Pension Problem in Spain

1.     The economic issue that this article addresses is the need to rely on parent’s pensions since the unemployment rate in Spain is so high. Apparently, there is a debate on whether or not pensions rates should increase due to their importance in helping out the unemployed. According to the article, the unemployment rate in Spain is 26.3% and 27% of households survive from the pensions being received from retired family members. Both of these percentages are very high and indicate a significant problem occurring in Spain. The article also goes into detail about the pension reform that the current Prime Minister, Mariano Rajoy, is establishing which he says will help those with pensions. However, in 2014 pensions were only increased by a rate of 0.25%, below the inflation rate of 0.8%, which is enraging some of the citizens.

2.     This issue can be related to our discussion on markets that we discussed in class because the high levels of unemployment in Spain could be attributed in some way to an inefficient market. Whether it’s due to too much, too little, or inefficient government regulation, Spain’s economy hit rock bottom in 2008 and has been rebuilding ever since. Since Spain has such a high unemployment rate, consumption is low meaning that the overall market system in Spain is taking a hit and needs to recover quickly.

3.     This problem occurring in Spain was the result of poor government regulation, false confidence when borrowing and spending, poor investment decisions, and more. This caused an increase unemployment rate, which made it so that many had to depend on their retired family members pensions as a means for survival. As mentioned earlier, there are policies in order to help those with pensions, but according to the article they are false promises and are not working. Unions argue that the current reform will cause about 9 millions pensioners to lose 15-28% of their pensions which in turn will affect the consumption/spending of Spanish citizens, causing an even greater decrease in their economy. However, a Spanish economist claimed that it is necessary to lower pensions in the long run since the old pensions were not sustainable due to increased life expectancy. Honestly, I do not feel like I am in a position to have a viable opinion on what should be done, but I do know that whatever is currently being done is not working and the government must somehow find a way to make the market more efficient and decrease unemployment rates. 

Part one: Culture

Country: Spain

1.     Popular sports in Spain include: soccer, basketball, tennis, cycling, handball, motorcycling, Formula One, sailing, golf, skiing, and the controversial sport, bull fighting. Spain is currently going through a sort of sport “golden-age” with many successful accomplishments in sports such as: soccer, tennis, basketball, cycling, and formula one. The most popular sport in Spain is soccer, or football, and it is widely supported on both the club and national level. Spain’s national soccer team is currently one of the best in the world winning last World Cup and the last two Euro cups. Spain is also represented well in the tennis community with tennis star Rafael Nadal, winner of two Wimbledon Championships and five Davis Cups and in the cycling community with Óscar Pereiro, Alberto Contador and Carlos Sastre.

2.     Spanish music is very diverse consisting of traditional styles such as flamenco and classical guitar, opera, classical music, hip-hop, electronic dance music, and rock. The traditional music varies by region from flamenco found in the southern region, Andalucía, to Galician music consisting of bagpipes accompanied by various other instruments. Popular singers include: Enrique Iglesias, David Bisbal, Rocío Dúrcal, Raphael, Luz Casal, and many more.

3.     Spanish cuisine consists of a vast amount of different food that may have different various depending on the region. Since Spain is surrounded by the Mediterranean Sea, the Atlantic Ocean, Northern Africa, and France, Spanish food often has many influences from a variety of cultures. Some traditional Spanish foods are: paella, tortilla de patatas, jamon iberico, gazpacho, salmorejo, and pescado frito. Not only is the food in Spain unique, but so is the atmosphere in restaurants and the way that it is served. Food in Spain is often served in small portions called “Tapas” where one orders several different plates of small, often bite-sized, portions of food and everyone takes a little from each plate.

4.     There is not much religious diversity in Spain. 70.5% of Spaniards are Roman Catholic, 24.1% are atheist, and around 3.1% have another religion. This is primarily due to the emphasis that was put on Roman Catholicism throughout Spanish history, especially during the Inquisition, and the power and prevalence of the Catholic Church in Spain.

