As the Guardian reports this morning:
Spanish retail sales tumbled by 10.7% year-on-year last month — worse than the 7.8% decline recorded in November, and close to the all-time record fall of 11% recorded in September.
Of course Spain has massive problems; it has also had massive tax evasion and a completely absurd property boom. But these are falls in retail sales. Consumption is collapsing in the wake of tax rises and austerity cuts which in combination are destroying all prospect of any economic recovery and in the process are eliminating any chance that Spain can address its debt issues.
This is the realtiy of what George Osborne wants for the UK.
This is what neoliberalism and its small minded practitioners prescribe.
And it does not work. It just creates the destruction of value, and not just economic value at that, but the real value of human endeavour.
When can we put this madness behind us?
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Unfortunately neolibealism and its practitioners hold positions of influence that matter, to the extent that all pretence of democracy is rendered meaningless. Furthermore they are adopting increasingly draconian measures to maintain their hold on power.
“Completely absurd property boom”, this is what we are going into in the South East coupled with easily avoidable and derisory taxation of property. What happened in Spain has happened also in parts of the USA that we hear little about. When something like this goes bad you have chaos with all the consequences.
All property bubbles occur because land is not taxed sufficiently.
“Consumption is collapsing…”
Isn’t that a necessary condition of reaching a sustainable future? Isn’t the problem that our whole economy has been built on consumption? If people are cutting back on the basics for survival, that is clearly a bad thing. But if it means fewer mobile phone upgrades, people having 1 tv in their house instead of 3, cutting out the regular coffee each morning, is that a bad thing?
You have previously described the private sector as the froth on top of the capuccino.
Or to put it another way, what rate of consumption is sustainable in a finite world with a growing population?
Roger, agreed. Those of us who believe in a sustainable future celebrate this drop in rampant neoliberal consumptionism
I have no problem with reduced consumption
I do when the poorest go hungry
When it comes to saving the environment, no sacrifice is too great.
Stafeno, sacrificing the weakest while the middle and higher classes are on a rising scale of protection is another part of the neoliberal project, alongside dependency on continued expansion of consumption.
Either neoliberalism dies, and with it both of these and other issues, or it does not. I don’t believe there’ll be an option to pick and choose which parts of the social Darwinism (that “no sacrifice is too great” implies) that neoliberalism embodies should be retained. Why would the weak turkeys vote for Christmas?
All these consumption items which we’re told we have too much of (especially those skivers) are relatively cheap nowadays. It’s the necessities of life which are becoming unaffordable for many, especially a comfortable home (includes energy cost – even transport costs because homes near work places are unaffordable). But the affordability of food itself is also becoming an issue.
This is the sign of a truly disfunctional economic system.
It all rather depends whose consumption is dropping, and of what, doesn’t it? If, as Carol says, it’s the consumption of the basics required by ordinary people for a halfway decent existence, like food, transport and heating, it’s nothing to celebrate. Especially if it’s accompanied by the continuance of gigantic pay awards to the financial sector and the executive class so that societies become ever more unequal, and ever more unpleasant places to live in. Carol’s absolutely correct, our economy is truly dysfunctional. Mobile phones with the computing power of a supercomputer of a few decades ago are cheap (although I can’t be bothered with a 24 month contract at £35 a month myself), but house prices are so high in the UK we’re becoming a society of renters and rentiers, and the level of benefits and wages for the worst off so low we’re seeing a massive increase in food banks. Truly appalling.
What’s your take on the possibility of Spain leaving the Eurozone as the austerity, seems in part to be derived from the government (of whatever hue) merely having the appearance of being a satrap of the ECB?
Neoliberalism has nothing to do with Spain’s boom and bust. You could not be more wrong.
It was the Euro and political corruption.
The Spanish interest rate should have been 10-15% in the period of 2001-2006 to dampen the property boom but instead was the ECB Euro rate of 1-3%. Hence you had cheap money and a runaway property boom that ended in disaster. And you had the regional banks with politicians on the boards feathering their nests.
Not a neoliberal in sight.
Respectfully, the whole EU model is built on neoliberalism
You could not be more wrong
Sorry but you are incorrect. The EU’s economic structure was initially a mechanism to protect French agriculture via the CAP. It also imposes trade barriers to disfavour imports from outside the EU.
The only thing that is liberal is the single market. But the single market has absolutely nothing to do with the Spanish debt crisis. That was caused by the Euro (and exacerbated by the corrupt regional spanish banks and their deals with property developers).
Utter nonsense
It began with heavy industry
Get your facts right
High interest rates to tackle just one part of the economy is a stupid policy. Far better to increase ad valorem property taxes. Best of all, collect all land rent for public benefit (land value tax), then you would never have another property bubble.
Carol, keep up the good work!
Spain could sort out most of its problems if it left the euro, which is too strong against other currencies for Spain’s cost of labour. It really needs to devalue, but can’t.