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Spain’s Unfinished Transition from Dictatorship to Democracy

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Yves here. I thought this piece might serve to stimulate a broader discussion about institutional structures not just in Spain but advanced economies generally. I’m interested in getting informed reader comments on the author’s reading of the role that the “politicians” play, that they have invaded institutions that were designed to sit largely outside politics.

In his new book Payoff, Jeffrey Connaughton contends that the US has a permanent politic class that has taken over the government apparatus, and extends well beyond government employees (as in lobbyists are key actors). In Europe, career bureaucrats are running roughshod over elected officials in periphery countries (or at least are trying to). Some commentators have noted that one of the reasons for German footdragging on various important aspects of the Euro integration project, such as unified banking regulation, is that they still want inconsistent things from a political perspective: they want the European apparatus powerful enough to bring the miscreant Latin countries to heel, yet Germans and other northern bloc countries remain reluctant to give up their sovereignity, which is necessary to move the project forward.

By Spaniardfbm, who has a law degree and works as public servant in Seville, Spain. This is a shorter and edited version of the original article first published on Liberal Villainous. Cross posted from Testosterone Pit

Spain’s economic problems lie neither in the financial sector nor in the budget deficit. They are only symptoms of deeply rooted institutional problems that determine a great variety of issues, from how the budget is composed to who receives a loan from the politically controlled banks (cajas). Neither banks nor public workers have ruined the country, but politicians, a separate class born out of the “Transition” from the Franco dictatorship to democracy.

Until Franco’s death in 1975, Spain was governed by a fascist bureaucracy, called “Corporate State.” It was formed by the ruling party, the only Workers Union, the only Employers Union, the Catholic Church, and local entities. During the “Transition” to democracy, a series of measures designed as exceptional were adopted to promote regime change. Politicians, out-goers and incomers, agreed on surrounding themselves with class privileges (some old, some new) to ensure the former a comfortable retirement and the latter a slew of protections and privileges.

These privileges were extended to regional pressure groups—Basque, Navarrese, Catalans, Galicians and Andalusians. They were intended as temporary and geographically limited, but over time, they have become permanent and widespread in all 17 autonomous regions and thousands of local authorities.

Since the arrival of democracy, the Corporate State has covered itself with a democratic umbrella. The single party and the single workers union have been split in two. And a powerless (except in the lower courts) democratic bureaucracy has been created, giving the country two de facto bureaucracies for the same purposes. And that has been multiplied by 18, if we count the central government and 17 regions with its governments, parliaments, ombudsmen, etc. And by thousands if we take into account the local entities. So the current status is that of a double Public Administration:

- The Corporate Administration. Legacy of the Franco regime, it is formed by political parties, especially the hegemonic People’s Party (PP), the Spanish Socialist Workers’ Party (PSOE), and the Nationalists, plus trade unions, employers unions, local power, and NGOs (previously only the Catholic Church, but now diverse).

- The Democratic Administration. Formed by the Legislative, Executive, and Judicial powers, it is commanded by politicians and served by funcionarios, such as police, judges, prosecutors, tax authorities, etc. The Democratic Administration is tied to the rule of law. It exercises power over citizens and is supposed to protect them from politicians. Its presence is mandatory when citizens´ rights are in peril.

But in practice, the Corporate Administration occupies positions at all levels within the Democratic Administration, even those that imply the exercise of power over citizens, such as judges, and despite the Law and un-executed court orders that should have ousted them. For example, a 2008 report by the Andalusian Court of Auditors “detected” that 33% of the central-services staff belonged to the “parallel administration,” as the courts have labeled it. An unprecedented request (August 2012) from the Andalusian Regional Ministry of Finance, asking other ministries about the personnel they employ directly or indirectly who are neither funcionarios nor lower-level workers, reveals how the Corporate Administration lives and spreads chaos.

However, the real numbers are likely unknown due to a lack of transparency in public and private entities, and due to the decentralized style of management and the occultation techniques that the Corporate Administration has used to survive and thrive under its democratic umbrella.

Franco’s tax and budget system having largely disappeared after the “Fuentes-Quintana” reforms of 1977, the Corporate Administration is funded through “special laws,” “special rules,” and “exceptional mechanisms.” The act to “repair union assets damaged during the war and dictatorship,” for example, paid for “repairs” to the CCOO—a Union that didn´t exist in Franco´s era. And the payments far outstripped those given to the CNT, a real anti-regime union at the time.

While special rules on pensions, unemployment, etc., established within general laws for the wellbeing of the political class, are a source of funds and power for the Corporate Administration, the main source lies (in my experience) outside the law—here, anything is possible if you are a politician.

This can take many forms through biased interpretations of rules or “exceptional mechanisms” designed for severe conditions that in practice have become common instruments. They’re exempt from control unless a scandal explodes into the open. These include Government Agreements (even secret ones are “enforced”), Social Partnership Agreements, Exceptional Grants, Nominative Grants, (false) Regulated Subsidies, (false) Conventions, (false) Concerts, (false) Open Calls for Proposals, etc. They are hiding under different names within framework agreements between politicians, trade unions, and employer unions for sharing the pie of public funds.

The Andalusian Supreme Court of Justice has repeatedly failed against the Government and its “open defiance of the rule of law.” This assertion has been ratified by the Spain’s Supreme Court of Justice (STS 29-November-2009 E.G.M.A.S.A.) and reiterated by the lower courts, the last one on September 11, 2012, with no political or penal consequences.

This may surprise outsiders, but not locals. Public opinion is rarely moved by “technicalities,” and judges and prosecutors at penal courts—except for the judge Mercedes Alaya who got involved in this by chance—shiver at the prospect of starting a process against a whole government or worse, against most Members of Parliament, when there is no physical robbery attached to it to sell the case to the media.

Finally, the European Union and its funds have not helped. The European Commission does not want to fund permanent staff in Member States´ Public Administrations but in “independent entities such as Audit Companies, Trade Unions, or NGOs”. And that “principle of partnership” has come in handy to our political class to grant themselves the money directly or through a horde of facade-entities, with the support and blessing of Brussels.

