In its online and print editions, The Economist has just published an article on the “minimum income” that was just passed by the Government of Spain, taking a “snapshot” of the situation of the Spanish economy and the increase in the number of people below the poverty threshold.  This article includes statements by the Social Security Minister, José Luis Escrivá, whom they call the “architect” of the new social protection system.

Before anything, let it be perfectly clear that we are hardline supporters of all measures taken to prevent anyone in society, for whatever reason, from falling into misery and social exclusion.  A just, and worthy, society must dedicate the resources necessary to ensure that social exclusion doesn’t happen.  It must also guarantee that every euro dedicated to that purpose be useful, guaranteeing that the people who receive them can rise back up to be free and autonomous.  This is because continual dependence on grants and social aid, like poverty, are just two different ways for individuals to lose their freedom.

Enjoying social and political rights and being self-sufficient with a respectable job is the best guarantee that we live in a democracy, just like knowing that if we stumble, we won’t be left behind.  That’s why we congratulate Minister Escrivá for having managed to take the lead on this decision that will so profoundly affect the Spanish.

Having said that, we cannot help being surprised by some of his statements, specifically the ones in the following paragraph:

Until now social assistance has been the purview of the regions, and varies greatly. The rich Basque country is generous; poor Andalucía is not. “Something that was designed to reduce inequality had the opposite effect,” says Mr Escrivá. The regions will now be free to redirect their spending. The new scheme has innovative features. To identify those eligible the government is enlisting the help of NGOs as well as town halls. To provide incentives, the payment will be tapered if earned income increases.

We understand that everything outside the quotation marks cannot be attributed to Mr. Escrivá as his words, like the use of “regions” to refer to the Autonomous Communities, notwithstanding the second article of the Spanish Constitution, which “recognizes and guarantees the right of autonomy of the nationalities and regions that make [Spain] up“.  As regards us, neither the Autonomous Community of the Basque Country (CAPV) nor the Chartered Community of Navarre (CFN) can (or should) be called regions.

But that’s just the starter.  The core of the matter is in the claim that “Something that was designed to reduce inequality had the opposite effect,” referring to how social assistance was to be put into the hands of the autonomous communities.

No, Mr. Minister, no.  Inequality has not been created because this power is in the hands of the autonomous communities.  This inequality is the product of the insufficient financing of the Government of Spain of the autonomous communities under the common regime (all those excluding the CAPV and CFN).  That, plus the lack of interest in some of them to dedicate resources to this item.

The difference in social welfare is not a matter of “rich and poor”.

The key to these differences is quite another: that the Kingdom of Spain has Historical or Chartered Territories inside it.  Those are the ones the First Additional Clause is aimed at:

«La Constitución ampara y respeta los derechos históricos de los territorios forales.
La actualización general de dicho régimen foral se llevará a cabo, en su caso, en el marco de la Constitución y de los Estatutos de Autonomía».
“The Constitution protects and respects the historical rights of the chartered territories.  The general update of said chartered regime will be carried out, where appropriate, within the framework of the Constitution and the Statutes of Autonomy.”

As well as the Second Repeal:

«En tanto en cuanto pudiera conservar alguna vigencia, se considera definitivamente derogada la Ley de 25 de octubre de 1839 en lo que pudiera afectar a las provincias de Álava, Guipúzcoa y Vizcaya.
En los mismos términos se considera definitivamente derogada la Ley de 21 de julio de 1876».

“2. To the extent that it may still retain some validity, the Act of October 25, 1839 shall be definitively repealed in so far as it applies to the provinces of Alava, Guipúzcoa and Biscay.”

These Chartered Territories have their own revenue agencies because, let’s not forget, in the Kingdom of Spain there are five: those of the chartered territories (Álava, Biscay, Gipuzkoa, and Navarre) and the Common Regime one, responsible for collecting taxes in the rest of Spain.

This also means that the CFN and CAPV can define their own social expenditure policies without having to depend on any transfers from the state, always providing that they are first able to comply with their contributory obligations to the state for common expenses, or for those powers which have not been transferred (find a more detailed explanation here).

The issue here is that the Social Policies of the CAPV and the CFN have made the lack of the same elsewhere more evident, or in other cases, made the fact that some other autonomous communities are unable to meet their needs because the Government of Spain has been underfunding them, damning them to fail, for decades.  To us, this is clearly a maneuver of political control and economic strangling.  But they can’t do that with the Basques, because their resources do not depend on what they receive from the Treasury of the Kingdom of Spain.

It is unacceptable that a country with a per capita GDP of €26,440 has been so far unable, or unwilling, to effective face this problem.  The “poverty” of the autonomous communities is the consequence of a lack of resources derived from the lack of will of the Government of Spain to find a solution and provide the resources needed.  The priorities of government are laid out in the budgets, and as regards the relationships between the Government of Spain and the common-regime autonomous communities, in the financing system agreements of the same.  That’s where the reasons are which explain the existence, or lack thereof, of an appropriate social protection policy.

Could this have been done a long time ago?  Yes, as is shown by how legislators who had the power to decide on income and expense policies wanted to do so, and did.  And this is especially proven by how, when a Government of the Kingdom of Spain has wanted to do something, it has.  The fact that it has never existed before is because the citizens under the common regime did not demand it: it was a lack of will, not a lack of resources.

We should be happy that this decision has finally been taken; to us, it is historic.  But it cannot be insinuated that this decision was taken to fix the incompetence or inability of the common-regime autonomous communities.  The main cause has been the lack of willpower of the Government of Spain to decide on dedicated it the resources it needed.

We must also thrilled that the Spanish Government is copying the Basques’  social coverage structure, which is great news because it’s really going to benefit the Spaniards.

The Economist – 6/6/2020 – Great Britain

Spain’s embattled government proposes a new anti-poverty scheme

In working-class southern Madrid there are queues for food at community centres and parish soup kitchens. Caritas, a Catholic charity, reports a surge in demand for its help. Covid-19 has exposed holes in Spain’s welfare state, just as the slump after 2008 did. This time, though, the government is trying to plug the gaps. Some of the aid is temporary: almost 4m furloughed workers have been getting 70% of their wages paid by the state, which has also made emergency payments to 1.2m self-employed people.

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