Ritchie on Spain

Of course Spain has massive problems; it has also had massive tax evasion and a completely absurd property boom. But these are falls in retail sales. Consumption is collapsing in the wake of tax rises and austerity cuts which in combination are destroying all prospect of any economic recovery and in the process are eliminating any chance that Spain can address its debt issues.

This is the realtiy of what George Osborne wants for the UK.

This is what neoliberalism and its small minded practitioners prescribe.

And it does not work. It just creates the destruction of value, and not just economic value at that, but the real value of human endeavour.

When can we put this madness behind us?

Leave the Euro maybe?

For that is what is causing the disaster in Spain. It\’s not neoliberalism at all: it\’s the euro, which is a decidedly non-neoliberal project.

If you have your own currency, your own printing presses, then you can, in a corner like Spain is, deliberately inflate the money supply (from QE to helicopter drops of cash, as Friedman himself pointed out) and thus you don\’t have to go through this hard austerity.

I don\’t claim that monetary theory will solve everything. But I do claim that it will solve monetary problems. And that\’s what Spain has at the moment: a plummeting money supply. It was Friedman himself who pointed out that this is what entirely fucked up the US in 1930. That they\’re doing it again in the name of \”Europe\” doesn\’t make it any less tragic: and nor does it make it neoliberalism.

This is, in fact, anti-neoloberalism. And yes, we\’ve been shouting for years that this would happen. And since it has started happening we\’ve been shouting that the solution is to break up the euro. Or if that can\’t be done then the ECB has to be doing that QE and helicopter drops.

I don\’t mind being blamed for the things that neoliberalism does do (like, increase in country inequality) but I do object to being blamed for what we warn against.

37 thoughts on “Ritchie on Spain”

  1. No good, Tim.

    You are clearly small-minded!

    Just to go for one element.The ‘absurd’ property bubble, for Mr. Murphy’s education, was caused by cheap money from the big staters trying to create an even bigger state in Europe (socialist not neo-liberal), politicians (admittedly of all hues) playing fast and loose with local, mutual savings banks (doncha just luv ’em Mr. Murphy, dem just so damn good. They destroyed us not the filthy captilaist running dog private banks) demonstrating their greed, ignorance and incompetence as they manipulated and destroyed the market, a socialist in the Bank of Spain who could have raised the level of deposit needed for property purchase but didn’t. A socialist President described by a senior member of his own party as ‘the most vacuous leader we have ever had by a long way’ who couldn’t see or refused to see the crisis even when the wave was crashing over him and who tried the old Keynesian stimulus (Plan E) which we couldn’t afford and which was about as useful as flushing 500€ notes down the bog.

    I can’t even begin to see where neo-liberal comes in. Corruption rife (all hues and at all levels too). Althought the vast amounts screwed out by the socialists in Andalucia (the famous EREs) will take some beating.

    Nah, I must be small-minded too.

  2. Oh and does anybody really believe that our world-recording beating youth unemployment figures (world champions again, not as good as football, but hell, still champions) has anything to do with neo-liberal free-market policies?

    Get out of here.

    We have over 100,000 new regulations on trade invented by our 17 regional parliaments.(apparently Rajoy is pushing a single licence to circumvent them).

    A minimum wage that many companies can’t afford for unskilled work.

    Downsizing is/was so expensive that it sends companies over the edge, either directly or over time as they hang on because they couldn’t afford the compensation.

    Nah. to hell with it I am just a small-minded ….whatever

  3. Must be that same sort of small mind of mine that doesn’t believe in sky fairies.

    I wish I had one of those bigish minds that can imagine a reality utterly distinct from this one and superimpose it over the top. Life would just be so much easier!

    I really am totally envious of bible bashers and pinkos! Not even crack and horse tranquilizers can get me to such a higher state of consciousness!

  4. bilbaoboy

    nah, you’ve lost your position on the leader board…..Greece now has higher unemployment than Spain.

  5. Dr M,
    “Not even crack and horse tranquilizers can get me to such a higher state of consciousness!”

    I’ll take your word that you’ve tried crack, but horse tranquillisers?

  6. Luke>

    Ketamine. One of the more popular recreational drugs around these days. Has the advantage of being approved for use by doctors, so we have a good idea of the side-effects. Has the disadvantage of tasting bloody disgusting.

    Amusingly, it’s a chiral molecule, but only one chirality causes hallucinations. The manufacturers deliberately separate the two isomers, using the hallucinogenic one for animals, and the other for humans, so if you want to enjoy the hallucinogenic effects you have to get the stuff intended for animals.

  7. Dave, thank you. Not sure if/how I will use this info, but great to climb above the name-calling to have some potentially useful information. And I will at least reflect the next time I am tempted to make remarks about UKIPPERS being illiberal misery guts.

