Sunday, 27 January 2013

Plight unseen

Monzón is the sort of town that looks like there's a recession even when there isn't. It reminds me a little bit of Hartlepool, where I used to go and watch football when studying in Newcastle a dozen years ago, and I would arrive to find an absence of people, even on the main street outside the railway station. Perhaps, those being the boom years, they were all down the Marina, but it was eerie nonetheless.

Monzón is not quite so deserted, not on a working day anyway, but you notice that it isn't busy. Even in better times, I've noticed that it isn't busy, and not because the pace of life is slower. Last week I noticed that it wasn't busy, and not because the wind was cold, though the wind was cold all right - cold enough to serve as a metaphor, if we didn't have enough metaphors of foreboding already.

It is not busy because there are not many people about, the reason for this being that not many people are working. I was in a bar in Monzón when the television news announced the latest unemployment figures, which are as close to five million as makes scarcely any difference. Feburary's will surely reach that score. There was a map on the TV showing where unemployment was worst: in the south, and almost all the south, with a harsh red colour indicating a figure of above 30% for Andalusia, Extremadura, the Canaries, Castilla-La Mancha and maybe Murcia as well. It is probably 30% in Monzón too, I wouldn't be surprised to learn.

Anyway, after the unemployment figures there were a couple of brief clips from Davos, with Angela Merkel saying how austerity has to be stuck to, and Christine Lagarde saying God knows what. I didn't pay attention: listening to Lagarde is like listening to the Pope, the only difference being that Lagarde's pieties are in French and English rather than Latin and German.

I am sure I remember from my teenage years, reading The Loneliness of The Long-Distance Runner, specifically a passage in which, having bought their first television, the protagonist's family get bored with it and resort to turning the sound off and making fun of the silenced talking heads. (I'm also sure I remember that three million was considered such a scandalously high unemployment rate for a country with a larger population than Spain, the government had to repeatedly fiddle the figure to get it down.) Watching Lagarde and Merkel is a bit like that, without the element of fun. They might as well be lip-synching. Or speaking in tongues. Or reciting the Lord's Prayer.

It is as if the six million unemployed did not exist. You cannot see them, of course - they are at home, behind blinds and shutters and curtains. Six million of them. They can see Merkel and Lagarde, but Merkel and Lagarde cannot see them.

During Davos, the IMF took the trouble to advise George Osborne that his economic policy wasn't working and needed to be changed. A statement of the bleedin' obvious, but a welcome one nevetheless. But I wondered, looking at my empty coffee cup in Monzón and turning to the empty faces on the television, where the similar advice was for the Spanish government. If the UK is going in the wrong direction, where is Spain going? To correct one policy and leave the other unmentioned is like pointing out the holes in a roof on one side of the street while a house on the other side is swept away by floods.

So why? Why the UK and not Spain? One explanation is that the IMF, which is anything but an objective observer where it is actually involved, has a much greater stake in Spanish economic policy than in British, having openly encouraged and praised the labour market reforms which were central to the PP government's strategy. (If you can call it a strategy. There is no proper reason to be so kind.)

Lagarde went out of her way to call them "brave", which meant what it usually means in contemporary political political discourse, which is nasty, and against the interests as well as the wishes of the voters. Having publically and visibly lined up with the reforms, the IMF - for all its rowing back on multipliers which impresses economic correspondents - is not going easily to change direction.

Cándido Méndez said it plainly last week: "La reforma laboral es una máquina de destruir empleo". The labour reform is a machine for the destruction of jobs.. If it had done as much damage to share prices as it has done to employment, the financial markets, the Troika and all the economics correspondents in Europe and North America would have been screaming for it to stop. But all it has done is to put a million more people out of work - and behind curtains and shutters and blinds - in a country where there are no jobs. This being so, it is something which, Merkel says explicitly and Lagarde implictly, should continue.

The other explanation, and they are not at all mutually exclusive, is the cant about competitiveness. In the minds of Europe's elites, I think there is a strategy to change the relationship of Northern and Southern Europe back to what it was, before the Euro, when the EU was the EEC. Rather than becoming competitive, the plan for the Mediterranean countries is that they cease to be direct competitors with the North, but rather serve as sources of cheaper, but educated labour for it. They will be poorer places: their young people will, as in Ireland, be encouraged to emigrate. The economies they leave behind will be devoted to servicing the debts incurred during the boom and the subsequent crisis. They will become exporters of people.

