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Back to Preguntas difíciles, ¿respuestas sencillas?

Isabel Rodríguez-Tejedo, Deputy Director of the Program in Economics, Leadership & Government, University of Navarra, Spain

Difficult questions, simple answers?

Tue, 13 Nov 2012 15:02:00 +0000 Published in Diari de Tarragona

If you don't mind, I would like to start by saving you some time: if you expect to find here an absolute answer that will put a issue to the question of economic viability, I encourage you not to read any further. I am not abstaining because I don't want to get involved, but out of respect for such a complex evaluation , full of nuances and subject to assumptions that are difficult to calibrate.

Although it may not seem so, numbers are tricky. With a little skill they can be made to say almost anything, and it doesn't even take malicious intent for the results to be highly dubious. Economists are very prone to deal with complexity by using "everything else constant", which is not bad per se, but it is dangerous when the politicians (and sometimes citizens) who read those numbers are not aware of all the constraints that have been part of the calculation.

Take, for example, the analyses that value the monetary benefit that would result from an independent Catalonia that did not contribute with its taxes to the financing of other territories. Even those who subtract the cost of the provision of social services now financed from outside, ignore that the cost would possibly be different if they were financed from Catalonia. I take this opportunity to put the same criticism to those programs of study who, from the other side, value the loss of income from activities and relations with the rest of Spain, dismissing the possibility of the creation of new ones.

Let us continue with the list of arguments. With independence, a new border would be created and (although we do not know for sure why) it is an empirical fact that the fact that there is a line painted on a map reduces the flow of trade below what we might suppose in principle. I am not talking about a possible boycott of Catalan products (which I assume would coexist with the boycott in Catalonia of those that would be imported from the new neighboring country), I am referring to a natural change, not born of animosity. How much, when, how... (keep on using adverbs, whichever ones you like), I do not know and I do not dare to assess it. Personally, I believe that the net effect would be negative, despite the fact that the starting point is a status union (which would probably mitigate the consequences, but we know that it does not eliminate them) and even expecting an increase in exports to other parts of the world.

A similar argument is that of the relocation of companies that would foreseeably follow independence. Although there is no solid basis for speaking of a "mass flight", it does not seem likely that the uncertainty that would be generated around the new nation would serve to attract new companies. Continuing with the effects on companies, the case of large financial companies, which have been obtaining an important part of their deposits from other parts of Spain and would probably suffer a significant withdrawal of funds, is particularly worrying. And not to leave the financial aspect, although now at the institutional level, it is worth considering what would happen to the independent government's ability to finance itself. While some believe that separation would generate rents, it is unlikely to offset the financing difficulties, especially as separation would likely reduce access to international funding markets.

Finally, if a Spanish exit were to entail (as it seems) an exit from the EU, the negative effect would be difficult to calculate, but I can venture negative consequences of the first order.

In conclusion, I personally believe that the balance does not tip in favor of separation. But above all I am left with an astonished amazement towards those who happily take a issue (I don't care if it is positive or negative) and raise it as the Truth (yes, with capital letters, because it goes from being an indication to dogma) to defend the thesis which, in any case, was the one that had convinced them from the beginning.