5.      A lot of Spanish holidays and customs have something to do with Catholicism due to the majority of the population being Roman Catholic. National Holidays include: Día de todos los Santos, Dia de la Constitucion, Immaculada Concepcion, Noche Buena, Navidad, Año Nuevo, Día de Reyes, Noche Vieja, Día del Trabajador, Jueves Santo, Viernes Santo, Asunción, and Fiesta Nacional de España. There are also many regional festivals and holidays such as “La feria de abril” in sevilla or “Dia de Castilla y León”. Traditional customs include: La siesta, greeting with one kiss on each cheek, bullfighting, eating dinner around 9-10PM, and much more.

6.     Spain has a few popular TV shows and movies. TV shows include: “Aqui no hay quien viva”, “Cuéntame cómo pasó”, and “Paco’s Men”. Popular movies include: “Pan’s Labyrinth, The Orphanage, REC, Women on the verge of a nervous breakdown, and Amores Perros. Spain was also the birthplace for popular actors Penelope Cruz, Javier Bardem, Antonio Banderas, Paz Vega, and Elsa Pataky.

7.     Some online news sources in Spain are: http://www.abc.es, http://www.rtve.es/noticias/s/espana/, http://www.elmundo.es/espana.html.

8.     There are some online forums for Spanish expatriates such as: http://www.internations.org/spain-expats, http://www.eyeonspain.com, http://www.alloexpat.com/moving_to_spain_forum/, and http://www.expatexchange.com/spain/liveinspain.html

1.     Spain has a very interesting type of government as it is following the ruling of Spanish dictator, Franco. The government in Spain is a parliamentary democracy with a constitutional monarchy. An elected prime minister runs the government, but Spain also has a king that holds the constitutional head of state. The king has no executive role other than representing the country at events, appointing officials, and being the commander in chief of the Spanish armed forces. The main two political parties in Spain are the Partido Popular (PP) and Partido Socialista Obrero Español (PSOE). Other parties include: La izquierda plural, UPyD, and CiU. The current prime minister is Mariano Rajoy Brey who is part of the PP party, which is center-right wing. 

Components of Markets

1.     The author, John McMillan, defines markets as transactions between buyers and sellers where each party has the ability to veto them. Markets are an essential component of human existence and they have developed along with our culture. McMillan goes into the details of different types of markets, revealing why some are more efficient than others and how they are constantly changing. I like when he compares a market to the biological evolution on species since it is based on trial and error, but there are still some differences in how they are manipulated. McMillan states “Only when the informal rules are supplemented by some formal rules can a market reach its full potential, with transactions being conducted efficiently and complex dealings being feasible.” This is based on the important aspects of markets, transaction costs and government control. Transaction costs are essential to the efficiency of the market because they affect the possibility of transactions as well as the time and energy needed to complete them. The more efficient the transaction costs, typically the more fluid a market will work and therefore, a better economy will be the result. The other important component is government control over the market and McMillan even says “help from the government is essential if the economy is to reach its full potential”. Governments create a structure to a market, establishing rules that help keep things running as efficiently as possible. Too much or too little government intervention could lead to an economy’s destruction, so it is important to find a good balance, which is a very hard task to accomplish since markets are constantly changing.

2.     I have observed the different clashing opinions—one stating that markets exploit the poor and the other stating that they are the base of liberty and prosperity. I believe that the reason for this clash of opinions is the result of various spikes in markets due to variances in government control, resources available, and multiple attributes of society in general. Since markets are constantly changing because of this, it has hard to always trust it since it fluctuates so much. Ironically, this market fluctuation is what makes markets efficient and it helps them involve in a positive direction. People may distrust government control over markets because they may not always agree with how the government is controlling the market and it may favor some more than others. Because of this, I believe that it is best for the government to stay as neutral as possible when interfering with a market and only intervene when absolutely necessary and when it is in the best interest of the nation.