This sounds more conspiratorial than it is, and more than I would like it to: but I am talking about a broad picture, not a narrow plan. A direction of travel, rather than a fixed itinerary. It would suit the leaders of the Northern European countries. Come to that, it would suit the leaders of the Southern European countries, who want nothing more than to say there is no alternative, and whose lives and families are not affected.

I don't really know to what extent such a strategy exists. It may even not exist at all, in which case the ship really is a rudderless one, and one without maps and sextant either. But what other reason can there be, for ignoring the disaster of six million unemployed? Other than that this is something that Europe's leaders want?

[Photo: Radio Huesca]

Sunday, 20 January 2013

Not saving, but drowning

We were lucky to get out of Pamplona. Already by Tuesday the ring road was impassable in two places and parts of the city were experiencing flooding - if it had carried on raining until Friday evening, when we packed up our books and came back through the pre-Pyrenean mountains, we might not have been able to get back at all.

Fortunately, the rain took Thursday off, and though it came back on Friday afternoon, presumably opting against making a puente of it, by that time the waters had receded. There was not, in truth, all that much human drama on account of the rain, but earlier in the week there was a last-minute rush to save the dogs trapped in an animal shelter. Local television and newspapers carried pictures of some very wet dogs being carried to safety.

There was a lot of weather on the news this past week, what with the rain, and the snow, and in many parts of northern Spain the snow foolwed by the rain. Or the other way around. The flurries of snow vied for prominence with the flurry of corruption stories which, while rarely absent from our screens at the moment, have been particularly hard to miss over the past few days.

In Spain, these cases come with names - Caso Faisán, for instance, or Caso Campeón, and my favourite of these is probably Caso Pokémon, a case revolving around political corruption in Galicia, something about which the Galician Mariano Rajoy is strangely reluctant to speak. The most important of them, however, is probably the Caso Gürtel, which involves political corruption in the Partido Popular primarily in Valencia, but also in Madrid, and by extension, since Madrid is the capital, throughout the ruling party.

This last week, thanks to El Mundo, it transpired that we are now apparently to have a Caso Bárcenas, Luis Bárcenas being the ex-treasurer of the Partido Popular, and a man who came under suspicion during the long investigation of Gürtel. He even resigned his post, although his party were decent enough to issue a statement in his support, assuring us of their total faith in his innocence.

Confidence in Sr. Bárcenas's innocence is not being expressed quite as enthusiastically in PP circles now as it was four years ago, or indeed as convincingly, seeing as the gentleman is being accused of passing envelopes of cash to senior party figures and of having had 22 million Euros in a Swiss bank account, money which is mysterious in origin and which, equally mysteriously, is alleged to have disappeared from that account when Bárcenas found himself under suspicion during Gürtel.

El País:
Bárcenas is implicated in the Gürtel kickbacks-for-contracts scandal, which first broke in 2008. Under an ongoing investigation into the corruption ring, it emerged earlier this week that Bárcenas had a bank account in Switzerland in which he had deposited as much as 22 million euros. He also took advantage of a tax amnesty in place last year to declare 10 million euros, which had previously been kept hidden from the tax authorities.
This last point is politically explosive, since it is being suggested that the amnesty was used, perhaps even devised, in order to allow Bárcenas to put himself and his activities beyond the reach of subsequent legal action. Be that as it may, the PP are currently trying to distance themselves from their former treasurer, which is not entirely convincing either, for reasons that El País points out:
sources said that despite stepping down as a senator and leaving the party in April 2010, Bárcenas has continued to appear in its Madrid headquarters, seeking help from PP officials to find a solution to the legal quagmire in which he finds himself. He was last seen in the building – located in Génova Street in the center of Madrid – as recently as Wednesday of this week.
The story broke on Thursday, since when, outside the building - and outside other PP buildings in other cities - there have been demonstrations.

Rajoy is not too keen to talk about this case, either. But although the PP-friendly evening news on RTE didn't run the story until nearly quarter of an hour into their Thursday bulletin (to be fair, the Algerian hostage crisis was on first, but even so) it's been hard to get away from. And who, other than PP members, would want to?

While I was enjoying the news, I stumbled across a discussion on the state 24-hour news channel, 24h. This discussion, which I enjoyed a little less, was illustrated with a clipping from the Washington Post, in English, which unfavourably compared the French economy with its counterparts in Italy and Spain, which had - I forget the exact phrase, probably because I was distracted by the need to shout at the telly - made greater efforts to improve their competitiveness.

