Editor’s note: This article was first published in August 2010, in the middle of Spain’s economic crisis. The housing bubble, bank aid and youth unemployment it describes reflect that moment.
In Spain‘s case, even a university student of business administration can offer a clear view of the measures a country like Spain should take to get out of the economic crisis. Below is a summary of a university project that sets out measures to solve the economic crisis.
1. Cut the number of central government ministries and regional government departments
While we’re at it, we could also reduce the number of unproductive civil servants, of whom there are many in Spain. In Spain, being a civil servant is a form of passive income: “you receive a stream of income without having to do anything to earn it.”
Good luck to the civil servant who passes the oposiciones (Spain’s competitive public-sector exams), but it’s bad news for a country whose taxpayers have to pay these salaries for an unproductive share of the workforce.
2. Raise taxes on the highest incomes, such as athletes and senior executives
In Spain, a leader in sport and in signing foreign athletes, a foreign athlete can easily earn 90 million euros tax-free. Even elite Spanish athletes move their accounts to foreign tax havens to evade paying taxes.
Senior executives have a more elaborate scheme, since they receive the right training and information to evade taxes. The upshot is that, in the end, the people who pay these people’s taxes are the middle class and the poor.
3. Cut taxes for low-profit small and medium-sized businesses and for the self-employed
We want to encourage entrepreneurship, yet when you look at the taxes a small business has to pay, rather than encouraging entrepreneurs, we “scare them off”. How can small businesses be made to pay more in taxes than they earn in profit?
4. Raise taxes on large companies with high profits
Even a 7-year-old knows this measure, but anyone aged 30 knows that a good way to avoid taxes is to invest that capital, along with the many formulas a large company has for getting tax deductions.
5. Increase support for entrepreneurs
Not only are new entrepreneurs not being helped in the right way; as we said in the previous point, we’re suffocating small business owners. A country’s economic salvation lies with its small entrepreneurs, and a government must never forget that.
6. Control illegal immigration and encourage the integration of legal immigrants
We’re number one at letting in the “worst” of every country, but we don’t help immigrants who simply want to work, and we don’t make it easy for them to integrate. As a result, the country bears higher public healthcare costs and receives no new Social Security contributions from immigrants who have to work illegally because their paperwork isn’t handled properly.
7. Abolish lifetime pensions for politicians once they leave office
We all know how much a politician earns, and it isn’t fair that, once out of office, they keep a lifetime pension that could feed 20 families. It would be like a singer living off a single album recorded 20 years ago. I believe that having been a politician or president is a good enough CV to have no trouble managing a company’s accounts, since they’ve managed a country’s.
8. Improve job training for young people
When the housing bubble began, many young people dropped out of school, lured by the chance to make money. Now that it’s over, those young people are unemployed and lack the training to get back into the job market, so we have the generation of young people least prepared for the world of work.
9. Require banks, to some extent, to lend so as not to hold back business development
The banks were the first to receive government aid, not to cover losses, since they had none, but to make up for lower profits. The idea was that they would receive money in order to grant loans and credit to businesses, but the truth is that to this day it isn’t being used for that, and the banks keep earning billions every quarter. In casinos and in a country’s economy alike, the house (the bank) always wins.
Further reading
- Welcome to Spain: I’m the tax office, and this is a robbery
- Differences between Hispanic and American entrepreneurs
- Why do new businesses fail?
Featured image: Javier Perez Montes, CC BY-SA 4.0, via Wikimedia Commons.
