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Post How Madrid Destroyed Valencian Economy, TV
Created by John Eipper on 01/13/20 4:38 AM

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How Madrid Destroyed Valencian Economy, TV (Jordi Molins, Spain, 01/13/20 4:38 am)

Sir Paul Preston wrote on January 11th: "I don't recognise what Jordi Molins had to say about the Valencian economy being reduced to 'whores and waiters.' I would rather have suggested that the close relationship between the Partido Popular in Madrid and in Valencia helped corruption flourish on an eye-watering scale and left the Valencian region over-dependent on the construction industry."

The Madrid Deep State created, forty years ago, a strategy of concentration of economic power in Madrid. Valencia, a traditionally industrial region, received a bad deal: Madrid wanted, for political reasons, to cut the relationship between Valencia and Barcelona at all costs, resulting in the establishment of a toll highway between both cities (unlike in Madrid, with all kinds of free highways) and the lack of a proper train line, both for people and for trade between the Mediterranean ports and the French border.  (The reason was that, despite being positive for the Spanish economy as a whole, these infrastructures would not benefit Madrid, and instead, they would benefit Catalonia.)

Despite being Spanish nationalists, the Valencian leaders initially rebelled against such decisions, since they were going to hurt their local economy. However, Madrid promised those elites to allow them to build as much as they wanted (and with limited controls, resulting eventually in massive corruption), and a new highway with Madrid. A highway with Madrid is not what Valencia needed, but the offer to become rich through corruption enticed a big part of the Valencian elites, which did not say anything about the dismantling of the traditional Valencian industry sector.

A Bank of Spain report, page 4, chart 1:

https://www.bde.es/f/webbde/SES/Secciones/Publicaciones/InformesBoletinesRevistas/ArticulosAnaliticos/2017/T3/fich/beaa1703-art27.pdf

...shows that from 1980 to 2015, the Spanish regions that grew the most per capita were: Madrid, Catalonia, the Basque Country, Navarre, La Rioja and Aragón. What do these regions have in common? Apart from Madrid and Catalonia, all the other high-growing regions are in the "Ebro Valley" region. Or in other words, 1) close to Catalonia and 2) far away from Madrid. In fact, if one considers the slow-growing regions, one can see that they are mostly the ones geographically close to Madrid, or at least the most economically dependent ones on Madrid. Madrid is the Spanish region that has grown the most in the last decades, but this has been accomplished by siphoning off resources (mostly human capital) from nearby regions. Only less dependent regions, which are relatively far away from Madrid, like Catalonia or the "Ebro Valley" region, have been able to "survive the attack" from Madrid.

The remaining regions have been able to survive either with subsidies (Extremadura's GDP is about 30% consisting of direct subsidies) or with the low-level kind of economic activities that Madrid has allowed them to perform ("putas y camareros" for the touristic regions, mostly Valencia and Murcia, the Balearics a bit less due to their appeal for Northern European tourists).

On a related topic, Eugenio Battaglia asked: "Our friend Jordi Molins wrote that Valencians are forbidden from watching Catalan TV. A question: how is such a prohibition implemented?"

Valencia had, for a few years, their own regional TV channel, Canal 9. All the other TV channels were in Spanish, so one could have expected Canal 9 would use mostly Valencian. Instead, Canal 9's main language was Spanish, but sometimes they were using Valencian. So the Valencian people had the possibility of listening to Valencian on TV.

However, after the financial crisis, regional budgets were tightened, and the Valencian regional government decided to shut down Canal 9 completely. This even reduced the Valencian language TV usage to 0%. The Catalan regional TV made an offer to the Valencian government to broadcast the Catalan regional TV in Valencia. But the Valencian government rejected the offer. Due to the diabolic structure of the Digital Terrestrial Television, there was no possibility for any other channel to offer media in Valencian. So for years, the Valencian people could not hear a single word of Valencian on TV. The Valencian government acted forcefully to avoid any change to this situation.

So, the point is not so much there was a explicit prohibition against Valencians watching Catalan TV, but that the Valencian government used all its power to avoid having a channel broadcasting in Valencian or Catalan for the Valencian people.

Recently, a new Valencian TV network has appeared, À Punt. However, the damage to the Valencian language of so many years of Spanish nationalism is going to be difficult to reverse. In fact, Valencian has already disappeared as a language in several large Valencian cities.

