Saturday, December 15, 2018
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Juan Ignacio Palacio Morena

​Not only Catalonia: interests and daydreams

Professor of Applied Economics

We pose the question that the Catalonian independence movement hides protectionist interests. This does not only affect Catalonia. The liberalisation of the Spanish economy, associated with the incorporation into the European project, leads to the false impression that restrictions on competition have practically been eradicated. However, not only old restrictive competitive practices survive, but also new ones have been generated, linked mainly to regional and local spheres.


Catalonia

This false impression is also fuelled by the dominant conception of competition that identifies it with the adjustment of short-term prices. Competition, as can be seen in any sporting competition, requires rules of the game (regulation), bodies that ensure compliance (referees, competition defence committees) and consequently a permanent innovative attitude (training, definition of tactics and strategies, research and other active competition policies). 


The identification of competition with the adjustment of short-term prices leads to postulate deregulation, which paradoxically leads and legitimizes the oligopolistic or monopolistic market domination.


On the other hand, competition requires rules of the game in each of the markets. As Professor Julio Segura pointed out at the time, "it is obvious that it can be badly regulated, but it is also difficult to imagine such a regulation so defective that it is worse than no intervention at all" ("Changes in the policy of defence of competition and industrial policy ", Ekonomiaz, Nº 21, 1991). We also have to say that regulation does not necessarily mean state intervention, although the protection of the State is required to ensure compliance.


Not only Catalonia. Neither the Catalonian secessionist attempt is the only major problem in Spain, nor the interests behind this attempt are exclusive to Catalonia. 


A little over two years ago, I warned in this blog (http://entreparentesis.org/blog/581-mas-alla-de-cataluna), what was at stake in the impending Catalonian regional elections. Unfortunately, the passage of time has proved me right. The Catalonian independence movement responds above all to the fact that a large part of the Catalonian bourgeoisie wants to have even more room to manoeuvre to protect its interests without having be accountable to higher levels of the Spanish State.


IN NATIONALISM, THOSE AFFECTED BY THE CRISIS SEE A SOLUTION TO ALL THEIR WOES


This is what has been claimed since the attempt to liberalise the Spanish economy in the 19th century, becoming the main standard bearers of protectionism. It is clear that the problem was not confined to Catalonia, but rather that Spain, like most of Europe, ended up falling into a protectionist-nationalist spiral. Added to this is the daydreaming of many affected by the crisis who in nationalism see the solution all their woes, ignoring that in fact, they would be even more aggravated.


Spain is characterized by having many uncompetitive markets. This explains the deficiencies of the productive system. The generalised and repeated lament about the deficient investment in innovation (Research + Technological Development), and the weakness of a good part of the small and medium Spanish companies, is of little or no practical importance. By not addressing the factors that actually restrict competition, it is impossible to make progress in those aspects. Nobody innovates if there is no competition (on the concept of competition see J.I. Palacio: "Productive structure, competence and innovation" in Science and Innovation Reflections in a crisis scenario (Alicia Durán, coord.), Books of the Cataract, 1º de Mayo Foundation, School of Industrial Organization, Madrid, 2011, pages 23 to 72 and "Growth and productive model: competition versus price adjustment", Gaceta Sindical No. 28, June 2017, pages 43 to 64). When they asked Hicks, Nobel Prize in Economics, what monopoly is, he answered: "the quiet life".


In addition, political institutions suffer from lack of transparency and credibility, and there is little social structure. 


There are significant imbalances and tensions in these three areas: the economic (market), the political-legal (State) and the social coexistence (civil society). We confine ourselves here to the economic sphere, which is not the most significant, although it sometimes seems to be so, and is not independent of political decisions and social attitudes, although these connections are often denied.


The European Union presupposes economic liberalisation. The frontiers of tariffs and subsidies to trade between the countries of the Union disappear. Common rules are established in the operation of the markets. Relations with third countries outside the European Union also have a common framework. Spain has adapted rapidly to this and has achieved significant economic growth that has meant an improvement in the standard of living of the entire population.


NUMEROUS NORMS AND OBSTACLES EXIST THAT SEGMENT THE MARKETS


The external opening up of the Spanish economy has led us to think that markets have become quite competitive. However, not only in Spain but also throughout Europe, there are still numerous rules, practices and obstacles that segment markets and shield them from competition. The Municipal and Regional Governments have their own margin to regulate, but above all, in implementing the general rules, which generate local monopolies or oligopolies.


It is difficult to grant licenses when the works are not going to be done with companies "friends" of the managers of the corresponding Administration. Competitive bidding is established This is restricted to companies of local or regional scope. Projects are fragmented to avoid exceeding the limit above which public tendering is required. The public sector itself, in designing the structure of infrastructures and services of a universal nature such as health and education, does so based on spurious interests that make them inefficient and make it difficult to coordinate with agents from other municipalities and regions.


The attempt at Catalonian independence does not respond as much to wanting more money ("Spain steals from us"), as to want to do with public money what Catalonian public institutions want, without the need be accountable for the higher instances of the Spanish State. 


