased to exist as a unified construct thanks to the polarisation brought about by separatism. Today, its citizens are completely divided on what “Catalonia” means, as the recent regional elections have demonstrated. There are now two clear constructs. The urban, mostly coastal, areas voted clearly in favour of remaining within Spain (and Europe by extension) and a bilingual, inclusive society; whereas the rural hinterland voted for exactly the opposite. In fact, a new construct called “Tabarnia” (Barcelona + Tarragona) has recently arisen within the former group, claiming their right to independence from the latter. 
One of the delicious ironies of “Tabarnia” is how swiftly the separatists have angrily retorted that Catalonia is indivisible and that only the “Catalan people” as a whole can choose the destiny of Catalonia, using the same arguments they have been quick to dismiss when used by the central government. 
Then again, logic has never been their forte.

La ironía del rescate de los bancos

Para los aficionados a las tertulias financieras:
1. El Estado no ha rescatado al sector bancario- ha rescatado a las antiguas Cajas de Ahorro (a casi todas).
2. La gestión de las Cajas de Ahorro se había poblado de políticos y sus amigos/familiares.
3. Los gestores, no siendo profesionales, decidieron prestar dinero a deudores que no podían pagarlo.
4. Como las inevitables pérdidas superaban el capital que tenían las Cajas, había riesgo de su extensión a los acreedores, que son los depositantes.
5. Para evitarlo, el Estado inyectó capital (directa e indirectamente), asumiendo esa pérdida.
6. Los gestores de estas Cajas fueron despedidos y, en casos de mala fe, juzgados y condenados.
7. Por tanto, los “rescatados” fueron: (i) los deudores que han disfrutado de algo que no pagaron y (ii) los depositantes que, a pesar de lo anterior, han recibido su dinero igual.
8. Una alternativa hubiera sido que muchos perdieran su dinero por haberlo dejado en una entidad donde los gestores lo prestaban sin tener ni idea. A mí me hubiera parecido razonable, pero, en un país en el que, si la nieve resbala, es culpa es de otro, imagínense la que se hubiera montado.
9. Ahora, los propios “rescatados” son los que claman al cielo con el “rescate de la banca”. 
Lo que hay que oír.

Friday, 1 September 2017

"La Nacionalitat Catalana"

Para entender cómo piensan muchos separatistas catalanes, es imprescindible leer “La Nacionalitat Catalana” de su ideólogo de cabecera, Enric Prat de la Riba. Es un fascinante panfleto de principios del Siglo XX en el que el autor repasa lo que entiende por una “nacionalidad” y explica por qué Cataluña lo es. Explica también que la represión tras la Guerra de Sucesión oprimió al pueblo catalán hasta que su cultura resurgió en un espontáneo “renacimiento” (básicamente coincidiendo con el Romanticismo de finales del IX). El libro entero es un compendio de victimismo (“Castilla” nos ha oprimido), revisionismo histórico (la Edad Media era maravillosa), imperialismo (las naciones civilizadas tienen que dominar a las bárbaras), admiración por el nacionalismo alemán (el “Volkgeist” o espíritu nacional) y supremacía (los catalanes somos diferentes y mejores); todo en la mejor tradición del fascismo español.

"In, Inde, Independència!"

I originally wrote this at the end of September 2012 but declined to post it because Spain at the time was in the throes of a serious financial crisis and in my professional position, a personal opinion of this nature may have been counter-productive. Five years-on, however, I feel the debate is out in the open and this may be a minor contribution to it.

Greetings, o’ loyal reader. It has been a long time indeed since I last wrote in my blog. Partly this is due to new demands on my time from a new family member but, more importantly, I have been constrained due to my current professional activity. I have a fiduciary duty to my employer and, as such, I need to keep most opinions to myself.
However, I have been raised from my quiescence by the recent sight of almost one million people clamouring for independence in Barcelona. Reflecting upon this event, I remembered a good friend and former MBA classmate who, as an advertising executive, revealed to me the art of his profession. “Blood, sex and money”, he said. These are the primal instincts that move people. Appeal to these and you can move mountains. Blood. Sex. Money. Think of all the cases where rational argumentation is futile because it directly attacks one’s feeling of belonging (religion and family?). Think of all the cases where rational thought is put away in order to pursue a sexual fantasy (Bill Clinton and Dominique Strauss-Kahn). Think of all the cases where civilised behaviour is eschewed in the pursuit of power and status (too many to mention?).
I pondered upon this when I tried to get another friend to explain to me why he defended the idea of an independent Catalonia. After failing rather miserably to present a rational argument he ruefully admitted: “It’s a question of feeling”. He was not able to rationalise an independent Catalonia, he worshipped an independent Catalonia. At this point, I realised that no rational argument was ever going to waive his conviction, his feeling of belonging, his kinship with the tribe.
Against irrational and emotional arguments that have set in people’s minds it is almost impossible to win. Think of religion- how many mad ideas are floating about which are plainly ludicrous, but whose mere criticism can place you at risk of death? This, unfortunately, is the situation that we have to deal with in Catalonia. There are limited ways of dealing with this problem and one, force, is clearly not an option in today’s environment. Yet other options exist and only require the political will to be implemented. Aligning incentives- both positive and negative- is clearly an option. The threat of a Spanish veto to a Catalonian entry to the EU is an example of negative incentives but these are not sufficient. Are positive incentives not available? Don't we have examples of how Catalonia has prospered within Spain? Many are available but few publicly abound.
Finally, the propaganda apparatus of the nationalists should also be deactivated, probably by cutting the access of public funds for these means. But also by using pro-Spain advertising and marketing. The population in Catalonia currently only have access to one side of the story.