JE comments:  Jordi, couldn't an argument be made that Madrid is trying, however imperfectly, to even out the wealth throughout the nation?  As you state above, the wealthier regions of the North and Northeast have "survived the attack" and are prospering anyway.  How do you define a central government's role when it comes to income redistribution?


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  • Spain's Income Redistribution is Largely Regressive (Jordi Molins, Spain 01/15/20 3:32 AM)
    John Eipper asked: "Couldn't an argument be made that Madrid is trying, however imperfectly, to even out the wealth throughout the nation? (...) How do you define a central government's role when it comes to income redistribution? "

    The Spanish fiscal regime is not intended for income redistribution, from rich to poor. As it can be seen from the Figure 2 below...


    https://voxeu.org/article/income-redistribution-through-taxes-and-transfers


    ...only about 10% of total fiscal transfers go to the bottom 20% quintile of less-affluent Spaniards. In other words: the Spanish income redistribution system is actually regressive towards the less affluent Spaniards.


    But affluent Spaniards pay a relatively high proportion of taxes, so the reason for such a regressive system (at least, for the less affluent Spaniards) is not a regressive tax system.


    The apparent contradiction above disappears when one realizes that a fiscal system is not only a tax system, but also a "payments" system.


    Any reasonable redistribution system should satisfy, at least, the following conditions:


    --The fiscal system should not penalize, for political reasons, any minority group.


    --In particular, the fiscal system should redistribute "from rich to poor," but it should prevent a (politically well-connected) minority group from becoming wealthier than a (politically not well-connected) minority group after transfers, when before the transfers the situation was the opposite.


    --The cost of living should be taken into account: transfers should depend on the cost of living of the recipient (otherwise, a civil servant will be over-paid in cheap regions, and will be under-paid in expensive regions)


    The Madrid Deep State devised, 40 years ago, a fiscal system that violated the previous conditions. For example, Catalans were seriously penalized (they paid the same taxes as all Spaniards, but they received much less investment than other Spaniards). Catalonia ranks high in GDP per capita before fiscal redistribution, but it ranks lower when GDP per capita is measured after fiscal redistribution. If one takes the cost of living into consideration (Catalonia is more expensive to live than other regions), the comparison is even more stark.


    So, how does the fiscal system works in Spain? Not, as described above, from wealthy to poor, but from wealthy (but not well politically connected) to middle-income (but well politically connected). Poor people (who are never well politically connected) get a really crappy deal, but since they are invisible to the mass media, they do not matter.


    As a consequence, this overall system is engineered to extract as many resources as possible from Catalonia. One negative side effect (for the status quo) is that Madrid also gets a bad deal: being a rich region, Madrid ends up paying lots of taxes. But this effect is modified ex-post by a myriad of constant investments in Madrid. Of course, these investments are absolutely absent in Catalonia.


    The summary is that Spain has a diabolical fiscal redistribution system, which benefits not those in need, but those well connected politically. The less affluent would probably be better off with a "please do not try to help me" approach.


    JE comments: Remember Ronald Reagan's nine scary words, "I'm from the government and I'm here to help"? This always rings true, until there's no other option than to seek help from the government. Jordi, what regions do you have in mind when you speak of the middle-income groups that are politically influential?


    According to the charts linked above, New Zealand and Australia are the world's most "redistributive" economies, followed closely by the usual Scandinavian nations, Netherlands, and Great Britain.  Spain is almost dead last among the listed countries, topped (bottomed?) only by Portugal.

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  • Does Madrid Victimize Catalonia, Valencia? No (José Ignacio Soler, Venezuela 01/15/20 4:38 AM)

    It is difficult to remain indifferent to Jordi Molins's posts about Spain's alleged victimization of Catalonia.



    On January 13th, Jordi wrote of Madrid's supposed conspiracy to ruin regions of Spain, such as Valencia, and of course Catalonia and others. He also mentioned that the "putas y camareros" situation in Valencia is fundamentally a result of this conspiracy. Finally, Jordi claimed that the "Països Catalans" vision for a Greater Catalonia has never been a political goal of the region's independentist movements, with the exception of the relatively small CUP.



