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Skip to 0 minutes and 16 seconds The economic crisis has shaken the Catalan economy sharply, creating paradigm changes in the social fabric, and causing actions and reactions that have affected the current the welfare state. To learn more about the relationship between society and economy, and about what role government plays in it, we speak with Guillem López Casasnovas, one of the most experienced economists within the Catalan university landscape, former advisor to the Bank of Spain, and a member of the group of experts backed by the Spanish government to redesign the countries regional spending. Through his insights,we will try to find out more about the strengths of Catalonia’s Welfare State and about the most important challenges yet to be faced.

Skip to 1 minute and 3 seconds Which are the strengths and weaknesses of the Catalan economy? If I had to summarize the main asset of the Catalan economy, I would focus on social capital. It may sound a bit strange for an economist to talk about social capital; but in fact what we see in Catalonia is a relatively wealthy country, it has around 15% above average for capita income with regard to the European Union, we have a very open economy. This is not something new because even with the middle age, with all the trade from Catalonia, with the kingdom of Aragon… it left a very open economy, with a quite good knowhow or how to trade.

Skip to 2 minutes and 4 seconds And at the end of the day, this built a sort of cluster. Cluster in statistic terms means that the variance within the Catalonia is rather low, that means than the homogeneity, the things that are shared by the population are quite huge, the sense to belong into a group is relatively high, and the variance, the differences against the rest or across the other parts of Spain, say, are rather important.

Skip to 2 minutes and 44 seconds That means with this cluster, capitals, we have a… Well, I would say also that physical capital is important, but given the situation of infrastructure I have some caveats and that, given the level of investment from Spain in the past… And for this reason, I am focus on social capital, that means the sense that we are part of a nation, we share language, culture… We have diversity but diversity doesn’t go against this idea on how to tackle a life. This has been in some sense eroded by immigration because we have a huge amount of immigration during the last ten years almost 1 million, which is a huge amount, even a largest year that some states in the United States of America.

Skip to 3 minutes and 49 seconds We have managed quite well this immigration, obviously better in the past, during the Franco’s regime and the starting of the new economy. Perhaps not so well now, due to the fact that social services and the capability to accompany all this process, all these new immigrants, helping them to understand the way of life, culture, language… Hasn’t been so good as it should have been, this has to do with the problems of our regional authority in coping with these new challenges.

Skip to 4 minutes and 32 seconds Due to financial reasons, our public sector… I would say that has not the same standard that society should require, in terms of a wealthy society with a higher per capita income, having paid so many taxes; and sometimes public services haven’t been able to preserve the simple standards. This has created, by the way, some sort of stress. Citizens that are trying to complement whatever was not coming from the public sector with the private effort. We are paying almost for everything, given the insufficiencies of the physical infrastructure, on tolls for motorways… Given the problems with our education system in the way you have to finance, the contracting out of private facilities, helping the public provisional health care, etc.

Skip to 5 minutes and 40 seconds But this stress, by the way, has created a sort of adrenaline putting together this society even closer, and this sense of sharing all these problems has created an important cluster, which at the end of the day as according to the more well-known economy is a present, is a very important thing, is even more important than the traditional labor and capital. To have a social capital means that investment, foreign direct investment should have a place to stay.

Skip to 6 minutes and 23 seconds Most of business services may be happy to be in Barcelona, we have a quite good networking of intermediate cities, which have articulated a lot our market, our internal market. The social capital plus our knowhow inherited from probably the middle-age, we are able to face the future to open our economy, you see, if you look at the figures for economy the situation is quite extraordinary, in terms of a balance trade, the amount of exports, the Catalan economy is capable to do; in fact substituting some of these exports from the mainland towards, the European Union and the world in general. I think this is very, very important for the future of the Catalan economy.

Skip to 7 minutes and 26 seconds How improve the weak points and stay the strengths? In order to make sure that we are able to anchor our best assets probably we would need a public sector much more involved in helping business, business friendly I would say. We regard to basing network for a social welfare, for population which may be left behind with all the innovations and technologies. And that means to reduce the fiscal deficit that Catalonia has with the central state. Not just as a way of spending more, but spending better, closer to the needs of the Catalan citizens. And also, think a bit more about which is the fiscal pressure which have to tackle our firms in order to be more competitive.

Skip to 8 minutes and 58 seconds That’s something which is missing, because is very difficult from the center with the single economic policy to properly attend the Catalan community needs. That is something that needs help from outside in this case to restore the fiscal drag that at this moment doesn’t allow for proper social services, according to the required standard for a quite developed society as Catalonia is at present. And on our own responsibility, not just asking responsibility to others…

Skip to 9 minutes and 49 seconds We should avoid this idea that we are one of these countries with middle-sized firms that we feel happy to be “small is beautiful”… Being this idea of so strong individual family business; because at present that doesn’t help very much to face whatever is coming, the threats which are coming from a global world. The idea that in the past, things were going well for everyone, given this better knowhow, the capability to finance by themselves instead of going public… For most of these middle-range firms trying to get a fiscal agreement to be comfortable without increasing either on the number of trade union representatives, or in terms of changing tax rates because larger sizes of these firms.

Skip to 11 minutes and 5 seconds This at the end, may imply sort of capture, because you are left in the middle of the road and in terms of economic competition this is a bit dangerous. I think we should cooperate more; business should be more open to share views with other businessmen with the public sector, being more present in all these activities; to make sure that what we have had in the past, it can be replicated for a better future.

Society & the Welfare State

The economy affects society and its structures in a variety of ways. Education, immigration, health and employment have a lot to do with the global economy.

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This video is from the free online course:

Getting to Know Catalonia: An Introduction to the Catalan Language, Culture and Society

Pompeu Fabra University Barcelona