FISCAL DEFICIT AND ENTREPRENEURS’ HELL

For a quar­ter of a mil­len­nium, Span­ish re­formist move­ments have re­peat­edly ad­vo­cated im­i­tat­ing Cata­lan so­ci­ety: as did, for ex­am­ple, en­light­en­ment au­thors like Fran­cisco Nifo or José Cadalso in the late 18th cen­tury, lib­er­als like Pas­cual Madoz in the mid-19th and “re­gen­er­a­tionists” like Miguel de Un­a­muno in the early 20th. Some read­ers may even re­mem­ber José María Car­ras­cal’s “Cata­lanis­ing Spain” ar­ti­cle pub­lished in Feb­ru­ary 1978 – 10 months be­fore a con­sti­tu­tional ref­er­en­dum topped off Spain’s so-called “de­mo­c­ra­tic tran­si­tion”– or Es­per­anza Aguirre es­pous­ing the same idea at a talk she gave in Sep­tem­ber 2013 – also months be­fore the at­tempt to re­boot the sys­tem with King Juan Car­los’ ab­di­ca­tion.

It is nearly as old a tra­di­tion as ban­ning Cata­lan cul­ture or bomb­ing Barcelona every 50 years. And it has proven equally un­suc­cess­ful. The rea­son is ob­vi­ous. Cata­lans were (and are) as widely ad­mired for their en­tre­pre­neur­ship as dis­liked for their re­bel­lious­ness, yet Span­ish au­thors have rarely recog­nised these traits as two sides of the same coin. Cadalso wrote that Cata­lans were the Dutch of Spain; Car­ras­cal that they were the Eng­lish or Swiss – all highly mer­i­to­cratic so­ci­eties. Cat­alo­nia’s wealth dis­tri­b­u­tion and so­cial cus­toms were more egal­i­tar­ian (and hence mer­i­to­cratic) than Castille’s. Yet such a so­cial en­vi­ron­ment not only fos­ters as­so­ci­a­tion­ism and en­tre­pre­neur­ship but also re­sis­tance against hi­er­ar­chi­cal power abuse: deep down, the rebel and the en­tre­pre­neur are twins.

Thus, when the de­fi­cien­cies of Spain’s in­sti­tu­tional frame­work be­come too bla­tant, the idea of “Cata­lanis­ing Spain” ap­pears as at­trac­tive to would-be re­form­ers as un­savoury to those who ben­e­fit from the sta­tus quo and hold the power to change it. Hence re­form in Spain is al­ways half-hearted. Then, as soon as the emer­gency ends, the re­bel­lious province turns from role model to nui­sance and the goal again be­comes “His­panis­ing Cat­alo­nia” or, fail­ing this, bomb­ing it into sub­mis­sion. Until the sys­tem’s weak­nesses trig­ger an­other cri­sis and the cycle restarts.

His­tor­i­cally, at­tempts to erase Cata­lan iden­tity (eg, through brute force, tax plun­der or mas­sive Span­ish im­mi­gra­tion) have con­sis­tently failed. Yet Spain’s es­tab­lish­ment may have un­wit­tingly found in the mod­ern wel­fare state the tool to achieve this long-cov­eted vic­tory. Spain’s wel­fare state was born in the 1980s, when pub­lic ex­pen­di­ture climbed from about 20% of GDP to al­most 50%. Pre­vi­ously Cat­alo­nia’s net tax con­tri­bu­tion had al­ways been dis­pro­por­tion­ate but, as gov­ern­ment spend­ing was rel­a­tively low, also more man­age­able. Yet, as wel­fare ser­vices grew, so did the tax bur­den and soon Cat­alo­nia’s fis­cal deficit set­tled at about today’s ex­or­bi­tant 8-9% of GDP. Fur­ther­more, since Cat­alo­nia is a huge im­mi­gra­tion re­ceiver, de­mand for so­cial ser­vices is very high. To top it all, the wave of so­cial dis­con­tent that sweeps de­vel­oped economies today, linked to the im­pact of glob­al­i­sa­tion, cre­ates ad­di­tional de­mand for pub­lic in­ter­ven­tion to soften this im­pact along var­i­ous wel­fare, en­vi­ron­men­tal and even lifestyle di­men­sions. This chal­lenge is com­mon to many coun­tries today, but Cat­alo­nia’s case is unique in hav­ing to re­spond to it while en­dur­ing such colos­sal fi­nan­cial bleed­ing.

Hence, caught be­tween de­mand for pub­lic in­ter­ven­tion and a crip­pling fis­cal deficit, Cata­lan au­thor­i­ties have cre­ated so many ad­di­tional tax and bu­reau­cratic bur­dens that they run a se­ri­ous risk of dam­ag­ing, per­haps even de­stroy­ing, Cat­alo­nia’s dis­tinc­tive en­tre­pre­neur­ial drive – ie, pre­cisely what, for cen­turies, made Cat­alo­nia so re­mark­ably pros­per­ous and re­silient. This is a lethal trap, for it turns Cata­lans’ oth­er­wise le­git­i­mate so­cial de­mands into in­stru­ments of sub­mis­sion to those Spain-wide in­sti­tu­tions that, by dis­crim­i­nat­ing against Cat­alo­nia’s econ­omy, con­tribute more than any­thing else to this dis­sat­is­fac­tion. Per­haps this re­al­i­sa­tion ex­plains why today more than ever pro-in­de­pen­dence views pre­dom­i­nate among Cata­lans with higher ed­u­ca­tion lev­els.