The Catalonian nationalist bourgeoisie continues to miss protectionism.


There are numerous texts of the late nineteenth and early twentieth centuries that indicate that the origins of Catalonian bourgeoisie nationalist thought has roots deep in time. By the way, in some Basque texts of the time, there is already clear support for Catalonian protectionist-nationalist positions, which is not surprising.


A so-called "Left" has also justified nationalism, as if it were the solution to all evils.


From academia and trade unions, it has been argued that Catalonian independence was the only solution for the evils of the crisis, and that Accordingly, any progressive person should support it as a first step towards a policy change in the rest of Spain and Europe (http://www.sinpermiso.info/textos/razones-para-que-la-izquierda-apoye-la-independencia-de-catalua and http://www.sinpermiso.info/textos/de-nuevo-sobre- the-left-before-the-possible-secesin-de-catalua). Few of the academic, political or social community close to those who defended that position have countered those arguments. Only recently have voices appeared Accordingly (https://elpais.com/elpais/2017/11/07/opinion/1510069357_100353.html and https://elpais.com/elpais/2017/11/02/opinion/1509652112_797743.html). Most of the Left and the Catalonian intelligentsia in the first place, but also more generally, have actively or passively supported these kind of arguments.


WE BEAR SOME RESPONSIBILITY FOR NOT HAVING GENERATED ALTERNATIVES


As we have been saying, the crisis has weakened the middle classes. At this juncture, this is why the spokespersons of the independence movement have been proposing for some time that this is the moment to impose independence, now or never. On one hand, from supposedly left-wing arguments, the independence movement has been supported by part of the lower classes, added to which young are the unemployed or those in precarious employment. On the other hand, a significant part of the upper classes, whose staunchest core is a bourgeoisie long for protectionism and sees it as a solution to the problems they have also undergone, in the independence movement sees a lifeline.


Not even the "precarious" perceive that anyone has formulated a concrete alternative that improves their present situation and gives them a glimpse of the light at the end of the tunnel; nor does the Catalonian bourgeoisie see clearly that there are alternatives that clear away their problems and respond to their expectations. This is why, to some extent, we all have a responsibility, whether active or passive, in not having contributed, to the furthest extent of our capabilities and possibilities, to generate viable alternatives, which in most issues need to have a European scope.


The European construction requires national policies that eliminate obstacles to competition that go far beyond the simple liberalisation of foreign trade. 


We need to avoid practices that restrict competition at regional and local levels. These practices are sometimes shielded by ways of doing things or practices that are clearly illegal (corruption), but which are often not detected or reported. On other occasions, it is about paralegal actions and habitual practices accepted as good, but that conceal privileges and favours self-interests.


In the background lies a weakening of the national states that remain in a kind of no-man's land between supranational and infra-national institutions. The "more Europe" requires national states to strengthen European policies instead of curbing them for their passivity in response to practices that erode European cohesion at regional and local levels. Under the slogan of closeness and democracy, corrupt practices are concealed that favour only a few and end up harming everyone in the medium and long term. I have heard a Town Mayor justify their clan chieftain actions saying that what they are trying to do is to sustain local employment.


IT IS NOT ENOUGH FOR US TO BE DIVIDED INTO DIFFERENT PEOPLES


There is also an underlying culture which, as contradictory as it may seem (there is no culture if it does not have a social character), is individualistic. This means that each one of us is claiming more and more for ourselves (our family, our people, our community) at the same time as we feel progressively irresponsible in the construction of the "common good" (family, town, community, nation, Europe, and so on)..) to which we demand solutions. "What about me and mine", and you could answer "who are you asking". "This home and this country are a disaster". Have we not realized that we ourselves are part of the home and the country?

I turn to literature to close this reflection with ironic humour and poetic hope.


The eminent writer Joseph Roth, along with Stefan Zweig and Sandor Márai, among others, narrate the vicissitudes that are unleashed after the fall of the Austro-Hungarian Empire and who dreamed of a diverse but united Europe, in their novel "The bust of the emperor", has one of the characters say the following:

"Listen to what I am telling you, Solomon! It turns out that this disgusting Darwin who says that man is descended from the monkey was right. It is longer enough to divide men into peoples, no ! They want to belong to different nations. National... can you hear me, Solomon? Not even monkeys would think of such an idea. All in all, Darwin's theory still seems incomplete. Maybe it is the monkeys that are descended from the nationalists, because monkeys represent progress. You who know the Bible, Solomon, you will know that it is written in it that on the sixth day God created man, not national man. Is not that right, Solomon? "


And the Spanish writer Gloria Fuertes gave us this poem: "In the air, pure air does not like to caress flags. All flags smell of projectiles, of wounds. All the smell of young men's blood.


The pure air reluctantly waves them until with all the flags the countries become a gigantic multicoloured long rope, then the hurricane will become a soft breeze that caresses the only flag of a pleasant world ".


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