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Alejandro Navas, Professor of Sociology, University of Navarra, Spain

Living beyond one's means

Thu, 30 Sep 2010 07:43:52 +0000 Published in Navarra Newspaper

Felipe González recently recounted one of his meetings with Helmut Kohl, which took place in the Canary Islands. The two were having dinner in a restaurant when Kohl noticed the presence of a German family at a neighboring table. He felt obliged to get up and greet them. He asked them if they were on vacation in the Canary Islands. -No, we live here. -Oh, yes? Do you work here?" the former chancellor asked solicitously. -No, no, we are unemployed. Once a month we fly to Germany (yes, on a charter flight) to report to the employment office, as required by law". Kohl returned embarrassed to his desk, while Felipe Gonzalez could not hide his mischievous glee.

In Germany there is a deep-rooted spa culture, and the public health system offered each citizen up to twenty-one days a year in such establishments subject, with position to the State budget, as long as there was the corresponding therapeutic indication. Obviously, it was very easy to obtain this medical certificate . Chancellor Kohl tried to cut this benefit from 21 to 18 days, but had to give up in the face of a popular uprising. He had no choice but to complain about the lack of solidarity of the Germans, who complained that they had a very high level of welfare.

When the Social Welfare State was being developed in Germany in the 1960s, the government calculated the necessary conditions for its sustainability: ensuring generational replacement, plenary session of the Executive Council employment and annual economic growth of 3%. What Western country today even remotely approaches these goals?

Tens of thousands of Germans live off the public purse because it does not "pay" them to work, and attempts by successive governments to force them to accept a employment have not borne much fruit so far. But at least they can claim that their predecessors made heroic efforts in the years after World War II - the famous "German miracle". One can understand those who have worked very hard for some time and are tempted to let their guard down and take a break, even at the risk of gentrification.

If we look at our own country, we see that there are hardly any laurels to rest on. We have also experienced B economic growth in recent decades, but it is now becoming clear that the foundations of that apparent prosperity were quite flimsy. The leave productivity of our Economics is not enough to pay the excessive indebtedness of the State -central administration, autonomous regions and city councils-, companies, financial institutions and households: the total accumulated debt is equivalent to almost four times the value of our GDP. Who can live on spending four times what they earn? We certainly have some world-class companies in strategic sectors, but they have often financed their expansion with too much credit - the famous "leverage" - and, in any case, they represent a small part of the national wealth. When speculative bubbles burst and we are forced to land, sometimes in a traumatic way, we understand more easily that we cannot live beyond our means.

The Executive, the unions and the employers are at loggerheads - how strange! - trying to fix Economics, even though they have been forced by the financial markets and the great powers: the candor with which Zapatero has recently revealed the content of Obama's famous phone call last May is astonishing. Like a bad student who has not done his homework and invents implausible excuses to avoid the teacher's punishment, Zapatero tried to make Obama see that our economic status was not as bad as it was said. But he did not swallow: "I have very good information and I know that Spain is bankrupt". The next day, Zapatero announced the measures that he had steadfastly refused to adopt during the previous months. Hopefully, for the good of the country, the social agents will be able to reach reasonable agreements. But we would do better not to expect too much from them: technicalities of the labor reform aside, the solution to the crisis lies in working more and better, something that should be within everyone's reach.