2005/05/29 - Jorge Valín - Libertad Digital

The State Doesn´t Add Up

A few weeks back, the business association CEOE declared the “the Spanish economy is suffering a serious competitiveness problem” due to “fiscal, labor and social burdens”. As a solution, the socialist administration is studying whether to lower the social costs imposed on indefinite contracts half a point. Come on. This tiny measure won’t do much against the 38% companies have to pay the government for the luxury of employing people.

Forecasts for European growth are not very promising. The Organization for European Cooperation and Development (OECD) recently cut 0.7 points off the euro zone´s expected growth for 2005 and 0.5 for 2006.

Spain’s competitiveness is following the same downward track. According to a study from the business school Instituto de Estudios Superiores de la Empresa (IESE), the nation’s competitiveness has tumbled 12.5% with respect to the rest of the euro-area over the past six years. A few weeks back, the business association CEOE declared the “the Spanish economy is suffering a serious competitiveness problem” due to “fiscal, labor and social burdens”. As a solution, the socialist administration is studying whether to lower the social costs imposed on indefinite contracts half a point. Come on. This tiny measure won’t do much against the 38% companies have to pay the government for the luxury of employing people. 

When what is at stake is expanding freedom, the government is always moderate and pragmatic to better conserve socialism. But when the issue is expanding social costs, the State is always radical. And this is the source of Europe’s decline: more privileges and money for bureaucrats and pressure groups (farmers, NGOs with their suspect “social goals”, unions, civil servants…) and everything paid for with money companies and workers came by honestly. No need to make donations, the State will happily take the money and donate it to itself.  

Spain’s and Europe’s real economic problem, without doubt, is the State. It is the only organization that, by law, can strip citizens of their money through force and threats. Such action is usually called robbery and extortion; but under the banner “welfare state”, and weasel words like “pragmatism” and “moderation” there hides an economic system based on aggression, the randomness of a handful of politicians, dirigisme and central planning. It should not surprise anyone “production” flees a country tied to such values.   

The solution to the problem of competitiveness and growth is to be found in the exact opposite. If dirigisme and state omnipotence leads to economic decay, the free market leads to prosperity and wealth:

-What sense does it make to have licenses? No one needs a license to be a good taxi driver. If you know how to drive, you can take someone from point A to point B, regardless of whether or not you have a license. 

-We do not need bureaucracy. If you want to open a hair salon in Aragón, for example, you will have to wait 180 to 200 days. Signing and accumulating papers will not make you any better at cutting hair.

-What have we achieved with all these taxes? That the State gets richer at our expense while Spaniards have trouble making ends meet. Eliminate them all.

-What have we achieved with the minimum wage? That young people have no jobs or endless temp contracts.

-Why force companies to pay the State? There is less money for the businessman making him less able to produce and create jobs. More than 20% of the Spanish economy operates under the table; and this is not some entrepreneurial quirk.

-Why keep up an obstructed and obsolete public medical system? The slogan “all treatments should be free” has only created a reality of “all treatments have a waiting list of at least a couple of years”. Despite the strong State monopoly on health care, private medical insurance is much more efficient.

-Why be compelled to contribute to public pensions if you won’t be able to collect anything? The State is not financing your pension, but that of some elderly person today. The State cannot guarantee your future.

In short, why maintain a useless organization (the State) that makes us poorer day after day? The State just does not add up.