  8. I’ve taken Special K, as we called it at the time. A very unmellow high indeed. You can’t beat mushrooms, trip wise. I’ve not tried crack – I believe it’s very moreish.

    Richie is clearly tripping 90% of the time. I suspect nutmeg.

  9. D’you think anyone should point out to Murphy, Spain is the Courageous State? In all it’s glory.

  10. Frances @ 4

    The thought crossed my mind. But a slight exaggeration when on a Mr Murphy rant is permitted (isn’t it?)

    Anyway we still play better football

  11. I suppose it escapes Ritchie that Spain’s economy was in the shit because of Zapatero, long before Rajoy took power.


  12. That piece from Ritchie is the five hundredth time I’ve seen a self appointed expert on Europe who clearly doesn’t understand the basic problem with the Eurozone. If I had half the grey matter surgically removed from my skull, would that reduce my IQ by enough to qualify me to write about Europe for some newspaper?

  13. You can’t have it both ways:it is anti -libertarian to have a plummeting money supply but an expanding cheap money Euro has destroyed Spain via amonster property bubble . A real conundrum n’est pas?*Good job we have the experts in control over here: they have the freedom to expand demand but have chosen to contract it.
    * Not for land taxers,it aint.

  14. Shinsei67 (#15)

    I have heard this from Murphy before – and can only conclude either:

    A;/ The definition of what constitutes a ‘Neoliberal’ is fluid and changes according to the needs of an argument – Even the man’s own definition in the Courageous State is open to differing interpretations.


    B:/ This means that in effect the entire world, perhaps barring the Korea DPR (for me, the ‘Courageous State’ in action) is under ‘Neoliberal’ rule. Strangely, I don’t know anyone from the political centre or right who would consider most aspects of the European project in the slightest degree ‘Liberal’, neo or otherwise but it goes to show you the inherent lunacy of the man and the ideas he, and his attack dog on these pages, seem to espouse.

  15. Arnald – Are you asking me to define something? What – the EU? Or NeoLiberalism?

    If the former, I’d say an extremely restrictive, Socialist form of near totalitarian government.

    In terms of NeoLiberalism, I’d say the onus is on you, as Murphy’s champion on these boards, to provide me with a definition – I’m assuming the link at #16 is a rationale you agree with, correct?

  16. Arnald (re: Your link at #16) It’s certainly an interesting piece. Not one I would normally have read anyway so I thank you for posting it. Couple of key points I doubt anyone working in Private business and exporting to the EU, or anyone familiar with the ‘Directory of Community Legislation in force (it may be called something else now – basically a guide to EU law)’ would argue that the single market has seen a ‘reduction in regulation’. The author appears to ignore the rise of a powerful bureaucratic class interested in maintaining its own power base.

    He’s operating from what appears to be an almost Marxist obsession with Capitalism, and thus his basic premise, is, for me, ultimately flawed as it’s based on an incorrect apprehension of the real world. I guess we’ll have to, as ever, agree to disagree on this one.

  17. Then Vanpy, you are quite mad.

    The rationale in that link is sound. No-one can claim to be able to define ‘neoliberalism’, not without contradictions, but the EU project was founded on economic beliefs that tie in closely with the modern varieties of definitions of neoliberalism.

    The EU is not socialist.

  18. No Vanps. You have an incorrect perception. You seem to forget the rise of a tiny proportion of businessmen that own enough of the market influence and enough of those bureaucrats in order to massage the policy and economy in their favour. That is the ultimate position of this neoliberal economic experiment.

    It was always a flawed premise.

  19. Arnald (re#22) So you admit that you can’t define what Neoliberalism is, and yet it runs the EU for its own benefit?

    Are you suggesting that the drive towards a Federalist superstate, obliterating any trace of local identity is in any way a Liberal policy? I’m assuming on that basis, you would dismiss the USSR as ‘not truly Socialist’ and in fact possibly even neoliberal itself?

  20. Arnald (re:#23) – Ok, so let me get this correct as this for me goes to the heart of the matter – you are saying that the rise of a number of large multinational corporations (a tiny proportion of businessmen in your formulation) has enabled a degree of market monopoly which has enabled them,via influencing the bureaucracy either through outright financial inducement or other, more subtle mean to manipulate the economy for their own ends?

    Even assuming for a moment you are correct, what is your solution? I am assuming I am to look to the Courageous State as the alternative, replacing what you perceive as the dictatorship of a few massive corporations with what, distilled rule by a privileged state bureaucracy?

