The Weight of Reality in Catalonia

By Benito Arruñada and Albert Satorra. Adapted translation of “El peso de la realidad en Cataluña” (El País, December 18, 2017, p. 13).

 

When emotion and reason collide, nothing better than our economic decisions for revealing where our real interests lie. In them, we ‘vote’ with our pockets, we don’t just have to tick a box as we do in surveys; we are neither deceiving ourselves nor are we just venting our feelings, as is fashionable in ballots. Therefore, a key to the vote in the Catalonian elections on 21 December is to identify why in just five weeks the attitude of all sorts of decision-makers changed so radically.

Up to September 2017, the Catalonian economy was doing well and inspiring confidence. Only the largest businesses were drawing up contingency plans to move out of Catalonia, but with no expectation of having to apply them. The pro-sovereignty politicians are said to have ignored the businessmen’s warnings but, in fact, not even the latter believed their fears were justified.

But, all of a sudden, capital started to disappear, headquarters were moved, consumption collapsed and, most serious of all, because it revealed expectations, investments were frozen. The facts are well known and, for Catalonians, the consequences were soon felt in their everyday lives.

So why did those who had faith in August flee in panic in October?

Part of the answer is obvious: the Catalonian Parlament enacted its “disconnection laws” on 6 and 7 September 2107, and unilaterally proclaimed independence (issuing a so-called UPI, or “unilateral proclamation of independence”) on 10 October. Although the proclamation did not take effect, it caused a drastic change in opinion among the economic agents. Judging by their conduct, all decision-makers, whatever their nationality, status or ideology, stopped considering that the conflict and insecurity associated with the call for independence was a remote risk and started seeing it as a likely one.

Also, those who were dreaming of a ‘low-cost’ independence, within the European Union and without serious tensions, suddenly faced the reality that just the probability of conflict was entailing huge costs in physical wellbeing and social peace. Far from increasing social cohesion, independence would likely cause serious conflict within Catalonia. And their behavior also pointed to this realization: even those who were still pro-independence took measures to put their savings and their businesses where they would be safe.

It seems that not even the separatists expected the Spanish State to wait until the last minute to stop the pro-independence procés (the Catalan word used to describe the whole series of movements towards independence since 2012). A former minister of the regional Catalan Government even joked, “Don’t worry. They’re bound to step in eventually”. For weeks, the government intervention that the rational self of many pro-sovereignty Catalans trusted in proved to be elusive. The Government reacted anachronistically on superficial matters, on its handling of the propaganda and the social media, but not on substantive matters. To the surprise of the pro-independence movement, its response was in line with the contradictions among Western public opinion.

Nor did the separatists expect their leaders to go so far. They underestimated how protected the separatist “clerisy” is, that is, the multitude of politicians, civil servants and hangers-on who live on, and for, the building of the Catalan nation. Sheltered by public budgets and wages, they are not so worried about sinking the economy, wellbeing and harmony. If things go well, they can achieve unlimited power and will be seen as heroes; if they go wrong, others will foot the bill, such as the 14,698 new unemployed in Catalonia in the month of October and the 7,400 in November 2017, the worst figures since 2008 and 2009, respectively. We do not know what the “feelings of identity” of such post-UPI unemployed workers are; but data from the Centre d’Estudis d’Opinió, a body controlled by the Catalan regional government, indicate that, on average, both unemployed and temporary workers feel much ‘less Catalan’ than those of us who enjoy steady jobs or work for public organizations.

If our diagnosis is correct, as long as the economic agents consider another procès possible, we should not expect confidence to be restored. After the regional elections of 21 December 2018, any economic decision-maker, Catalan or not, and of whatever ideology, will demand guarantees that the conflict will not arise again, and neither the politicians nor our institutions can offer them. But we voters can start to provide guarantees by burying both our ‘emotional’ and ‘strategic’ votes, and considering the reality of our interests.

On the one hand, the independence movement is fractured. It is still mulling over the failure of the procès as if it were yet another stage on a journey that, basically, it is enjoying and often fears will come to an end. For the time being, all its intellectual power is being applied not to reasoning but to producing excuses. It should start to worry. In fact, its workers are starting to realize that even their jobs would have been at risk in the reality (but not in their dream) of an independent Catalonia, isolated from the European Union and engulfed in a triple chaos – political, economic and social. But such jobs are also at risk if Spain stops growing. The fiscal deficit of Catalonia continues to increase and the now forgotten insult “Espanya ens roba” (Spain is stealing from us) might well turn against them.

And now, not only those who might lose their jobs but also the pro-independence bourgeoisie would do well by turning out to vote. And the latter should do so, once and for all, using their heads. After voting with their pockets, fleeing from insecurity, they now know their real interest does not lie in independence, or even in greater home rule. The increase in self-government over the last forty years has confirmed, yet again, the thesis of which we were recently reminded by Antón Costas, whereby Catalonia does best the less it governs itself. Perhaps because the strength of our personal relations prevents the institutions required by a modern society from functioning properly. This strength of personal ties becomes a handicap when we Catalans have no independent arbiters. Has governance improved or has corruption in our town councils decreased now that the role of their secretaries and comptrollers has been diluted? Just imagine what would happen if justice were controlled regionally.

Of course, Spanish justice today is imperfect: but we should remember that the foundational law of the independent Catalan Republic—the Law on Legal and Foundational Transitoriness of the Republic or Llei de transitorietat jurídica i fundacional de la República, promulgated with the UPI by the Catalan regional Parliament and declared void by the Spanish Constitutional Court—eradicated the separation of powers; and that its transitory vocation hardly satisfied anyone, apart from those who hoped to hold all the power.

Only a rational vote will prevent the scenario that is most likely at the time of writing (December 2017): that of a tie among forces, consecrating uncertainty and thus holding back investment and encouraging the flight of productive resources. In such a scenario, private economic activity would decrease and the weight of the public sector would grow. There are even those who expect the rest of Spain to pamper Catalonia with more resources. Note how they are already proposing that the debts of the Catalan regional government be pardoned, or that the departure of businesses be compensated by relocating official State bodies to Catalonia. Such pandering would only benefit the highest-ranking members of the Catalonian clerisy. In fact, something similar has already been happening with the resources of the Autonomous Communities Liquidity Fund (FLA, for Fondo de Liquidez Autonómica) used to transfer credit from national to regional governments, which are being used to keep afloat a Catalan regional government (the “Generalitat”) that favors cutback in health care rather than in the Catalonian TV3 channel or in its network of international “embassies”, both extensively used to promote the independence agenda.

On the one hand, by thinking with our pockets, we Catalonians would do well to understand that increasing the size of the public sector, whether headquartered in Madrid or Barcelona, is a mistake. With  luck, Catalonia would end up being like the Asturias of the 21st century, a region that decades of subsidies have condemned to emigration and insignificance. If there is no such luck, the costs would be much higher and more immediate. The crisis of recent weeks, rather than being just a warning, would only have been a taste of what may lie ahead.

On the other hand, by thinking less with our pockets and more about the country, we should remember that, according to CEO data, which have been stable for decades, more than half of us Catalonians feel as Catalan as we do Spanish. It would therefore be suicidal for Catalonia to ‘refloat’ the separatist clerisy that has done so much to divide us over recent years.

There’s still time to turn things around.

Benito Arruñada and Albert Satorra are, respectively, Professors of Business Organization and Statistics at Pompeu Fabra University in Barcelona

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