THE
INDEPENDENCE OF CATALONIA:
by Xavier Sala-i-Martin, Columbia University and UPF
Translated
by Eva Guler
* THIS SCRIPT HAS BEEN PREPARED FOR A CONFERENCE AT THE OMMIUM CULTURAL *
Once upon a time, there was a country
with a 6 million population, with an area of 40,000 square kilometres.
The country had as next door neighbours two big European powers,
traditionally colonists, whose languages were a constant threat to the existence
of the local language. The
auto-governed population was being forced to speak and use two (or more)
languages. The capita growth of
this country was high, one of the highest of the world, a complete economic
success.
Is this science fiction or reality?
When we speak about the independence of
Catalonia, the first question that a non-economist individual would ask me
(being an economist myself) is “if Catalonia would be viable” to sustain
itself as an independent nation. If
Catalonia would not be viable as an independent economy, the description on the
first paragraph would be science fiction and therefore it would not exist.
But, the country that I have described is an actual fact and it is a
country that exists and it is independent: I am talking about Switzerland.
Switzerland has a 6 million population
and approximately 40,000 square kilometres.
Switzerland borders with Germany and France, two European powers,
traditionally colonists and the local language, the Swiss-German (which is
different to German) is being threatened by the French and German languages (and
Italian as well, which is spoken by a very small minority in the south of the
country). So, before we even begin
to talk, you can see that the arguments given against the viability of Catalonia
as an independent nation are basically erroneous: if Switzerland is viable (and
not only it is but it is also the second richest country of the world) why
wouldn’t Catalonia be, if also, our country is not up in a range of mountains,
has a sea port and it has an easier access to the rest of the world?
In this script, I will try to analyse
the arguments that the anti-independents use to demonstrate that Catalonia is
not viable as an independent country.
The most common argument is “Catalonia
is too small to be able to become an independent nation”.
The truth is that no serious economist can agree with this statement.
There is no economic theory that says that a country must be of a minimum size
to be viable or that bigger countries in size are more viable than small ones.
If this theory exists, it would be totally wrong because, in the world we live
in, the expenditure per capita or the economic growth figure of a country cannot
be related to the size of a country (measured, for example, by area and/or
population). It is simply false that larger countries are more economically
successful. If not, then why do we
find amongst the poorest countries of the world, such big countries like China,
India and Russia? And how come we
find, in among the richest countries of the world, countries like Belgium,
Holland and Switzerland?
Another argument against independence is
that “a country can not prosper without
natural resources like land, gas or petroleum, and Catalonia doesn’t have
any”. This theory is also
completely false. For example,
Japan or the “miraculous tigers” from East Asia (Hong Kong, Taiwan, South
Korea and Singapore) are not producers of petroleum or natural gas, and the
fertile land to which they have access to, is very limited, (actually, both Hong
Kong and Singapore are one city countries!).
Saying this, the economic growth accomplished by these countries during
the last decades has been spectacular. (1)
Even more, if we apply this argument to
our text, it is true that Catalonia, even though it has a great quantity of
fertile land, does not produce some of those natural resources… but neither
does Spain. So, independence would
not bring any loss in this instance.
Also, there are economic arguments that
lead you to conclude that to have natural resources can be a bad thing for the
long-term growth (the economists named this phenomenon “Dutch Decease”).
The argument can be summarised this way:
when a country has a lot of natural resources (for example, petroleum) it
dedicates a great quantity of resources to develop that particular sector and it
tends to forget other sectors. In
particular, it tends to forget the innovative and technological sectors, which
generate the technological changes that guarantee long-term growth.
So, these countries that are specialists in the production of petroleum
and other primary materials do not focus on educating the population or adopting
modern technologies and finish up by being poorer than they would have been
without petroleum. The typical examples of countries that have suffered from
this “Dutch Decease” are Mexico and especially Venezuela, countries that
have become poorer after discovering rich petroleum banks.
