Post-bubble Spain (I): Deconstructing the “Spanish Miracle”

by Luis Vilacha Fernandez. Originally published on 2014/03/05

Spain never looked so much like its stereotypes as it does today in the post-bubble period. When the economic crisis blew up in 2008, no one in Spain would have expected that six years later Spaniards would have to leave the country as their grandparents did after the Spanish Civil War. That they would have to consider private healthcare, witness how a whole generation could be lost forever because of the discriminatory budget cuts in the educational system. All these measures are making it almost impossible for new students to access public universities.

The bubble will last forever, that was what politicians usually said years before September 2008. There was no other country in the world at that time with an equivalent number of on-going construction projects as Spain. The evidence suggests that there is a real connection between the intensive development of the Spanish economy and the model adopted by the Franco’s regime. As a result of the Civil War, the dictatorial regime at the time needed a radical economic and social change to create stability in the country.

The origins of the Spanish dependency in tourism as Harrision (1980) has argued lay in the so called “Spanish Miracle”, when the Spanish economy boomed for a short period between the 1960s and 1980s. Spain transformed itself from an unindustrialised country before the 1960s to a flourishing economy that could easily adapt to become part of the European Economic Community in only 20 years. This miracle originated from the Stabilization Programme, which made it possible for a high number of agricultural workers to migrate from the villages to the main cities at that time. As the “Spanish Miracle” occurred under Franco’s dictatorship and miracles do not last forever, most people in Spain agree that this is also the period when mistakes were made.

Six years ago no one would have imagined that this post-bubble situation would not last more than a couple of years, and the media contributed to that idea. Additionally, there is a major problem in Spain besides the fact that the financial system just exploded from one day to another. The problem was and still is, that there is no productive model based on industry, the internet or in any private sector, except for the tourist sector, which benefits from Spain’s most famous characteristic “the Sun”.

Everybody agrees that living in a country with good temperatures during the whole year is definitely what quality of live means. There are still a considerable number of people in Spain that defend ’’the Sun’’ as a gift from God because of the good weather. This pleasant weather makes Spain one of the top holiday destinations in the world with a considerable number of tourists every year. And it is true, there is nothing better for an economy than receiving thousands of people from all over the world just because the weather is good. Consequently, the Spanish economy is financially dependent on tourism.

Corruption as a political and economic system

Beyond the dependency of the Spanish economy on tourism, there are other issues that should be indicated as well. At the time, the rise of economic corruption appeared as a new problem for the Spanish economy, an issue that was born at the same time as the boom in construction projects, which again has a direct connection with one of Spain’s gifts, ‘’the Sun’’ and its dependency on it.

Some may argue that corruption is an endemic problem of any society in the world, and no one would question the certainty of this statement. However, when one looks deeply into the Spanish economy, one will easily find that there is no country in the world which has been spending such an amount of money without any official budgetary planning (Financial Post, 2012). As in China, also Spain now has ghost cities. In fact, there are ghost libraries, museums, industrial parks, airports, highways and so on. Politicians have built a megalomaniacal country for everyone who loves to enjoy ’’the Sun’’. Corruption, after this radical economic growth, was everywhere but people were not bothered too much about it because after generations of being poor, Spaniards could finally enjoy wealth and prosperity.

Likewise, if there were only some cases of corruption it would not be an institutionalized problem for 95% of Spaniards (El País, 2014). Therefore, when the whole country is involved in large scale corruption, including the two biggest political parties in the country, Partido Popular (PP), now in office and Partido Socialista Obrero Español (PSOE), the problem becomes significant. Moreover, last February 9th the King’s daughter, Cristina de Borbón, had to appear in court to be questioned about her husband’s business dealings after he had been accused of laundering money and tax fraud (BBC News, 2014). Consequently, it is clear that there has been a large scale of corruption scandals that has been going on for many years.

When the miracle that changed the country became a huge bubble during the 2000s and one day just exploded no one in the government neither in the opposition, the trade unions or the employer’s federations knew how to react to this tragedy. Austerity plans became increasingly popular in the media as the promised land of the new governmental policy-making and suddenly, Spaniards realized that their wealth was gone.

References

Abellán, Lucía (2014). 95 percent of Spaniards see corruption as institutionalized. El País, In English. Available from: http://elpais.com/elpais/2014/02/03/inenglish/1391426403_653818.html

Burridge, Tom (2014). Spain’s Princess Cristina in court over corruption case. BBC News Europe. Available from: http://www.bbc.co.uk/news/world-europe-26094035

Harrision, Joseph, Spanish Economic History: From the Restoration to the Franco Regime. The Economic History Review, New Series, Vol. 33, No.2, p.266. May, 1980.

Smith, Sharon., Callanan, Neil and Doyle Dara., Bloomberg News (2012). Spain real estate ‘madness’ continues despite burst housing bubble. Financial Post. Available from: http://business.financialpost.com/2012/05/02/spain-real-estate-madness-continues-despite-burst-housing-bubble/