3.     In modern markets, there are certain rules that are set in place in order for them to function as efficiently as possible. For example, there are rules against the formation of monopolies that help markets function better by allowing there to be more competition and taking away the possibility of one person destroying a portion of the market by having too much control. This is an important rule because it allows there to be competition which is what fuels a free market. Without it, one can set their own prices and mess up the market by tampering with set prices, which would affect transaction costs. Also, governments have taxes to help pay for public utilities and help keep the economy stable and they set minimums and maximums on products to help speed up or control the stability of a market. Overall, this may help aid the economy by making the economy as efficient as possible, but it can also take away from the full potential of a free market if it controls too much or the wrong components.

Geographical Importance of Economic Success

Jared Diamond’s main point in his article “Why Did Human History Unfold Differently On Different Continents For The Last 13,000 Years?” is essentially that the differences in the success of different societies is based on geographic factors instead of biological factors. From this main essential point, Diamond begins to expand on why this is the case by comparing the success of Eurasian societies to Native American societies, Sub-Saharan African societies, and Aboriginal Australian societies. The three later societies have been conquered by Eurasian societies due to factors such as: stronger immunity to germs, better weapons, and a more organized and complex society structure. Diamond goes into some detail to explain why each of these factors gave Eurasian societies an advantage and how these factors occurred.

            Diamond starts out by talking about the European colonization of America. The Europeans were severely outnumbered, but even so, they were able to conquer the millions of Native Americans that previously lived there. The same thing occurred in Sub-Saharan African and Australia. In this article, he states that this was due primarily to the germs that were infecting and even killing up to 95% of the population in the case of the Native Americans. Increased weaponry and domesticated animals used for battle also had a great affect and made it so that they didn’t have a chance regardless of their greater numbers and fighting on their native lands. He then asks us the question: “Why were Eurasians the one’s to have this increased immunity, more advanced weapons, etc.?”

Diamond makes it clear that the time that a society has been around does not contribute to the societies success and that there is no difference in biological make-up which leads to only one clear answer, geography. One’s geographical features such as North to South axis vs East to West axis, proximity to other societies, fertile land, and domestic plants and animals all contribute to a society’s success.

In the case of America and Sub-Saharan Africa, he states that the main problems were a larger North to South axis vs the larger East to West axis found in Eurasia. The axis difference made it so that there were different climates throughout America and Africa, inhibiting the use of uniform domestic crops and livestock throughout the entire region. This makes it harder for agriculture, which is the main foundation for the growth and success of a society since it enables a more efficient society that has a governing body and specialized jobs that allows for more time to create goods and weapons since they do not need spend time and energy focusing on catching food as opposed to hunting and gathering.

Also, the number of domesticated plants and animals is a very important advantage that Eurasia had over the other regions. With more domesticated plants and animals, not only could a society support more people, but it also helped them build immunity against many diseases that originated from livestock, which resulted in the death of millions of Native Americans, Sub-Saharan Africans, and Aboriginal Australians.  This was a huge advantage that the Eurasians had that was possible due to their similar climate throughout the region, which made the uniformity of domesticated plants and animals very easy and possible.

The last factor of success, which inhibited the Aboriginal Australians the most, was proximity to other societies. Diamond makes it clear that proximity to other societies allows for the creation and retention of ideas, which help advance a society. For Australians especially, they were on a continent that was far away from many others making their progress much slower since they could not communicated and transfer ideas with other societies. This was not the case for Eurasian societies since they were all part of one big landmass and therefore ideas spread rapidly resulting in the faster development of new and more efficient technology.

These ideas can be applied to today’s global economy because countries with access to natural resources, a good agriculture system, and a strong military seem to be the most successful and have Eurasian origins/influences. These countries tend to have a more organized and stable government with more specializations which in turn leads to a more efficient society overall. Also, countries that work together and share ideas, especially with the use of the Internet, seem to have an advantage over those who do not communicate as frequently. This just comes to show that each one of these factors is essential and contributes to a society’s success regardless of whether it was 1000 years ago or today.