When our former Prime Minister J.L.R. Zapatero said that Spain had not finished its Transition from dictatorship to democracy, I do not think this was the problem he had in mind. But this is the one we have, and the one that politicians can, but do not want to, fix: establish a real separation of powers with an independent Administration of Justice, and get rid of the Corporate Administration inherited from the Dictatorship, ruled by a despotic oligarchy, and covered with the veil of an imperfect democracy.

Spanish Prime Minister Mariano Rajoy (PP) has a singular problem: 84% of all voters have “little” or “no” confidence in him. The fate of Alfredo Perez Rubalcaba, leader of the opposition PSOE, is even worse: 90% of all voters distrust him! Those are the two top political figures of the two major political parties, and the utterly frustrated and disillusioned Spaniards are defenestrating them both. Read…. Punishment Of The Spanish Political Class By The People.

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63 comments

  1. Hugh

    This is quite interesting. We do not seem to have progressed beyond the propertied oligarchy of the Founders and Framers to democracy either. Indeed we seem to be going backwards into a kind of feudalism.

    I wish the author had written this from a kleptocratic perspective because many of the elements he/she discusses are consistent with institutionalized looting.

    I think the author is wrong in confining his discussion just to Spanish institutions. The real killer for the Spanish economy was the real estate bubble and while local elites and kleptocrats certainly aided and abetted in it, this was very much a bubble blown by Northern banks. And while the austerity programs which the Spanish elites are embracing can be used by them to further loot the country and the commons, the main beneficiaries of austerity are again the Northern banks.

    I tend to look on our own problems as one of the whole of our elites: office holders, political operatives and staffs, regulators, lobbyists, academia, think tanks, the judiciary, and the media. It is a system greased by campaign contributions for office holders and the promise of high paying careers for all, if they do what they are told. It is staffed throughout by the revolving door. It is relentless in its propagandizing, its class war, and its looting. It is incapable of reform either within or without. If we are going to get rid of it, whether here or in Spain, we will have to overthrow it, and it is not going to go quietly.

    1. Susan the other

      This article described the USA in a roundabout way. I agree. Kinda like the elephant and the blind men. Spain sees a “corporate administration” as a remnant of Franco; we see it as a bold new takeover of our democracy. And in both countries public referendum, aka voting, is pointless. People are getting nowhere fast.

      It is clear that the ECB will only deal with a EU private banking system and will not bail out the national banks – but that doesn’t help the people either because the ECB mediates the payments and they all go to Germany where, of course, corporations rule, albeit with more public consideration. So both finances and policy are to be controlled by and for corporations but there is not much democracy.

      I don’t know how there can ever be any kind of EU-wide agreement, democratic agreement, to form a fiscal/political union to average out economic disparities with fiscal policy when people are strictly ignored. Their new agreement will be done and maintained by a form of “representative government.” A sham. Under the new speak of Der Spiegel the problem to be resolved is “sovereign debt.” It all sounds like a play to force a new EU administration, but not equality. The problem to be solved is true sovereignty. So Spain and the rest of the EU will either fall apart or get what we’ve been getting: taxation and looting without representation.

    2. RanDomino

      Feudalism is a very common organizational form because it’s so simple- “You serve me; in turn, you have servants.” Why direct your slaves yourself when you can have a few of them order the rest around for you?
      By essentially having many power centers, it’s extremely flexible; it’s basically fractal (the part has the same structure as the whole).
      It works extremely well- at least, for the purpose of ferrying wealth from the many to the few as efficiently and totally as possible, anyway.

    3. Spaniardfbm

      Thank you, but the article I cited in my post, published in “El Pais -English edition” takes the POV of institutionalized looting.
      What I want to emphasize, precisely, is that our problem is bigger because in Spain the daily work of the public administration is in the same hands that rob us all. So if we try to find someone completely innocent, we will have a hard day. And if we try to expel them all, we would destroy Spain.
      Politics have acted as a Cancer in Spain so widely that we do not need surgery, which is what the bail-out measures usually suggest, but chemotherapy, and lots of detailed work save our organs, one by one.
      I will post some detailed suggestions at the end of next week, so if anyone knows a bail-out maker… :)

      1. Spaniardfbm

        Hi
        Could you define fascism and tell me why I am a fascist, from your POV? And what am I “confused” about? E.g., you are confused when you think that I belong to the UPyD party, because it’s a socialist party and I am a Liberal. Finally, what is absurd about my assertions regarding EU Funds management? Taking into account that I have passed the last five years working on management and evaluation of Structural Funds, I feel curious. Please, answer, I am sure I will have fun reading you :)
        But what I really want to add here is the number of public enterprises that you say do not exist (:O). I didn´t not know how could anyone in Spain be so ill informed without lying, but I have realized that data are no so easy to obtain so I will give them to you and your friends. Unfortunately all the links are in Spanish so fewer people will be able to extract their truth from the data, but at least there are lots of numbers to see…
        In January 2012, according to the central government, there was 800 State´s owned Private Companies (“Sociedades Mercantiles”) in the central (171) or regional (629) governments and 1.449 in the local authorities. http://www.lamoncloa.gob.es/ServiciosdePrensa/NotasPrensa/MinisterioHaciendayAdministracionesPublicas/2012/inventarioentes010612.htm
        There is a link that allows you to search them by town. Great, isn´t it?
        Here you have a couple of news about the local entities. About how a half of the total for a 43 million country, belong to three of its 17 regions, Andalusia+ Catalonia+ The Basque Country, and how the Socialist PSOE party is supposedly in rage against its suppression.
        http://www.radiogranada.es/2012/10/el-psoe-exige-a-rajoy-que-retire-su-propuesta-de-eliminar-las-entidades-locales/
        And I am counting ONLY the ones declared as “Sociedades Mercantiles”. I am not taking into account the Foundations, that in fact works as politically connected subcontractors for the Government, other “NGOs”, consortium, etc…
        Here you all have a very interesting report about the (lack of) progress from a 2010 agreement of the successive Spanish governments in reducing the number and complexity of the Corporate State.
        http://www.minhap.gob.es/Documentacion/Publico/PortalVarios/FinanciacionTerritorial/Autonomica/Informe%20Reordenaci%C3%B3n%20SP%20a%2001-04-2012.pdf
        I emphasize: The number and complexity, not its weight in the budget or the political class control over it.
        BUT my point is, that from my direct experience, all this numbers falls absurdly short, because they do not take into account the 100% privately owned NGOs, companies, etc. that lives from and for the government and specially for the Parties in Spain. And they don´t count them because not even the politicians know how many of them exist, because there are no central orders, or plans. That is what I mean with “decentralized style of management”. Decentralization is great to thrive. The problem here is that Parties thrive is of no use to citizens.
        Finally, this is a very funny article that sum up what is happening. The title could be translated as… “Please, pal, suppress your public corporations, that I am not in the mood”.
        http://hayderecho.com/2012/08/12/suprime-tu-un-ente-publico-que-a-mi-me-da-pereza/