This is a very attractive argument and
we have shown examples, which support this theory. The truth is that is when we
analyse all the countries in the world at the same time (instead of just looking
at Mexico and Venezuela) we will realise that there is no relationship between
the wealth of having natural resources and economic growth (on the other side of
the argument we will find examples given that the most richest African countries
are South Africa and Botswana, two rich countries in natural resources,
specifically in gold and diamonds). So,
it is not true that to have natural resources would be good, but neither can be
said that it could be necessarily bad.
The usage of natural resources,
obviously, is a necessity if you want to gain economic growth. And, if one doesn’t have them, these can be obtained by
other methods. The most logical and
normal way of doing it is to do it by international trading, and not through
political submission. And even
more, to belong to a small country is favourable because it is an incentive to
the government and all economics agents to compete and improve because the
alternate protectionism is not an option. The problems that nowadays the Spanish
government face today over the very famous “artilleros” created during the
alienated Spain from the Franco era, a Catalonian state would have never have
had it. A Catalonian state,
logically, would be one that is open to trading with all the countries of the
world (including Spain).
A third argument against the economic
viability of Catalonia is this: “Isn’t
it enough to compete with Paris, London, New York or Hong Kong, that now you
also want to compete with Madrid”? This
statement is also totally wrong. Catalonian
businesses are already competing with the ones in Spain, we may or may not be
the same political unit. The
interstate competition is as big as the international one.
Who does the reader think the Costa Brava hotels compete with? They
compete with the Italian hotels, the Moroccan hotels and the Greek hotels, but
the biggest competition comes from Spanish hotels in the south of Spain (Costa
del Sol) and even from hotels from the coast of Tarragona (Costa Dorada) which
are in the same Catalonian state.
So, the independence of Catalonia, would
not bring a very substantial increase in competition to the one we already face.
And if, there was an increase, it would be very favourable, as an
economist and as a user, we should always applaud any new competition due to its
tendency to bring better quality and lower prices on products and services.
Continuing the same theme, another
argument against the independence is that “
to leave Spain would be suicidal because Spain is our biggest market for the
Catalonian businesses”. But
the question is: Why? Why would the Spanish people buy our own cava and spend
their summer holidays in the Costa Brava? Because
they love us like good compatriots that they are?
Or maybe because given the price and quality of our product, that is the
best they can do? Clearly the true
answer is this last one. So if independence does not affect the price and
quality we offer now, then the Catalonian markets would not lose.
It’s a fact that the biggest
international market is your neighbouring country.
The biggest market for Mexico is the United States of America.
The biggest market for Taiwan is China and the biggest market for France
is Germany. Does the reader think
that in reality that this then is a favourable argument for Mexico to be the 51st
state of the United States of America?
There are some people that claim “the
dissolution of countries at the present time, is
against the current trend in a time when Europe is nearing a one common
currency, a one fiscal system, a one military unit and a one political unit.
To speak about separatism and independence at the end of the 20th
century is old-fashion and it is out of tone”. I think that this quote is not acceptable for several
reasons. First, it is not true that
there is a trend at the end of the 20th century to create a great
super government like the European one. In fact, in 1946 there was 74 countries
in the world and in 1995 there was 192. So,
if there is a trend in the world it is not the reduction of the number of
countries but it is exactly the opposite, therefore the evidence in which this
is based is simply false. Secondly,
the theory is based on the presumption that one political and one economic unit
are beneficial (and, to go against
the current trend is bad). Personally,
I have enormous doubts about the wishful European project, based on the creation
of one bureaucratic superstructure that will end up sinking all European
economies. And thirdly, it is not
necessary to venture into economic cooperation with the rest of the European
countries from Spain. It can be perfectly done from Catalonia.
Finally, the most feared argument: “to
obtain the independence, we need a war and this would be more costly that any
other economic benefit that you could get out of it; can’t you see what
happened in Bosnia with the disintegration of the old Yugoslavia”?.
This is half true and half false. It’s
true that the independence is not wanted if the price we have to pay to obtain
it is a war. But what it is not
true is that the only way of obtaining independence would be trough war.
