Crisis solutions; back to the basics. Part one.

Despite the consequences of past recessions a new crisis might have similarities with past ones but has its own characteristics. Unfortunately instead of going in-depth in terms of fighting a crisis nothing is changed basically. Still changing the basics could be the best solution for the long run avoiding threats of double dips like now.

Basics are formed in each society and country by culture, education, people, jobs and politics. Here hardly changes are done and instead public investments are increased, taxes are adjusted or new projects developed but it is all too obvious and not sustainable.

To prepare a country and its society for another round of downturns it would be much better to change (read = improve) the basics. Let’s take Spain as an example for each of these basics.

* Culture: by keeping this the same, like mocking about the past too much or rivalry at a national level this can block any progress or improvements coming from inside a society, like creativity, innovation or even new inventions. A society that adapts can faster anticipate or accept reform and therefore experience a real recovery.

The Spanish government did not or could not anticipate on the housing bubble. Despite the demand for cheaper housing a new system of for example renting would be better than hoping the market recovers. Young people forced to live with their parents than can easily move out and start own lives etc. Creating regulators for this new system would also deliver jobs. Local government could regulate and integrate this system without many problems or constant interfering from Madrid.

* Education: current school systems must be adjusted (to international levels) based on the economic situation of a country not based on someone’s left / right political thinking. It is not necessary to change a system every four years because of a new government but because the economic conditions require such improvements.

Global changes should already have motivated Spain to learn better English but local national feelings, like Catalonia, block this to protect own languages while television and movies should be subtitled everywhere. Furthermore due to a crisis mothers are forced to look for jobs too but child care is not modernized like in other European countries. No governmental (fiscal) or corporate backup for working parents for example.

* People: especially young people demand changes but the older generations refuse to reform (quickly). This will finally only lead to more protests and people will become unhappier and more aggressive ending discussions at the streets.

In Spain in 2011 lots of demonstrations showed how people feel about the state of their economy and future. Still they cannot change much as their alternatives are limited or their representatives are corrupt and political polarized.

* Jobs: It is inevitable jobs will be lost in a crisis or even after as companies have to continue cutting staff to cut costs. Some sectors will hardly or even never recover demanding people to re-educate. Without the right adjustments in local job markets, like more part-time, and fiscal protection a job market will loose competitiveness or even stops growing.

Spain has the highest unemployment of Europe while half of all youngsters cannot find one. Even with economic growth back to pre-crisis levels this will take years to cut to acceptable levels. What is required is a complete reform but Spain lacks country and local leadership to make this happen or politicians simply do not want to cooperate. Elections will not change this, despite promises of the opposition.

* Politics: corruption, fraud and lack of vision only harm a society but it is more common than making real solutions. Power and money are the wrong mix for politicians everywhere. Politicians are notorious liars only presenting (read = protecting) their own interests. Globally this can lead to serious regional problems like (more) war (in Middle East, Northern Africa, India-Pakistan and Africa but even civil war-like clashes can be seen in Europe, the US or China if economic conditions do not improve but decline next 2-4 years).
´
Spain is dominated by local powers and Madrid only lobbies. The socialists, last bastion in Europe, look like to have understood their failures of hanging on socialism which is dead for some time now. Unfortunately the alternatives are not promising. The Partido Popular will not reform the economy of Spain or even try to change the basics out of fear of loosing power. Again politicians put themselves above the priorities of a country. This will sooner or later be regretted.

Conclusion:

Change is not bad, change is good. To promote change it takes a lot of time and courage even to convince those that have the power to change. This could be the older generations holding the keys of a government, city or even company. This could also be younger generations that through protests but also by studying and working hard can demand better education, housing and job generation (which their parents did before).

Spain has still the chance to make these changes but decisions now are taken too slowly. Other countries should also adapt faster and focus more on the basics, not on areas which cannot be changed. Investing in the infrastructure for example might be needed but has a too short positive effect. Governments too often choose for easy targets which can be powered up for a while like fiscal subsidies. Better is to work on the pillars of an economy, even though you will not be reelected or become most popular on TV.

To be continued…..

In Part two of this subject there will be more attention on other countries, on the threat of another recession and on the alternatives now offered in stressed countries.