        1. Maju

          (Trying without links: it does not seem to get through otherwise).

          Even if it is misplaced, I think this refers to me.

          UPyD is a well known authoritarian party under the iron hand of Rosa Díez. It has catered support from the worst of Spanish fascism:
          ·> Ynestrillas (link removed)
          ·> Álvaro Pombo y Falange Auténtica (link removed)
          ·> In general their discourse of neither left nor right is identical to that of Falange (link removed)
          ·> Here, in the Basque Country Rosa Díez is well known because she used to be a high profile councilor until she was kicked from the PSOE for being too pro-PP and indisciplined

          I don’t know which is your exact ideology but you (Curro whoever, the author, I understand) sound almost exactly like Díez.

          I said before that the article (and in general your blog) lacks merit and I have seen no reason to change my mind.

          You say you’re liberal but let everybody know that “liberal” in Europe means capitalist right wing, not much relation with the US concept. European “liberal” would translate in US political language as “libertarian”, i.e. minimal state if any at all (mostly police and prisons), free pass for the rich, slavery or death for the poor. If you can tell me what’s the difference between that and fascism, it may only be that fascists never dared to go that far and kept a semblance of social state in some cases.

          In Spain there are no more state-owned companies: because of EU criminal pressures the public sector has been dismantled. Some local institutions keep a representation in the cajas (savings banks) but these are managed as private companies and no doubt, would not be for the Bankia disaster, they would have been fully privatized in a matter of years.

          Electricity: private monopolies, Telefónica: private since the 1980s, large banks: mostly private, Repsol: private, highways: private, etc. What is left of the public sector? I doubt that there is a single company left (Renfe: railroads?) and even local services like water supply are often treated as private instead for what they are: public service monopolies.

          “In January 2012, according to the central government, there was 800 State´s owned Private Companies (“Sociedades Mercantiles”) in the central (171) or regional (629) governments and 1.449 in the local authorities”.

          I’ve been looking for some samples following links in your link (for example, Navarre) and what I get is that public services are treated as private companies (mostly they are water supply, cultural and sport services, general infrastructures such as gas or major water/energy supply infrastructures and some agrarian foundations), all or most of which MUST necessarily be public and should be treated IMO as state departments and not mercantile companies.

          Who do you think you will fool with that? I mean, really…

          All I say is that politicians obey orders and those are not obviously from the general populace who (formally) elects them in a rather empty ritual but from the companies and their owners, Botín and the likes, organized in the true single party of Spain: the CEOE (Spanish Confederation of Business Organizations), but often with power of their own (if they are big and/or well connected enough).

          1. Spaniardfbm

            Yes, more than 2.000 private corporations in public hands, not to mention Foundations, Consortiums, etc, all of them devoted to vital-basic-services…yes…of course.
            Where you asking about someone trying to deceive readers?, didn´t you?
            I am going to give an example to foreigners of what the Spanish Corporate State considers “basic services”. And by the way, you can get familiar with The Catalonian Government, nationalist, separatist, austere as only Germans can be (I am obviously kidding).
            Now, links to “La Vanguardia”, a catalonia-nationalist newspaper.
            August 24 2012: The Catalonian government wants to get rid of its investments on ski resorts in Catalonia. Lluis Recoder, a Regional Minister, declares that being the formal owner the Catalonian Railway Company (Public – FGC) only makes things worst because FGC should be investing in railways, not in (broken, I add) resorts.
            http://www.lavanguardia.com/politica/20120824/54340661763/generalitat-quiere-desinvertir-estaciones-esqui.html
            October 17 2012: FGC buys a 51% of Vallter-2000 resort by 2.4 MILLION EUROS to Vallter Limited. The Catalonian Government argues that the sky resorts have a “strategic interest” for the Catalonian Nation.
            http://www.lavanguardia.com/local/girona/20121017/54353127057/setcases-vallter-2000-ferrocarrils-generalitat-compra-mayoria.html
            Meanwhile Catalonia has been closing hospitals and schools for years, and I am not talking about the current crisis but about the “boom” years. Catalonia has never recover its old economic power, lost during the 1990s crisis. What remains is a facade, a farce, and their political elite is fighting to keep it alive to remain in power and to keep having the privileges that all the Spanish politicians think they deserve.
            There is nothing more typically Spanish, more Corporate in Spain, than Catalonia, except perhaps Andalusia. I promise (and if I fail, please, remember it to me) to talk about the “double 3% scandal” in Catalonia, and the INVERCARIA scandal in Andalusia. They both are so simply laughable, that look unbelievable…

          2. Maju

            Your examples are not representative and you only have to follow your own links to know, so you are trying to deceive, making of the exception, by means of emphasizing it, a pretense of norm.

            Anyhow, besides that, I’d like to rise the following question: the state needs resources (we all agree, right) and these can be raised by means of taxes but also by means of investmentes, investments that can have a social function and at the same time be profitable. So I do not think, against IMF/EU doctrine, that the state should sell off public-owned companies, specially not those that are profitable.

