The Spanish Solution to Austerity: Protest

By: Raquel MacGregor

After hearing Romney’s “I don’t want to go down the path to Spain” comment during the first U.S. 2012 presidential debate, I had to laugh at the irony of my choice of Seville, Spain for my semester abroad.  It seems I couldn’t have picked a worse time to live in Spain.  Poverty and unemployment are ubiquitous, there is widespread discontent with the government, and citizens are becoming desperate.  Spain is now bordering on the precipice of financial catastrophe.  Beginning when the housing bubble burst in 2008, the government has gone from surplus to massive deficit.  With unemployment wavering at around 25 – 40 percent for young adults, Spain’s economy barely has a pulse.  Unemployment in Andalucía, the region of Spain where I live, is close to 50 percent.  On top of that, the Spanish government has proposed a series of austerity measures in the public sector, including 40 billion euro (51.4 billion USD) in cuts, more than a quarter of Spain’s GDP.  These cuts include public sector salary freezes, tax increases, and departmental cuts across the board.  What do all these austerity measures breed? Public unrest, and lots of it.

The citizens are simply not happy with Prime Minister Rajoy’s “cut-all” approach. This year, there have been several protests involving hundreds of thousands of demonstrators in Madrid and Barcelona.  My recent trip to Madrid was almost cancelled because of the thousands of protesters scheduled to march the road in front of my hotel.  Even living in Seville, a city numbering only 700,000 inhabitants, I have witnessed substantially sized bi-weekly protests.  At demonstrations, Spaniards protest against any number of cost-cutting measures including the introduction of co-pays on medication, teacher salary cuts, and university tuition increase.  Essentially citizens protest any and all cuts.  Last week I had to duck and push through thousands of protesters just to get home during an internationally coordinated strike.  The week before, school was closed for another anti-austerity protest.  Paros académicos (academic halts) and huelgas (protests) constantly threaten to close universities for weeks or even months.  Missing school for days at a time is not a question of if but of when. I fear losing a semester of school credit if the protests continue.

Essentially, protests have become a part of my life.  When I first arrived in Seville, the lively civil disobedience animated and engaged me.  The protests were loud, vivacious, yet rarely violent.  I would often join in and ask questions; I loved the political engagement of the citizens.  Lately, however, the constant barrage of protests has become mundane.  Every day of protest costs Spain millions in lost productivity.  Missed days of class threaten the integrity of the entire public education system.  Yet, the government has not changed its stance.  What exactly is the Spanish public seeking to realistically accomplish? Although the resentment towards the cuts is completely understandable, there is little discussion of a resolution.

Spain’s simplest solution for its economic crisis – leaving the euro – seems unlikely.  The nation’s membership in the EU holds its currency at an artificially high rate.  Before the formation of the eurozone, Spain and other economies in crisis could undervalue their currency to regain competiveness in the global market.  Doing this would increase exports and reduce Spain’s trade deficit, which would help boost the national economy.  However, Spain’s membership in the euro prevents this from happening, and moreover, most Spaniard’s don’t seem thrilled to return to a currency that reminds them of a time of dictatorship and oppression.  Besides, even if Spain returned to pesetas, it would be unlikely to pull them out of the $2.4 trillion hole they’ve dug.

The Spanish government is trying to solve its financial crisis through cuts and bailouts from the EU without addressing the underlying problem.  Throwing money at failing banks is no better than putting band-aids on a body in multi-system organ failure.  Instead, the government needs to couple austerity cuts with domestic investments. Spanish leaders should heed the example of President Obama’s efforts to reboot the economy in the United States.  Obama has not simply increased taxes- he has invested in the manufacturing industry, education, and clean energy.  He has created tax cuts for small businesses.  He has poured money into infrastructure.  It is true that all these actions cost money, but all investments start with a down payment.  Spain, unlike the United States, has not introduced any sound investment plans in their road to recovery.  With their only strategy being $51.4 billion in state spending cuts, Spanish leaders are milking their citizens dry.

Instead of protesting public service cuts, citizens should instead insist on investment.  Spaniards need to take responsibility for their politicians’ failed economic strategies and suggest viable solutions.  Investment in tourism, Spain’s largest industry, is one possible avenue.  Spain also has a highly skilled workforce; 39% of the population aged 25-34 has a graduate education.  The country should thus focus on investment in the more highly specialized and scientific jobs for which it is already known, such as the aerospace and automotive industries.  Spain must retain its talent, not just its agriculture.  Investment is necessary.  Simply applying public sector cuts will only further shut down the economy.

However, one may ask, can Spain afford to invest at this point?  The answer, surprisingly, has hardly been discussed at the public level.  In fact, citizens, politicians, and the media never seem to bring up solutions to the crisis so discussions on the feasibility of domestic investment has not had much critique on either side.  The press constantly criticizes government policies but establishes few suggestions on the right course of action.  It seems that Spain’s real problem is its lack of intellectual discussion on finding a solution.

As an American living in Spain, I am astounded that a talented student graduating with a Ph.D. in engineering has little to no job prospects.  I am saddened that entire families live off of the pension of a single grandparent.  I am amazed that 10% of homes in Spain stand idle and crumbling while newlyweds move in with their parents.  Something is fundamentally wrong here.  Spain needs change, not cuts.

Photo credit: Flickr user patrick colgan

This article originally appeared in the winter edition of PPR on March 11, 2013.

Tags: Economy MacGregor Print protest Spain