Historically there has been two ways about drawing borders: war and
monarchy marriages. This last one
has not fully disappeared yet, but monarchy marriage is not used together with a
political goal. The war, on the
contrary, is still being used. But we find ourselves in the 21st century and we
should need to have faith in freedom and a civilised democracy.
Plus, the history of the last 20th century can bring some
optimism in giving us many examples of countries like Slovakia, Estonia,
Leetonia, Lithuania and many more old soviet republics that have achieved the
independence in a very peaceful way.
Economic progress is gained by a
creative population willing to work, a legal system that guarantees investors
property rights, incentives to companies to innovate and to adopt new
technology. An educational system which helps the population to be more
productive and a good government who encourages internal and external trading
and never sinks a productive economy with excessive taxes, with a fair
bureaucracy and intolerable corruption and maintains a fiscal and monetary
stability. From this point of view,
the independence would not be a positive one if, a supposed government and
Catalonian institutions, would not demonstrate their capability to fulfil the
above points or if these could actually be worse than the ones from a Spanish
government. Today we do not know
how a Catalonian government would do it. What
we know for certain is that the way it has been done previously and how the
Spanish government is currently doing it. And
the truth is that the cards dealt are not in favour of the Spanish people.
Recent history shows us that the
independence of Catalonia is more and more viable every day.
Some recent studies show that the increase of international trading is
linked with economic viability of new countries.
The argument is that international trading is a good substitute to a
political union as an enlarging tool from the markets and as the international
markets keep growing, is less necessary to have a large country to be able to
sell the products in a way that when the international trading increases, so to
the independent tendencies. In an
article previously written at Harvard University, professors Alesina and Wacziar
have demonstrated that in the 20th century recent history these
tendencies are confirmed, which means that, not only the independence of
Catalonia is possible but is positively possible.
With what I have written, I have tried to leave aside the nationalism and patriotism to exclusively focus in the economic viability of a catalonian state. I am not saying that the independence would be a wish come true (this would be a different topic) (2) or that there are non-economic arguments that need to be looked up when we ask for it. What I am definitely saying is that there should not be any doubts about the independence being completely achievable from an economic point of view.
1. And this is true even when we take into account the financial crisis that some (not all) of them countries have been trough recently.
2. An important economic argument
that needs to be used when you weigh the costs and benefits of independence is
the fiscal deficit. The recent
study from “L’Institut d’Estudis Autonomics” estimate that the
catalonian fiscal deficit in respect to Spain during the 90’s has been of
approximately 900,000 millions of pesetas (even though the current tendency has
decreased, the amount continues to be spectacular).
What does this mean? Well,
the catalonians pay certain taxes to Madrid.
From these taxes, a quantity comes back to Catalonia for public expenses,
social benefits, etc. Another
quantity but, it stays in Madrid and never comes back.
This is the Catalonian fiscal deficit, and all these money adds up to,
during the 90’s, at around 900,000 millions of pesetas.
To understand how much 900,000 millions of pesetas mean, divide this
amount by a 6 million population and the total would be of 150,000 pesetas per
person. This means that a typical
catalonian family with 4 members (father, mother and 2 children) pay
every year 600,000 pesetas to Madrid that never comes back.
Can the readers please ask themselves what would they do with 600,000
pesetas extra every year? : Go to Disney World (the one in Florida, not the one
in Paris) all the family every summer? To buy a bigger house (600,000 pesetas
every year are 50,000 pesetas every month
that can be used to ask for a loan for a bigger and more luxurious property)? Or
to buy a car worth 1,2 millions of pesetas every two years? Or to buy a BMW every five years? A lot of things can be done
with 600,000 pesetas every year, can’t they? Well, forget it because this
money is not coming back to Catalonia… and this is a very important economic
cost.
The main benefit is this sham, they tell us, is the interregional solidarity.
But one thing is solidarity and the thing is that they steal your wallet
for your pocket.