            In fact, as I understand it, selling off such resources amounts to high treason because it means depleting the state, the res publica, the politically organized society, from its wealth. It’s not essentially different from selling a part of the country to a foreign power.

  2. Maju

    Honestly don’t be deceived by this guy who sounds as a total reactionary to me under a pseudo-democratic pretext. He does not seem to understand that Spain has a much deeper history than just fascism and constitutional monarchy, he expresses total disdain for the more than legitimate demands of peripheral nations (Basques, Catalans, Galicians and arguably others), he makes the kind of claims that the new fascism of UPyD and the likes make: politicians are to blame, bankers and other capitalists, military, police, judges or the king are outside the blame sharing zone.

    While he may be partly correct in comparing the current dual-party and dual-union system (which is identical to that in the USA and so many other Western countries) to the single party and single union system of fascism, it must be clarified that both unions and one of the two parties do not derive from the fascist regime but from opposition (in exile in the case of PSOE and UGT, inside in the case of CC.OO., now delegitimized but originally, in the 70s and 80s, a very legitimate grassroots union.

    Claiming that modern Spain is a “corporate state” is absurd. All state companies have been privatized or destroyed (mostly because EU demanded it) and recently even the cajas (public or semi-public savings banks, which were a key social structure) have been privatized and fused crazily (also largely because of EU pressure) leading to disasters like Bankia and the others.

    Of course in each privatization, those well connected and influential have benefited, as in Russia or other countries, but those are typically businesspeople rather than politicians (not so much of a difference in the right wing parties maybe but in the left ones businesspeople do not abound yet).

    I think that he is basically NOT correct: in Spain there are businesspeople, capitalists and latifundist landowners (an important part of the oligarchy) and those largely control the state, together with foreign investors from mostly other wealthier European states (France, Britain, Germany specially, also the USA).

    The oligarchy ranges from the southern aristocrats like the Duchess of Alba (and family, she’s quite senile), foreign established investors like the Thyssen clan, but specially is largely made up of Basque, Catalan and some other bourgeois minor tribes, who are very powerful in Spain and often in Latin America, Morocco and other places as well. Banco Santander, BBVA, La Caixa… are not bureaucracies.

    Anyhow, looking at his blog I am a little puzzled that you are publishing stuff from someone without any references who has been blogging for less that one month now (first post in Sep 18th 2012). For what I have read in the last minutes over there, he seems rather confused.

    1. bmeisen

      I share maju’s scepticism. The claim the EU funds “have not helped” is absurd. Until EU membership and funding the northwest corridor (Bilbao – Madrid), the most direct connection to industrialized, social democratic northern Europe, was a 2-lane highway. Franco liked it that way.

      The author seems to not understand the coalition building process that characterizes representative, multi-party democracy: the scumballs organize too, and they often do it faster and have more money. The text reeks of the direct democracy tripe that spoils OWS. Get rid of the corrupt political hierarchies between the 99% and power. This is way wrong – the people are never closer to power than in a dictatorship.

      The answer is not direct democracy but proportional democracy, like in Germany if you will. Germany’s upper house, the Bundesrat, elected a new president yesterday: the Green minister president of Baden-Württenburg Kretschmann. Merkel’s constitutional successor is now a Green. You get there with proportional representation – one man, 2 votes.

      1. Maju

        The guy is Andalusian so he’s probably thinking on the aids to farmers, which in his part of the world are mostly latifundist landowners, aristocrats arrived from the Feudal Era like Martians from a B-series movie.

        Those feudal landowners get the EU funds and run with the money without any merit. Meanwhile the state has to pay subsidies to prevent the landless farmers from starving or being forced to emigrate.

        But even in that he’s not specific enough: not a single line against the dukes and earls that dominate the Andalusian non-economy.

    2. Ignacio

      For once I agree with you. I think that this rant could be reduced to one word: cronyism. It works for private capitalism and for political institutions as well.

      I would like to highligth and commente this paragraph from the author that clearly shows his/her biases:

      “However, the real numbers are likely unknown due to a lack of transparency in public and private entities, and [b]due to the decentralized style of management[/b] and the occultation techniques that the Corporate Administration has used to survive and thrive under its democratic umbrella.
      Read more at http://www.nakedcapitalism.com/2012/10/spains-unfinished-transition-from-dictatorship-to-democracy.html?replytocom=848186#GTzic9tmhBHMjl15.99

      De-centralized management does not necessarily to lack of transparency. On the contrary, it helps to put an eye on regional and municipal management by allowing to identify the managers involved from the bulk of public administration. A wholly centralized administration has more means to act obscurely. This does not mean that local and regional managers are less succeptible to cronyism, but at least, you can notice it. In fact, public scrutiny on local and regional management has improved in Spain quite a lot. It is precissely this scrutiny what drives people like Liberal Viullainous crazy because we are now able to see how cronyism works at all levels with greater clarity.

      1. Maju

        Absolutely, it is generally good for public accountancy that the management is close to the people, i.e. decentralized. Of course there must be a balance with efficiency but the real problem in Spain is often the persistance of a not-anymore-needed central bureaucracy.

        For example here in the Basque Country we have several police departments, each with thousand of agents, dozens of stations, excellent weaponry and training, most acting only as occupation garrisons.

        I have still to figure out what the Armed Forces with all its bases and urban buildings do for us also. Or the many provincial and regional governors/delegates and all their useless courtly bureaucracies…

    3. Jim S

      Maju,
      You are constructing some straw-man arguments here.
      1. RE: two parties and two unions, the whether or not the organizations derived from the fascist party is irrelevant to the author’s argument that multiple parties/unions give the appearance of democracy.
      2. RE: corporate state, the presence or absence of state companies is irrelevant to the author’s argument that the groups and individuals who controlled the government under Franco have continued to control the government after Franco.
      And following from #2,
      3. RE: who controls the state, by implying that the author says that political power stems from economic power, you completely sidestep the discussion of the bureaucratic control of government.
      If you can’t slip those arguments past my atrophied logical parser, you ought to re-examine your argumentative technique.

