Saturday, January 21, 2012

Rajoy's First Days

The new Spanish government has introduced a number of measures to attempt to address the financial crisis. Governments aren’t very good at creating employment, which is the major problem, nor at creating liquidity, especially when they can’t even print money. One of the things they can’t do is force people to spend money, offer, or take out loans- if people aren’t confident they won’t take the chance.

They have increased income taxes, not surprisingly, and closed a number of government agencies, which will have saved a certain amount. Autonomous governments around the country, and not just Popular Party ones, have almost stopped creating new posts for public employees, at least unsackable ones. No one seems to know what to do about VAT. Even the opposition, who reduced it at the start of the crisis, then raised it, then raised it again, aren’t sure what it is they think the government should be doing with it, but they’re pretty sure that, whatever the government does, they’ll find a way to show that it was wrong. Once they’ve finished with their own internal beauty contest, that is.

If you were expecting a more detailed explanation and critique of the measures, then I’m sorry to disappoint. The soap opera of politics has become terribly tedious and I know longer want to waste time getting to grips with the details of it all. If you want to know more there’s a big, wide Internet out there (not much of a sales pitch, I realise, but this blog isn’t in it for the money).

One thing I find a little odd is that the left in general (the Socialist party and the Unions), have accused the government of ‘trying to make the middle classes pay.’ Who do they expect to pay? The working class is doing less work than ever, there are nearly 5 million unemployed, another 4 million are public employees, any working class people left who are lucky enough to make a living are not going to solve the problems between them, and in any case socialists don’t usually talk about taking money from the workers. Therefore I assume they are trying to set the middle class against that nebulous entity, ‘the rich’. But the rich don’t have enough money to solve the problems either, unless you interpret ‘rich’ to include half the middle class and then tax them all into extinction. This is not good policy in the long term. So, the lately governing and now opposition Socialist party doesn’t know what to do. Well, we knew that already. The question is, does the Popular Party have any better ideas. I doubt it, somehow, but we shall wait and see.

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