In my less intellectually generous moments, which are many, I find it hard to see anything other than cant in invocations of competitiveness when the Mediterranean countries are discussed. I mean, Good God, since the present government embarked on its reforms to improve competitiveness, the ostensible reason for which is to reduce unemployment by reducing the costs of employing people, the unemployment figure in Spain has risen by about a million.

So how can this be an obvious example of a path that other countries should follow? But apparently it is, or at least it is if it can be used as a stick to belabour the French government, or the French in general, or the welfare state or trades unions wherever they may be.

Essentially, it is cant. Not because competitiveness is a meaningless concept, but because it is evident that what has been going on in the past four years has not been some policy-led effort to regain competitiveness, but a panic-driven effort to pay back as much debt as the markets (who incurred it) may demand by taking as much off ordinary people as they can be induced, or forced, to surrender.

That has been the process. To talk about competitiveness, in that context, is a bit like burning a building down for the insurance and complaining that it should be better built. It is madness. But those whom the gods wish to be destroyers, they first make mad.

At very least, it is unreal to speak of an economy regaining competitiveness, or even taking steps to do so, while unemployment and homelessness and poverty are continuing to increase everywhere. Unreal. But these are unreal times. Money distributed in envelopes. millions going in and out of Swiss accounts. Economics discussed as if we were going in the right direction instead of living through an absolute disaster. Either they cannot see, or they are not looking.

We got safely home from the floods in Pamplona. Not everybody did. Not all the dogs were rescued, when the waters came. Two of the smallest dogs were found dead. Others were missing, believed drowned. But nobody seemed to know how many.

[PP statement: Huffington Post]

Sunday, 13 January 2013

Digging in

Now however, the circumstances have changed, the drowsy years have ended. Being a Socialist no longer means kicking theoretically against a system which in practice you are fairly well satisfied with. This time our predicament is real. It is "the Philistines be upon thee, Samson". We have got to make our words take physical shape, or perish.
I spent the last few afternoons in the garden, the huerto, a small plot in the village that R bought when she bought the house. I don't know exactly how large it is, in so far as one can say "exactly" for a ragged piece of land, sat atop a large and irregular chunk of rock below what used to be the village prison.

Why the village ever had a prison, I am far from sure, even though it used to be a much larger village than it is, perhaps two hundred inhabitants at its peak, compared to barely more than a dozen today. But it did, and the crumbling half-walls that remain form part of a pattern of gradual but massive depopulation that has affected pretty much all of rural Aragón and Navarra. Depopulation, leaving behind shrunken villages inhabited largely by the elderly. The normal pattern, when there is poverty and all the work is elsewhere.

I don't know. 150 square metres, maybe: there would be more if we didn't have the winter's firewood stashed along one side. But most of the rest is usable, open to cultivation, and that 150 square metres is what I have been digging, raking and purging in the last week before we go back to work.

What will we do if (or when) we lose our work? Everybody seems to be asking themselves that question - everybody, that is, who has not already lost their job. Everyone is fearful and everyone is insecure. Our mortgage, at least, is paid off, but we cannot indefinitely live by selling books to schools with shrinking budgets and customers with shrinking wages. Where, that is, they still have jobs at all.

What would we do instead? Hard enough for Spaniards to answer that question, when there are no regular jobs to be found. Perhaps no easier for two ingleses in their forties who aren't going to get those regular jobs even if they existed.

Manuel Castells spoke to Paul Mason last year and said some things that made me think. Or rather, it wasn't so much the things he said that made me think, it was that there was no option but to think about them, because the crunch is coming. For Spain, for much of Europe, and for two little people whose problems don't add up to a hill of beans in the face of such a crisis.

What we are not going to see is the economic collapse per se because societies cannot work in a social vacuum. If the economic institutions don't work, if the financial institutions don't work, the power relations that exist in society change the financial system in ways favoured to the financial system and it doesn't collapse. People collapse, not the financial system.

"The notion is the banks are going to be alright, we are not going to be alright. So there is a cultural change. A big one. Total distrust in the institutions of finance and politics.

Some people start already living differently as they can - some because they want alternative ways of life, others because they don't have any other choice.