      1. Maju

        The author gives the impression in the text of current parties/unions being actually derived from the fascist organization and that’s not the case. Actually exactly the same system (or even worse) exists in the USA, mind you, but the author only talks of Spain.

        I’m the first one to denounce the twin-party system as a farce but my criticism was that he is not describing things for what they are: Western bourgeois “democracy” but as if Spain had some odd virus directly derived from the fascist regime and only from there (not the previous 150 years of farce democracy/constitutional monarchy which were the same except for punctual quasi-revolutionary moments).

        The author manages to single out (in his discourse) Spain for no reason at all, never discussing Western bourgeois “democracy”, its limits and the powers behind it, but pretending that Spain is somewhat exceptional, as if there would not be a very similar system in the USA, the UK, France, Germany, etc.

        “by implying that the author says that political power stems from economic power”

        Actually what I say is that the author totally ignores that and pretends that the problem can be abstracted from its Capitalist essence, magically making an exception that is not such of the case of Spain (a totally normal case in NATOland and other parts of the world) and totally ignoring who gives orders to those elect politician puppets (which is not the People but the capitalists).

        What I’m saying is what the author fails to say and that’s why I say he is a misleading propagandist of some sort (and a quite mediocre one, mind you).

        1. Jim S

          “What I’m saying is what the author fails to say and that’s why I say he is a misleading propagandist of some sort…”

          Well we can agree that this is what you are saying, at least! However:

          “The author gives the impression in the text of current parties/unions being actually derived from the fascist organization and that’s not the case.”

          Again, this is irrelevant to the author’s point that the parties/unions lack meaningful political power. If you must attack the premises, find an angle that is actually meaningful.

          “Actually exactly the same system (or even worse) exists in the USA, mind you, but the author only talks of Spain” and later “The author manages to single out (in his discourse) Spain for no reason at all, never discussing Western bourgeois “democracy”, its limits and the powers behind it, but pretending that Spain is somewhat exceptional, as if there would not be a very similar system in the USA, the UK, France, Germany, etc.”

          So you are saying that the author’s argument on the nature of Spanish internal politics is invalid because it does not discuss the internal politics of other nations? A non-sequiter.

          “… what I say is that the author totally ignores [economic power]…”

          Hardly. You argued falsely that the author is wrong about the political class’s economic power because he labels it the “Corporate State”. Equivocation? Or maybe moving goalposts… Fallacious nonetheless.

          1. Maju

            How come a “non sequitur”?! If the main point of the author is “Spain is different” but what he criticizes is identical in other Western polities, the main point is invalid!

            “You argued falsely that the author is wrong about the political class’s economic power because he labels it the “Corporate State””.

            I did not discuss that label. What I say is that politicians obey bankers and seldom the other way around.

            A former minister under Zapatero recently came out with the story that when he meant to apply the rules to banks, he was notified by the Secretary of Organization of PSOE that “the banks cannot be touched”, what was supported by the rest of the government, making him feel he was wrong by means of peer-pressure (although he admitted that nowadays he suspects he was not so wrong after all).

            It is that the problem of this state (and others): that the bourgeois oligarchy, very specially the parasitic financiers, are untouchable.

    4. Spaniardfbm

      Hi
      Could you define fascism and tell me why I am a fascist,or a reactionary from your highly balanced POV? And what am I “confused” about? E.g., you are confused when you think that I belong to the UPyD party, because it’s a socialist party and I am a Liberal. Finally, what is absurd about my assertions regarding EU Funds management? Taking into account that I have passed the last five years working on management and evaluation of Structural Funds, I feel curious. Please, answer, I am sure I will have fun reading you :)
      But what I really want to add here is the number of public enterprises that you say do not exist (:O). I didn´t not know how could anyone in Spain be so ill informed without lying, but I have realized that data are no so easy to obtain so I will give them to you and your friends. Unfortunately all the links are in Spanish so fewer people will be able to extract their truth from the data, but at least there are lots of numbers to see…
      In January 2012, according to the central government, there was 800 State´s owned Private Companies (“Sociedades Mercantiles”) in the central (171) or regional (629) governments and 1.449 in the local authorities. http://www.lamoncloa.gob.es/ServiciosdePrensa/NotasPrensa/MinisterioHaciendayAdministracionesPublicas/2012/inventarioentes010612.htm
      There is a link that allows you to search them by town. Great, isn´t it?
      Here you have a couple of news about the local entities. About how a half of the total for a 43 million country, belong to three of its 17 regions, Andalusia+ Catalonia+ The Basque Country, and how the Socialist PSOE party is supposedly in rage against its suppression.
      http://www.radiogranada.es/2012/10/el-psoe-exige-a-rajoy-que-retire-su-propuesta-de-eliminar-las-entidades-locales/
      And I am counting ONLY the ones declared as “Sociedades Mercantiles”. I am not taking into account the Foundations, that in fact works as politically connected subcontractors for the Government, other “NGOs”, consortium, etc…
      Here you all have a very interesting report about the (lack of) progress from a 2010 agreement of the successive Spanish governments in reducing the number and complexity of the Corporate State.
      http://www.minhap.gob.es/Documentacion/Publico/PortalVarios/FinanciacionTerritorial/Autonomica/Informe%20Reordenaci%C3%B3n%20SP%20a%2001-04-2012.pdf
      I emphasize: The number and complexity, not its weight in the budget or the political class control over it.
      BUT my point is, that from my direct experience, all this numbers falls absurdly short, because they do not take into account the 100% privately owned NGOs, companies, etc. that lives from and for the government and specially for the Parties in Spain. And they don´t count them because not even the politicians know how many of them exist, because there are no central orders, or plans. That is what I mean with “decentralized style of management”. Decentralization is great to thrive. The problem here is that Parties thrive is of no use to citizens.
      Finally, this is a very funny article that sum up what is happening. The title could be translated as… “Please, pal, suppress your public corporations, that I am not in the mood”.
      http://hayderecho.com/2012/08/12/suprime-tu-un-ente-publico-que-a-mi-me-da-pereza/

  3. C

    My, admittedly limited, experience with European government leads me to agree with this.