    First, Jordi seems to use the expression of "putas y camareros" as result of a deliberate attempt from Madrid to destroy the Valencian economy. This is an absurd accusation. Jordi quotes Pérez Reverte, an extraordinary Spanish writer as well as a drastic and severe social and political critic, as the origin of his quote. Jordi does not add that the expression was a metaphor to express Pérez Reverte's bitter criticism of the economic crisis, with none of the specific significance that Jordi attaches to it.



    By the way, if this contemptuous expression should be applied as a result of the rise of the tourism economy in Valencia, it should also be remembered that Catalonia has more than double the tourist activity of any other region in Spain. This is particularly the case for Barcelona, and is strongly responsible for the city's economic prosperity.



    Second, Jordi also asserts that except for the CUP, no other Catalonian independentist party has ever made a claim for a Greater Catalonia. On the contrary, there have almost certainly been similar claims by the ERC (by the way CUP and ERC are leftist radical parties) and other Catalonian social and cultural associations during the Franco regime and after 1978. More recently if I remember correctly, German Gordó, a high-ranking former member of the Catalonian government around 2015, also declared that "the construction of a Catalan state should also include all the Catalonian nations," meaning of course Valencia, the Balearics, etc.. But the truth is that there has never been historically such a thing as a political unit of the so-called Catalonian countries.



    Finally, I will not comment further on Jordi's speculations about Madrid's conspiracies to economically harm other regions of Spain. I see his claims as further evidence of a victimization argument to justify a political ideology.


    JE comments:  For the last two weeks I've been immersed in Sir Paul Preston's massive history of modern Spain:  Un pueblo traicionado.  One of the recurring themes indeed has been Madrid's constant suspicion of Catalonia, which has had both a political and a sociocultural aspect.  For starters, anarchist activism and violence was historically centered in Catalonia.  Madrid's reactions were often severe, and included more than union-busting and political crackdowns:  at one point in the early 20th century, the bilingual street signs in Barcelona were replaced by Castilian-only.


    I remain agnostic on the Catalonia independence question, but I do see some merit in Jordi Molins's victimization arguments.


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    • Are Catalonia's Victimization Claims Legitimate? (José Ignacio Soler, Venezuela 01/17/20 2:57 AM)

      John E commented on my last post (January 15th), "I remain agnostic on the Catalonia independence question, but I do see some merit in Jordi Molins's victimization arguments."


      I must say that I am in agreement with John.


      Of course Catalonia can legitimately claim to having been victimized, as much as any other place or institution that ever was exposed to Franco's repressive regime. The question is that Catalonian independentists have used victimization arguments repeatedly after Franco's death, during the current democratic period, in order to support their independentist aspirations. This is not only unfair but false and an ideological manipulation to disguise what I suspect to be the real rationale, supremacist racism and xenophobia.


      For instance, consider the supposed economic ripoff from Madrid (the "Spain steals from us" mantra) they have been using over and over again, an issue which I have questioned in the past with rigorous arguments and figures.


      Let's take for example Jordi's most recent WAIS post about inequality and income redistribution in Spain (by the way, the article quoted by him is very interesting and illustrative). His criticism seems to be based on the indisputable tax system premise that wealthy people should pay higher taxes for a better and more effective redistribution among the less privileged population, in order to reduce the inequality of income.


      That's a fine ideal, which everybody must agree with. However I wonder why Jordi and the independentists are so outraged when they claim that as a richer region Catalonia is paying more taxes to the central government (or Madrid as they will call it) that supposedly are to favor less privileged regions in Spain, but they receive back much less. Jordi claimed that "Catalans were seriously penalized... they paid the same taxes as all Spaniards, but they received much less investment than other Spaniards." Is this not a victimization argument?


      JE comments:  I still believe that Catalonia can claim "extra" victimization from Madrid, certainly prior to 1975.  The reasons might be as simple as the region's separatist sentiment--although the independentists/Republicans would argue the other way around (namely, that the separatist sentiment arose from Madrid's actions).


      We talk about Spain a lot on WAIS, but I don't think anyone raised this question:  is there any other nation where the historically "second" city speaks a different language, and is also more of an economic engine?  Canada might fit the description, but Montreal is not as wealthy as Toronto.  And guess what?  There's a separatist movement in Quebec, too.  How about Beijing/Shanghai?

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