What I refer to is about the observation of one of my latest studies on people who have decided not to wait for the revolution - to start living differently - meaning the expansion of what I call in a technical term 'non-capitalist practices'.

They are economic practices but they don't have a for-profit motivation - such as barter networks; such as social currencies; co-operatives; self-management; agricultural networks; helping each other simply in terms of wanting to be together; networks of providing services for free to others in the expectation that someone will also provide to you. All this exists and it's expanding throughout the world.
Maybe. But how does one get involved? I have thought about it. I have had to. My comparative advantage, where I am, is that I am English. What I have to offer is the English language. I can sell it, as conversation, where people have the money to pay for it. Where they do not, I can sell it for services, or time, or food. I come round for English conversation - in return you make me lunch. I help you with your English grammar - in return you help sort out my computer. I speak English with you for an hour - in return I bank an hour of your time for when I need it.

All this is fine in theory, though less convenient than cash, especially as your bills still need to be paid in cash rather than services. It's also more convenient if you live in the city, where there are many more people who you can engage in alternative exchange, where they can be reached without the costs in cash and time of a trip by car.

What can be done living in the countryside? Castells speaks of "agricultural networks" but a vegetable garden one-fifth the size of a penalty area is not going to produce a surplus. But it will produce a lot of vegetables. More, if we are at home, rather than working, as we now do, on the road more than half the year, and hence we have time to cultivate it properly.

That is what happened during the great Russian economic catastrophe of the Nineties, though it went unnoticed by foreign correspondents who were only interested in branches of McDonald's opening in Moscow. Back went people, unemployed as they were, or unpaid even when they were not unemployed. Back they went to their villages and their vegetable plots.

The circumstances have changed, the drowsy years are ended. Back people go. From the whims of the financial markets to the whims of soil, seed and weather. Back they go. Maybe the "physical shape" our words will have to take is the shape of carrots, leeks, potatoes. Maybe we will have to get used to digging. Maybe many people will.

Monday, 7 January 2013

Evasive answer

The Spanish financial year runs, logically enough, from January to December, and from the end of December we have a month to make sure our records are in order before presenting our end-of-year accounts to the gestora. The gestora has an office in Huesca rather more civilised than that belonging to the Loughborough accountants for whom I temped for six weeks a dozen years ago, in which four or five trainee or junior accountants worked in one small room while the partners worked in spacious offices down the corridor. It was towards the end of the year and for Xmas almost every client presented the partners with a bottle of whisky as a token of appreciation. It's the sort of perk I don't remember receiving when I worked in the public sector.

Talking of accounting, false accounting is among the offences for which Rodrigo Rato is currently under investigation, which didn't stop Telefónica appointing him a consultant this last week. Which indicates either total confidence in his innocence on the part of Telefónica, or their disinterest in the truth or otherwise of the allegations and disrespect for the judicial process which is taking place.

Meanwhile, the bank which he headed is laying off thousand of employees and cutting the pay, gigantically, of those who remain. Few of the victims of this process are expecting to be offered new jobs with Telefónica. And while that is happening inside branches, outside them, the small savers who will not get their savings back are holding demonstrations.

We put a lot of effort into getting our accounts right, which is not true of every business in Spain that, like ours, makes a large proportion of its sales in cash without having to issue receipts. Knowing this, when we went to buy olive oil the other day, and paid in cash, I found myself wondering, as we left, about the tax declaration of the vendors, and then immediately wondering whether any of our customers have the same thought about us. It would be only natural.

According to research reported in the Financial Times in 2011, the black economy in Spain is about one-fifth the size of the official economy - about twice as high, if I follow the paper, as the figure in Germany. That's a difference, but it's not the difference between good and evil, between a healthy society and a sick one. There is more corruption, and more tax evasion, in Spain than in Germany or the UK, but Spain is not properly described as "corrupt". It is not an all-pervasive element in everyday life. We do not pay bribes to doctors for treatment, nor to traffic policement for non-existent offences, nor to public servants to have our documentation processed.

At the same time, it is a sizeable difference and an unhappy one from the point of view of Spain. Nor could it exist on the scale that it does if it were not tolerated unofficially, by the public, and officially, by the political and business classes: or if it were not something that had deep and long-lived roots in Spanish life. Political corruption in any country reflects something about the society in which it takes place. The UK, for instance, had an expenses scandal, where MPs of all parties were caught fiddling their expenses claims, "flipping" their first and second homes, claiming for things they should not - and this reflects a wider culture of fiddling among the public, where, for instance, insurance claims are fiddled, where VAT declarations are fiddled.

