Editor’s note: This article was first published in May 2013. The figures are from that month, including the shadow economy at about 19.2% of Spanish GDP, a self-employed contribution of just over 200 euros a month, unemployment benefit of 780 euros, and ministers Luis de Guindos and Cristóbal Montoro.
I have always considered Edurne Uriarte an intelligent person, but after reading the latest post on her blog, I no longer know what to think, because she has shown a tremendous lack of sensitivity and a great deal of demagoguery. Ms Uriarte points out that Spain has appeared in the ranking of the most corrupt countries in Europe, but this ranking does not refer to politicians or bankers. It refers to ordinary citizens, with Spain’s shadow economy supposedly standing at around 19.2% of GDP, equivalent to 201.3 billion euros that Spaniards hide from the taxman.
Ms Uriarte is outraged that the media do not report on civil corruption while they do report on political corruption. So let’s take this one step at a time.
1. Nobody knows how much money moves in the shadow economy
First and foremost, nobody can know how much money moves within the shadow economy. That is why it is called the shadow economy, in the same way that nobody can know how much money politicians have stolen and swindled. I am sure of one thing: the figures for supposed civil corruption will have been rounded up, while the figures for political corruption have been rounded down.
2. Let’s not compare fraud for survival with theft “because I can and because that’s who I am”
We need to be clear about what we mean by civil corruption or tax fraud. That is what we are here for: to explain it and to compare the kind of damage done to the country.
A civil fraudster might be the self-employed worker who does not even earn enough to pay the self-employed social security contribution. I know many people whose dream is to register as self-employed, but they are waiting until they get work that brings in at least 600 euros a month in profit, because the self-employed contribution costs a little over 200 euros. And whatever some people may think, a father cannot support a family on 600 euros, let alone on 400.
If a self-employed worker (who does not pay the contribution) does 400 euros’ worth of work a month, by the end of the year that person has moved 4,800 euros within the shadow economy. He is a terrible fraudster, because even with his fraud he will probably end up losing his home, since his business is not profitable even outside the law.
This person is in the shadow economy to survive, out of necessity, because he has no other source of income.
A real swindler and an out-and-out thief is the person who earns a salary of 5,000 euros a month plus 10,000 euros a month in allowances that we all pay for, and still takes a bribe to build a 900 million euro airport so he can pocket an illegal 5 million euro commission. That is a swindler, just like those politicians who win the lottery five times in a row. Their theft does incalculable damage to the population. As Alberto Vázquez put it:
“The bad thing about politicians is not what they steal, but that what they steal is a hundredth of the damage they have caused. It’s like smashing a 10,000 euro shop window to steal a 100 euro watch. In other words, for a politician to pocket a 50 million euro commission, a 1,000 million euro airport has been built where no plane will ever land.”
3. Other kinds of fraudsters
You will have heard that there are people who collect unemployment benefit while also doing a few odd jobs on the side. That, supposedly, is Spain’s great scourge, the real fraudsters. Let’s put ourselves in the shoes of some of them.
Imagine someone with a mortgage of 1,200 euros a month and two young children who loses their job and receives a benefit of 780 euros. Clearly they are short, and nobody worries about that person. If they do not want to lose their home, they will have to do something, because it is obvious the money does not stretch. And yes, that could be fraud, but once again it is fraud out of necessity.
On the other side we have a person who has spent four years in politics and already has a lifetime pension: a salary of around 6,000 euros a month, which they keep collecting even while sitting on the board of a listed company, earning between 75,000 and 120,000 euros a year on top of the lifetime salary that we all pay for.
4. The shadow economy grows when taxes go up
If we want to make a large part of the shadow economy disappear, one of the historically and economically proven ways is to lower taxes. The government itself knows this, as do Luis de Guindos and Montoro (the economy and finance ministers), but as we said yesterday, taxes cannot be lowered because someone has to pay for the damage politicians have done to our country. Tax rises are Viagra for the shadow economy. That has been proven. The country with the smallest shadow economy is Switzerland. There must be a reason.
That said, please, let’s not try to blame the victims of the economic crisis. I am not in favour of the shadow economy, but anyone who takes part in it (there will be exceptions) does so as their only way out. Politicians, on the other hand, do it out of greed and without any need. On one thing I have to agree with her: Spain is a country of crooks, but the grand masters are in politics, and the biggest tax evaders are our most important companies, those listed on the IBEX (at least most of them).
Featured image: Zarateman, CC0 1.0, via Wikimedia Commons.