    In general my European friends (in which I include Brits) are forced to deal more with a Bureucracy than with a political class. There the problem seems to be not democracy bought but democracy ignored. When the EU “constution” was voted down by the Irish population the Irish Prime Minister declared that they would “vote again until they got it right” or words to that effect. This comment, absolutely insulting to Americans was treated as normal, even proper by some with one German noting that the Irish had gotten all the “benefits” of the EU and now needed to pay.

    At the same time voters in Poland were told to vote on the treaty without even being given a copy in Polish which is legally required. So in Europe the bureucrats seem to be firmly in charge with the politicians either fronting for them or unable to affect real change.

    In the U.S. I tend to agree with your assessment Yves, I think that we have a permanent political class that is similarly antidemocratic. Look at politicians like Rick Santorum or Hilary Clinton, for example. Both are party loyalists who have been groomed to run in states they do not have a tie to (Santorum moved to Pennsylvania the minimum time before the election and barely resided there when he was Senator). In between stints in office they have served on external boards or think tanks or other government service. Ultimately they and others like them have blurred, or simply erased, any distinction between elected officials and lobbyists while at the same time party heirarchies that actively exclude outsiders.

    And, like Spain both parties are unpopular, though not that bad. The 2008 Presidential Election represented the highest turnout since the 60′s at 61-63%. A full 37%+ of American voters are so turned off by the parties that they just don’t bother to vote. In many respects the net result of the political class versus the bureucratic one is the same, a lack of real democratic effect.

    One functional difference may lie in the courts. The Spanish courts may be powerless but ours are not. Our courts however often cede their power, by accepting “National Security” as a get out of jail free card, or by willingly signing off on crappy plea deals.

    1. Nathanael

      The issue of the courts is actually a big deal. A country with no democracy but with a widely respected, impartial court system whose judgments *usually* stick up — that country will be pretty nice to live in, even if the oligarchs overrule the courts intermittently.

      A country with a nonfunctional court system will be miserable, regardless of whether it has voting.

      Courts predate democracy by thousands of years. They matter.

  4. Diego Méndez

    I agree with the author. Corruption, or “Corporate Administration” as the author calls it, is not the most important issue in the Spanish crisis, but it’s a real issue.

    If you have ever wanted to do business in some industries, the only possible way to do it was relating to politicians and extracting (EU or local) subsidies through the Corporate administration. This has happened at many industries: real estate, media, telcos, manufacturing, even small-sized R&D companies.

    Whether you agree completely or not with the author, it’s fair to say he has a point, and it is not tolerable to call him a “fascist” or condone such behaviour, so I won’t:

    - Maju thinks the author is fascist because he writes about Basques and Catalans while not saying how great they, their local politicians and their succeses are. Like most Basque nationalists, Maju probably uses a very strange definition of fascism, unheard of outside the Basque country and Catalonia.

    - bmeisen is misinterpreting the claim that EU funds “have not helped”. EU funds have helped the economy, but the way they were distributed has fostered corruption / the shadow “corporate” administration. In that sense, EU funds certainly have not helped.

    1. Jim Haygood

      Every economic crisis, in every country, leads to a searching examination of institutional structure, the quality of regulation, and the influence of corruption. Deficiencies are always found, as the author points out with some details pertaining to Spain.

      When crises occur in developing economies, invariably their institutional structures compare poorly to those of richer OECD nations. But differences in structural arrangements have little power to distinguish countries which fall into crisis from those which don’t. Michael Pettis has argued that the distinguishing factor is not institutional structure or corruption, but hot money capital flows.

      In the middle of the last decade, projects in Spain represented half of all construction in Europe by value. Hot money inflows to Spain — not only intra-EU, but also from sources such as Russian oligarchs — were enormous.

      No provisions were made within the eurozone for capital controls, either to slow hot money inflows or to prevent them leaking away in the ebb tide, as is occurring now.

      The most incompetent central banker in human history — serial bubble-blower Alan ‘Magoo’ Greenspan — argued that a bubble can’t be identified in real time. But even as Blind Magoo mumbled his nonsense, Jeremy Grantham at GMO quantitatively identified some forty historical bubbles, using a definition of two standard deviations above a fitted trend. This ain’t rocket science, except to charlatan political economists.

      Jean-Clodhopper Trichet, president of the ECB from 2003 to 2011, didn’t have a clue about the dangerous imbalances signified by phenomena such as Spain’s construction boom, half-million euro Irish cottages, and the convergence trade in eurozone peripheral sovereign yields which made dozens of hedge funds rich. He was happy to cheer on the boom, then gravely wring his hands when it predictably went bust. Finally Jean-Clod was yanked off the stage, and his name is no longer even mentioned in fashionable soirées.

      Fiat currency regimes are inherently unstable, especially multinational ones. Spain’s affinity to the eurozone has been rewarded with wildly imprudent monetary policies from Frankfurt that were not at all suited to Spain’s needs. Until this changes, it’s not going to get any better.

      1. Lambert Strether

        “Jeremy Grantham at GMO quantitatively identified some forty historical bubbles.” Got a link on that?

        Since the rentiers tend to fasten their tiny mandibles on bubbles, so a relationship between bubbles and the swelling and shrinkage of the permanent political class would be interesting to see (if there).

    2. Maju

      The author is clearly speaking as an Spanish imperialist, insulting the Basque and Catalan nations as if we’d be willingly under the Spanish boot and dissing our claims as “particular interests”. All that is fascism without question. I know a lot of Spaniards who don’t think like that at all, specially all those who consider themselves to be at the Left.

      Anyhow, Spanish imperialism apart, he totally sounds like UPyD, the party of Basque socialist renegade maverick Rosa Díez (ex-socialist like Mussolini, mind you), who has managed to expel all those like philosopher Savater who approached it at first, because she won’t tolerate anything but total obedience to the führeress and who has also managed to muster the support of many minuscle fascist parties, who recognize her as füreress-in-waiting.