In theory, the debate is centred around the fiscal"theft" that the rest of Spain inflicts upon Catalan taxpayers. Leave aside the obvious point that many of those claiming redress are net tax recipients rather than contributors. What is clear is that tax rules are the same in Spain as in Andalucia and as a consequence residents in Catalonia pay more because they earn more. Again leave aside the argument that part of the reason that Catalonian residents pay more is because of many large corporates selling to the rest of Spain are based here (Madrid, by the way, contributes far more for exactly the same reason).

So the gripe is about expenditure and "justice". Since 1978, Catalan nationalists have been asking for transfers of decision making, which has been achieved to an extent unknown in any jurisdiction I know. I can't, for example, think of a single instance of a region that does not permit public schooling in the national language, despite parental demand for optionality. Once most decision making power has been transferred, the issue is whether these powers are administered efficiently. It is pretty obvious that successive governments have done at least as badly as the national governments in managing expenditure.

One obvious source of expenditure reduction would be to recentralise some decision-making power but that is not an option, which shows that the debate is not really economic but more a smoke screen to hide the ultimate ambitions of the puppet-masters of the demonstration: secession. Time will tell.

Thursday, 2 September 2010

Bread today can bring hunger tomorrow

The above phrase is a literal translation of a Spanish saying: “pan para hoy y hambre para mañana”. The closest sensible translation I can think of is “laugh now, cry later”… a typical Southern European attitude to problems which makes this part of the world a great place to live in. Sometimes, however, we can get carried away with “laughing” by adding a few boosters (such as consumer or housing debt) so that the “crying” can almost develop into “dying”. While I write this facetiously, I think we have experienced too many excesses in Spain over the last decade.

How have we Spaniards managed to focus on today at the expense of tomorrow? Here go three of my favourites:

1. Dependence on the construction and housing sectors

This is a sector that cannot be competed away via trading and has thus avoided the impact of globalisation. It also happens to be low value-added labour intensive so that job-creation was an added bonus. Politicians of all sorts became chummy with construction “entrepreneurs” in a fatal embrace which was to show itself to be unsustainable. There were few incentives to improve education and competitiveness to face increasingly assertive emerging markets.

“Pan para hoy y hambre para mañana”

2. The use of deferred payment mechanisms to finance the above

The main constraint to the above policy is the availability of finance. Fortunately, central bank policy across the Euro area meant that money could be thrown at the above sectors in the form of both development grants from the European Union as well as financial debt provided by foreign financial institutions and other long term investors. To ensure that the volumes of debt being thrown in did not scare these foreign investors away, the funding was conveniently disguised into debt issued by local financial institutions, infrastructure “public-private project financing” and corporate debt of construction companies. I will not provide figures in this post but take my word for it. The volumes involved are huge. One flaw in this policy- debt has to be repaid and we cannot devalue our currency.

“Pan para hoy y hambre para mañana”

3. The restricted list method for choosing political representatives

The intellectuals who designed the post-dictatorship constitution decided that they wanted to strengthen political parties in the light of the inherited power of the Armed Forces, the Catholic Church and other reactionary elements. This might have made sense at the time, but it has since developed into a mockery of democracy where candidates owe their loyalty to the party that includes them in the list and not to the electorate. As a consequence, political parties have become so strong that they have weakened the very fabric of society. There are few, if any, genuinely independent institutions in Spain, including the judiciary and the press.

“Pan para hoy y hambre para mañana”

Change is necessary but I don’t think that change will come naturally. Those that benefit from the status quo will not voluntarily become the agents of change. Change will only come about if forced by circumstances or outsiders. This was and still is my great hope for the crisis. A renewed commitment to envision, propose and create a genuinely liberal society where basic rights are enforced, responsibility is assumed, and creativity and freedom from coercion genuinely flourish. After all; who wants to build a house on sand?