Not by everybody. Not even by most people, nor, I think, normally with the active collusion of others. The bottles of whisky were not a quid pro quo for turning a blind eye. But by enough people, with enough toleration from other people so that if you do it, you know other people won't blab. You can probably talk about it, not too openly, and other people won't blab.

That culture produces politicans who fiddle their parliamentary expenses. Not all of them. Not even most of them. But enough - trivial though it seems from here, when one is accustomed to the Partido Popular of Valencia or Galicia. Or the Balearics. Or everywhere else.

Spain has a higher level of political and business corruption than the UK - and a larger black economy, and each of these is a reflection of the other. But what to do? It is easy, and not entirely wrong, to condemn Spaniards for being complicit in the culture of tax evasion, just as it is easy, and not entirely wrong, to condemn Greeks for being complict in a culture of bankhanders.

But the worst possible time to do either is during a gigantic recession! How does one persuade people that they shouldn't be working cash-in-hand, if that is the only work they can get? If that is the only way they see, to save their house? How do you persuade people that they should always get a receipt, if not getting a receipt may mean saving VAT that is levied at an intolerably high level? A level that they can't afford to pay? In Greece:
Economics professor Theodore Pelagides says rampant tax evasion is a case in point. With VAT at 23%, thanks to policies mandated by Greece's creditors at the EU and International Monetary Fund, withholding of official receipts has assumed proportions that even by the standards of pre-crisis Greece have become chronic.

"People have been pushed to their limits. They have calculated in a very rational way that avoidance of such receipts is a necessity at a time when they have been hit by so many wage cuts and unexpected taxes," Pelagides said. "We should not be at all surprised by the report's findings."
Well obviously! The more poverty the make, the more cash-in-hand you generate. Doesn't everybody know this? Didn't the IMF?

Since this is a time for IMF mea culpas - an unheard of occurrence, so unheard of that one almost fears that it's a portent of apocalyptic times to come - one wonders whether they may also apologise for racking up VAT to the more-than-self-defeating point where nobody will pay it. (It's funny how there is a Laffer Curve, to be invoked against rich people's taxes, but no such concept seems to exist for taxes paid by ordinary people.) But 23%? Not so very far above the upper rate of IVA, the Spanish term for VAT.

This stands at 21%, raised to that level by a government which had promised not to increase it, the sort of thing that tends to upset electorates more than it does economics correspondents. (It is not the only rate. On the books that we sell, a much lower rate of 4% still obtains.) The more austerity impoverishes Spaniards, the fewer of them are going to ask for an invoice, a factura. Not when they can save themselves 21% without one. And every time that happens, the black economy is bigger, and the country is one step further from addressing a problem rather greater than anything that might be remedied by the imprescindible labour market reform.

Of course one could and should go further, and say that it will be harder still if the country splits apart. Impossible, if society disintegrates. And probably unrealistic in any event if the crisis continues, as it will, and if further austerity is insisted on - as it will be - from outside the country, from Brussels and London and Berlin. Of course there will be a movement, a struggle, to change this culture, to insist that taxes are properly paid and to shame the people and institutions that evade them. But that struggle will be carried out by the people who are against austerity, the people who are demonstratingly daily (and it is, practically, daily) against austerity. The people through whom, with whom, the ECB and IMF will work, are the political representatives of the major tax evaders, just as, in Greece, they have worked through New Democracy and PASOK.

If Christine Lagarde had really cared about Greek tax evasion, rather than about using tax evasion as a reason to speak contemtuously about Greeks, it would have been central to the troika's demands for Greek reform. It wasn't: it was just a list, spoken about no more by the IMF than by the government which made sure to lose it. the purpose it served was and is political - the attribution of blame.

When the rescate happens, expect lots of fuss to be made about Spanish tax evasion. Ask, as most commentators will not, where this fuss was when the boom was happening, or when Spain was invited to join the single currency. That would have been a good time for the fuss to be made. That would have been a good time to deal with tax evasion, when there were carrots to be waved, rather than only sticks.

But nobody wanted to, back then. Spaniards didn't, for sure. But neither did the people who will point their fingers at Spaniards and call them "cheat". They should point their fingers at the mirror. They should point them at themselves.