Saturday, December 21, 2002

Vice-President for Economics Rodrigo Rato announced that, unlike the last three years, the Administration will not manage to balance the budget this year, contrary to what had previously been announced. Rather, Spain will run a deficit of 0.2% of GDP. The budget is expected to be balanced in 2003 and 2004 and to run a surplus in 2005, as if they could predict something like that with any level of certainty. I'm not staying up nights worrying about a shortfall this small, though. Rato attributed the budget shortfall to excessive spending by regional governments and to the general economic slowdown.

It doesn't seem to me like Spain is suffering any too badly from any economic problems, though; running out of money is not a subject of anybody's conversation and people seem to be spending right and left. As I keep saying, the Spanish standard of living is very high, though Spaniards earn a lot less than Americans do even when you calculate purchasing-power parity. Their houses are smaller and not as fancy as Americans', but then many people have second houses, which Americans generally don't. They have one car, one computer, and one TV, while Americans might have several of each. They work a lot fewer hours, though, and enjoy a longer lifespan and guaranteed health care (it may not be real efficient but it is effective and you don't have to worry about how to pay your medical bills if you're Spanish; yes, I understand the national health care system has many faults, but from the standpoint of the average Joe, it also has plenty of advantages). They make a quite reasonable tradeoff, made possible by the fact that they're under the American military umbrella and thus don't have to pay for their own defense. They accept lower per-capita productivity and thus lower real incomes than the Americans, and in exchange they get security, a very decent though not high-luxury material standard, and more leisure time.

It sounds like a reasonable deal, and I'll point out that if Spain were suddenly forced to defend itself it could easily afford to quadruple its defense budget, raise it to Greek or Turkish levels, without causing too much pain. If I were them I'd spend the money primarily on the navy and air force, since we're practically an island. I'd have a crack division, 20,000 or so total soldiers, professional, highly trained and with high-tech gear comparable with that of the UK's best outfits, that could beat up big-time on the Moroccans or Algerians if they ever started trouble and drive back any attempted invasion, and I'd have another division, lightly armed though professionally trained, for peacekeeping missions. You could also throw these guys into the breach in case the Algerians try to grab the Balearics or whatever wild-eyed scheme some wacko just might think up.

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