      Why is the author attacking “the political caste” (i.e. the elect representatives of the people) and not all those who have power without any mandate, from the King to the Duchess of Alba, from the banksters to the mafioso boss of El Corte Inglés, from the oligarchy of Neguri to that of Barcelona, from the foreign “investors” (divestors, speculators) be them German, French, British, Dutch or Italian, who are taking our lives like Shylock?

      Because the author is an opportunist fascist, it’s very clear.

      1. Ruben

        “The author is clearly speaking as an Spanish imperialist, insulting the Basque and Catalan nations [...] he totally sounds like UPyD[...] the author is an opportunist fascist [...]”

        Weeeell what can I say, that you are making way too many assumptions?

  5. Ruben

    I’ve been saying this for quite some time in these comments section. Spain has a predatory, or better said, parasitic political class. They caused the housing/construction/infrastructure bubble to channel the new funds available from northern savers the best way in order to maximize corruption, instead of promoting productivity via science and technology, via the creation of a better knowledge base. As a parasitic class, politicians have expanded to control more of the State machinery, as described by the author. Northern countries gov’ts and pops have a good grasp of this fundamental weakness and thus do not want to provide unconditional help, and they are esentially right. Structural reforms are needed, badly and soon. Any early stimulus, debt forgiveness, mutualization of debt, exportation of toxic assets, will just make things worse because the parasite controling the State machinery will get bolder.

  6. Ruben

    You are misinterpreting the author, same error as maju. The author is not saying that beaurocrats control things and democratic policitians fron for them or are ineffectual. The author wrote this:

    “Neither banks nor public workers have ruined the country, but politicians, a separate class born out of the “Transition” from the Franco dictatorship to democracy”

    There is a separate class of politicians, same as in the USA, and this class is the main problem. The bit that has confused you and maju is that the author goes on to explain how this class was born, just to emphasize its illegitimate and non-democratic roots in the dictatorship.

    1. Maju

      In nearly every state there is a group (I would not call them “class”) of professional politicians whose interests are at the service of private powers (unless the state is socialist like Cuba or earlier in the USSR, in which case the power lays almost exclusively in the state and the political “class”).

      In a capitalist state, the political “class” is always at the service of the bourgeoisie/oligarchy. You and that Curro guy fail to identify this oligarchy, which is mostly not part of the political system as such but their bosses.

      There can be some particular oligarchs like Pantoja, Gil, Ruiz Mateos or Conde who have fallen off with power but not just with political power, they have probably offended the economic power represented in the CEOE (Spanish Confederation of Businessmen’s Organizations), which acts as de facto “Roman Senate” of the state (the Roman Senate had no formal political power either, contrary to popular belief – Rome was initially a democracy like Athens and held regular votes every year or so to elect consuls and other offices).

      1. Ruben

        Yeah well, you know, to me, the ultimate villains are not those that do what they are supposed to do but those that betray their mission (hint: you called them “the elect representatives of the people”).

        I remember an interview posted here to a remarkable woman, a British lecturer IIRC, intelligent, articulate, elegant, she was pleasant to hear and to see, I digress. The thing is she was talking about the deep failure of the finantial system and the crooked nature of big players, but when asked about where the guilt lied, ultimately, she did not hesitate for a second, it was the politicians, they engineered the system in order for the big players to take advantage of. She did not hesitate for a second. I wish I could find the link to that interview. Such an intelligent and pleasant lady.

        1. Maju

          Ruben: I can agree with those criticisms but I do not agree with segregating the political responsibility of those we (it wasn’t me, believe me, but “we” anyhow) have stupidly elected from that of the real power behind the throne, who are the oligarchs essentially. Why should I criticize Rajoy and not Botín? Isn’t Botín (owner of Banco Santander) much much more powerful than Rajoy? Why only to depose Rajoy and not to depose, expropriate and feather Botín also?

          I think that Rajoy’s guilt is shared by those who voted for him but Botín’s guilt is indivisible and unjustifiable: he has never been elected by the people, yet like the King, he is there for the good and never, it seems, for the bad.

          That is what I miss in those “anti-political” criticisms: that they may end in establishing an “anti-political” dictatorship like Franco’s, which eliminates all kind of representation and meaningful political activity but keeps and reinforces the same structures of exploitation and oppression, keepin in power those who really have it already: the oligarchs for whom Rajoy isn’t but a manager, a butler of sorts.

  7. RT

    I am not familiar with the situation in Spain so can’t comment on the author’s points. But as a European I’d agree that democracy in Europe is in a rather sorry state. And as a German in Europe I’d like to also point out the sorry state of democracy in Germany.

    Proportional representation can be a real serious problem, too. We had elections where a state government (e.g. in Hessen) was clearly rejected by the populace b/c of disgustingly overt nepotism but it nonetheless remained in power due to just forming a different coaltion largely based on secondary votes (philosopher Popper was, e.g., an outspoken critic of this special feature of proportional representation). We also have members of parliament who stay there for decades regardless of elections’ outcomes (the Bundestag’s current veteran happens to be Dr. Schäuble who took his seat 1972, i.e. during the time of Nixon’s presidency). Some parties – like the F.D.P. – have no directly elected representatives in the Bundestag at all (first vote) but only seats due to the proportional scheme (second vote). Hence, in essence if a party manages to get at least a 5% share of the secondary votes then it’s the party alone who picks the candidate, not the electorate. Therefore, voters in Germany can only purge someone out of parliament if the electorate removes the party entirely by voting for it by less than 5% so that the party gets no seats at all. A party that manages to win at least 5% of secondary votes can always dictate who is going to get the seats and can therefore sort of guarantee a parliamentary career spreading over decades, regardless of all elections in between.

