The tide goes out in Spain
In his entertaining lectures at Columbia Business School, the economist Bruce Greenwald likes to employ cite the line often used by Warren Buffett: When the tide goes out, you can see who is not wearing a bathing suit. This is the feeling I have in Spain. In year five of the financial crisis, I can see which of my relatives and friends had no swimming trunks. The slow downward slide is horrendous for the people living it. Over and over we see the bewilderment of those who worked hard and paid taxes. They don’t understand why they are seeing their first-rate healthcare system being undermined, pensions and salaries cut, and their education system — still not up to par — being squeezed further, while being told they have to bail out the banks because that is what Germany insists on. The downturn is persistent enough that the country’s largest bookseller, Casa de Libro, had a shelf dedicated exclusively to books about the “crisi” (see picture).
Spain under Francisco Franco was often referred to “la vida en blanco y negro,” or life without color, because it was so grim and gray. Franco’s departure showed the pent-up energy and creativity of the Spanish people. It was but a short time before the economic disparity between Spain and the rest of Europe — large even before Franco but a yawning gap in the years of his dictatorship — dwindled. Barcelona, for instance, became a global center for design.
In this harsh new world, many people are now irrelevant to the daily functioning of the economy. Architects, graphic designers, book jacket designers–-these kinds of professions now seem like a quaint memory. No one needs them, and the fear is that, if and when the economy recovers, many won’t be needed then. The few friends who have jobs live with the threat of layoffs and repeated pay cuts.
In this new environment only the fittest survive. I’ve noticed that people writing about Spain tend to bring in their cousins as evidence for whatever point they want to make. Well, two of my Madrid cousins didn’t go to college. They wound up in Amsterdam. One washed dishes in a hotel and the other sang on the street for change. Their mom was kicked out of a rent-controlled apartment in Madrid and now lives with a passel of other unemployed relatives in an old family house in a tiny town outside Seville. No heating or air conditioning, no car, and it’s a 20-minute bus ride to go get groceries. They would love to offload this white elephant, but no one is buying. Another friend inherited her mom’s apartment and before the crisis had the bright idea of buying a few fixer-upper apartments. She would spruce them up and resell them once the neighborhoods gentrified. We warned her not to buy more than one or two, but who listens to friends? Besides, in the days of the real estate booms in Spain and Ireland and the U.S., who could lose money investing in real estate? The naysayers were losing out on the opportunity of a lifetime!
She put down deposits on three or four apartments. Five years and multiple lawsuits later my friend (in her sixties) has lost everything. The good news is that after looking for a year she found a poorly paying office job. “I don’t feel sorry for myself. I have food on the table every day, and that is more than many people in this country have now,” my friend said.
Where are the bright spots? Her daughter studied in Brussels and Germany and speaks multiple languages and now works for an international company. My friend Borja has set up a little business that writes memoirs for older people wanting their families to know about the past. If that isn’t a metaphor for Spain’s fate, then I don’t know what is. Happily, Borja reports that he has a regular stream of customers.
Of course, we can blame those who didn’t invest in their future, or who thought there was a free lunch in a real estate boom. Those who did the “right thing” and are managing can be smug — until they realize there are many others who did the seemingly right thing who are suffering. The hollowing out of Spanish society continues. Anyone who can leave is doing so, and so Spain is losing the educated people it needs the most and who would be the basis of its future prosperity — if and when it does recover. The existence of a few bright spots does not mean that Spain’s economy is functional.
In the past, life was full of vicissitudes. Farmers always had work to do, but droughts, collapsing prices, disease, floods could leave them destitute — no matter what they did or how hard they worked. Markets didn’t provide the insurance that would insulate them from these risks. As we moved from these primitive economies, the nature of risks changed. Now, it is individuals who face the prospect of no employment. Governments need to step in and provide the kind of social protection that people want and need. We can’t simply throw up our hands and say we accept a society in which the only people who get jobs are those with MBAs who speak five languages. When a few kids can’t get jobs, it’s not unreasonable to blame them: They didn’t study hard enough, they chose the wrong subject, they haven’t searched hard enough for a job. When half of a country’s young people are unemployed, it’s no longer their fault.
Let’s be clear. Spain’s economy is in terrible shape and the reckless and irresponsible path of austerity the government is pursuing — a kind of austerity that is especially hard on those who are down and out — is already leading to social and political tensions and constant strikes and demonstrations. After all these years, it is astonishing that the Partido Popular has not learned a thing.
PHOTOS: Anya Schiffrin; Demonstrators march towards the Spanish parliament during a protest against the government’s austerity measures for the 2013 budget in Madrid December 20, 2012. REUTERS/Susana Vera