  21. Arnald (re#27) – You’ve seen the blueprint for the Europe of Regions I’m assuming? It dates back arguably about 20 years – although I would imagine it has changed a little in the wake of the Accession of the 12 new members in the last decade.

    I would agree with your point at #28 that the homogenisation of brands, (for example) especially in Eastern Europe, has gone a long way to assisting in breaking down national identity but look at the hostility shown to nationalism within the European Parliament itself and the rise of (Frequently short-lived admittedly) various Nationalist parties even in relatively stable countries like Finland. You would say that is not in any way linked to the EU and its behaviour?

  22. Van Patten

    Those nationalists are not trying to protect ‘identity’, they’re trying to use that as an excuse to insert vile policy. If it is a symptom of free movements of labour and capital, then that’s broadly ‘neoliberal’, no?

    I haven’t seen France lose much identity. Nor anyone.

    It is the markets that are dehumanising.

  23. Arnald (re#30) I think it’s a combination of the two factors – I think it important that we recognize centrifugal forces from both sides of the equation. There’s a drive to standardize consumption and thus identity that emanates from Business certainly (The fewer brands, the cheaper the production cost), but there is also a powerful bureaucratic interest in removing national identity as well. I think failure to acknowledge even the existence of the latter is where we’re at cross purposes. That said, I have to dash off for a few hours but thanks for the debate – it’s been enjoyable and for these comment pages, fairly civil!

  24. To the extent that something can be described as neoliberal, the single market (within the market) is neoliberal. It is about reducing frictions and improving economic efficiency.

    Other parts of Europe are not neoliberal – notably the social chapter and CAP. Both are about imposing inefficient higher costs, but reflect elements of social democracy.

    The heart of the matter in the Eurocrisis (PIIGS) is the Euro.
    The Euro is not a purely neoliberal concept. It does have neoliberal aspects – the greater certainty of investing and transacting in a single currency helps efficiency and encourages activity in the short run, but has issues because it created internal imbalances that had hitherto been dealt with via forex movements. It was primarily a political decision imposed as part of the “ever closer union”. Monetary union is only possible if there is fiscal union, meaning big transfers.

    On one level the single currency, like the single markets in labour, capital and goods can be seen as advancing a neoliberal agenda, but it is far more about advancing a political agenda: Most neoliberals argued this about the currency – the costs outweigh the benefits. If the PIIGS left the Euro, this would not endanger the single market in capital, goods or labour. Indeed the actions of the Europhiles has been the antithesis of neoliberal doctrine, which would suggest that leaving the Euro and letting markets clear would be far more sensible. These are political decisions, and it is foolish to blame it on neoliberalism.

  25. “neo-liberal” is the term Ritchie uses to describe anything he doesn’t like, even the consequences of his own ideology. He’d call the gulags ‘neo-liberal.

    It has all the integrity of a seventeen year old Trot calling their parents ‘fascists’ because they won ‘tvlet him stay out all night.

  26. I agree with bilbaoboy. Spain’s main problem is not the euro or the lack of an autonomous central bank. It is that we have abysmal labor and business laws. Businesses go bankrupt before they are allowed to fire workers, and are therefore too scared to hire any. Millions of working-age people are excluded from jobs by high wages set by collective bargaining at the national level. Opening and managing a business is a bureaucratic and tax nightmare.

    When the economy was growing the system allowed for “only” 11% unemployment. In recessions the system becomes disastrous.

    And with people unemployed and potential entrepreneurs scared out of the system we can’t create the wealth to repay the public debt. I am no fan of the euro or the EU, but these two are the least of our problems.

    To this we have to add that half (which turned out to be the worse half) the Spanish banking system were the not-for-profit, politically-managed banks. They are now formally nationalized, which is not very encouraging either.

  27. From Spain,

    The underlying problem is the structural issues in the economy that make it uncompetitive relative to Germany. Prior to the Euro, the mechanism that dealt with that was the foreign exchange market – falling peseta vs. DM.

    The Euro exacerbated this problem by lowering borrowing costs and setting off an unsustainable bubble, whilst not resolving the underlying competitiveness problem.

    I think we can all agree it is not a neoliberal problem.

  28. “If anything it’s the homogenisation of consumption”

    Ever tried to buy a tin of baked beans on the continent?

  29. Ken, our structural issues make us unproductive (and unfree). Period. Whether other countries are more or less productive than we are is irrelevant.

    I don’t know what “neoliberal” means. What I know is that Spain’s problems stem from a deep anti-free-market ideology among Spanish voters.

    By the way, Spaniards are heavily anti-market when voting (some recent cosmetic changes in labor legislation being a consequence of international political pressure, not of popular choice), but when they emigrate to other countries, as they are doing now in large numbers, they choose destinations with more pro-market labor laws.

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