Reflections on the Spanish Crisis

Arruñada, Benito, “Pondering the Spanish Crisis,” Lecture delivered in the Course on “Reforms and Oportunities in Times of Crisis”, Oviedo Chamber of Commerce, La Granda, July 20, 2009.

Spain was in crisis well before 2008. The problems are longstanding ones and may well last for many decades more. That is why the gap that separates us, in terms of convergence, from the more developed European countries is becoming wider. Over recent years, Spain has just sat back and enjoyed the fun, basing its illusion of convergence with Europe on the sale of State-owned companies during an upward cycle, on European subsidies and on disproportionate borrowing. Spain is becoming more and more like Portugal and, at this rate, it would be no surprise if our economy was to become like that of Argentina. There too they thought they were well-off and we all know how they ended up.
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The only thing I can feel optimistic about is the quality of individuals, people who are competitive, are determined to stand out from the crowd and who do not have a parochial approach to life. Some excellent examples are Alonso, Gasol and Nadal. We can learn a lot from them. For example, that they have prospered in a competitive environment, one in which competition is based on clear, stable rules that everyone has to follow. Their human capital was also developed in competition. They were educated freely, without bureaucrats deciding which school they had to go to, nor obliging them to follow the dictates of an education law drawn up by politicians. They had supportive families and entered the worldwide market without the usual fears and complexes. It works exactly the same way with companies.