    In light of this special setting there has been and is going on a lot of critic concerning potential for corruption within the German parliamentary system, not least because the German parliamentary class has also always successfully prevented all attempts to strengthen anti-corruption rules or laws for delegates. Germany so far hasn’t even ratified the UNCAC which really is, to me, a very bad sign especially if you look at which other nations have failed to ratify UNCAC yet (http://en.wikipedia.org/wiki/United_Nations_Convention_against_Corruption). Civil servants in Germany have a lot of draconian rules to adhere to, parlamentarians not so much. Furthermore, there is still no really democratically legitimized German constitution though the final paragraph of our Grundgesetz still promises that we may have one in some unknown future. Perhaps we should have used the re-unification in 1990 to get one but, alas, it was then really more about freedom and economics than about democracy. And further back in time, it’s today no secret anymore that some large corporations and influential industrialists went back to full business just a few month after WWII ended, many nazi jurists went back to the judicial system, teachers back to school, politicians back to politics (and some even back to power).

    And when it comes to Europe, Germans are perhaps even worse off than the Irish because there are no public votes on European affairs at all but only parliamentary approvals.

    In summary, even (or also) in Germany real democracy is still rather a promise than truly established. The system is clearly rigged in favor of solidly establishing a ruling class which is not too much hampered by some elections every now and then. In public polls, a solid two-thirds of the German population is in favor of at least some elements of direct democracy to be included in our constitution-surrogate. But in parliament, only about one-third of our so-called “representatives” are in favor of it and therefore we will not get that. To me, that’s quite telling. And I’d say that’s why participation rates in elections are constantly falling.

    But to make matters even worse, our current voting laws have been judged unconstitutional by the Federal Constitutional Court more than four(!) years ago (on July 3, 2008) but our parlamentarians don’t really care, they tried to fix it late (in 2012) but just rigged it once more, see http://www.spiegel.de/international/germany/german-high-court-demands-improvements-in-election-laws-a-846558.html (and yes, Merkel got to power in 2009 on the basis of an unconstitutional voting law but that odd fact was “approved” by the Court – which members are appointed by … some parlamentarians; reason: it’s a complex matter and politicians can’t fix it in just one year, so 2009 elections were held based on the invalid law; now it’s end of 2012 and in 2013 we’ll have the next election but still, there’s no valid law as of today). That’s the current sorry state of affairs in Germany. So, democracy as “Government of the people, by the people, for the people?” Nope, not really. But perhaps already a lot of downside risks to some sort of “Managed Democracy Inc.” maybe decaying into outright “Inverted Totalitarianism”? Well… what’d you say? Bad signs are mounting, aren’t they?

    1. Jim Haygood

      ‘We also have members of parliament who stay there for decades regardless of elections’ outcomes (the Bundestag’s current veteran happens to be Dr. Schäuble who took his seat 1972, i.e. during the time of Nixon’s presidency).’

      That’s pretty impressive, RT. But the dean of the U.S. House of Representatives, John Dingell, has been in office since the time of Konrad Adenauer — 1955. And Dingell’s father was a KongressKlown for 22 years before that, making 79 uninterrupted years that this father-son political dynasty has held office.

      As supporters are wont to chant at political rallies here, Four more centuries!

    2. Max424

      Thanks for the knowledge, RT.

      This might sound weird, but reading your comment, as negative as some of it is, I couldn’t help but thinking that you are living in a political paradise.

      It’s a comparison thing. I live in a country that has no government, at least in the traditional sense. So whatever you got, as bad as it might be, it sure looks pretty good to me.

    3. nonclassical

      …my perspective-having lived 4 years in Berlin:

      Germans have publicly financed elections-recently, accomplished 30% “renewable energy” application, forecast to be accomplished by 2020…when asked HOW this could be, German pol said, “We have publicly financed elections-limiting effect of “special interests”. Living in states, Seattle region, I found comparison of “rapid transit” and public input (nightly debates on news)
      quite the contrast to 30 year process here. I witnessed organized discussions, first focusing upon “SHOULD WE do….?”…(3 month public input-discussion)…
      then, “What is best way to do”…(3 month public input-discussion)…then “HOW DO WE PAY FOR IT”…(3 month public input-discussion)…

      Note the orderly process…in Seattle, the process stumbled over how to pay for it, for 20 years….then decided upon a “way”, then changed WHAT should be the “way”…then finally went ahead with what pols wanted-taxpayers had rejected..(and $ubsequent payoffs).

      On the other hand, Helmut Kohl’s administration was involved in $$$$ conspiracy regarding selling off east german industry-business…but Kohl got caught..(who OWNED industry?…played off layers of past industrial ownership?..
      and after YEARS of court decision, East Germans would accept whatever “ownership” evolved…(intentionally)…

      East German tee-shirt: “God knows best…..West German’s know BETTER”…

      1. readerOfTeaLeaves

        Oh, gawd… how to even begin…?

        For starters, you are talking about Sound Transit (the regional Puget Sound/Seattle based transit agency). Are they part of a Permanent Political Class, fully equipped with a network of subcontractors? You betcha.

        The head of Sound Transit is appointed by the Board; the last that I recall, the ST Board is comprised of representatives (including business people, mayors, etc) who are appointed by local governments. As a result, the ST Exec is well insulated from direct democratic sentiment; there is little direct democratic accountability to voters. But that was inevitable, due to the the legal structure of that agency: it is essentially a creation of local governments, and as such — apart from the occasional fig leaf of an election they hope to win, **but don’t have to win** – the ST Political Class is fairly well insulated from voters.

        Several years back, the region’s voters refused to fund one of Sound Transits prime initiatives. The agency and the regions’ political infrastructure overrode the voters. Sound Transit is implementing the project, anyway.

        It should be noted, however, that behind the scenes, the regions’ business leaders had been demanding solutions to traffic congestion. Some companies had started to leave the area due to: (a) the high cost of living, plus (b) they couldn’t afford to have their employees parked on freeways three hours each day in traffic jams. (FWIW, any business leader who failed to raise holy hell over the traffic mess would have been negligent, IMVHO.)

        And just because NC readers tend to be interested in banking and housing, the current head of Sound Transit, IIRC, is Joni Earl. Back in the 90s, she was on the board of Cascade Bank, a local mortgage bank whose other board members included prominent local housing developers. The developers couldn’t sell housing developments built 40 miles out of the city unless they had some kind of transit options, so they had their ‘come to Jesus’ moment, finally supported a transit agency, and then ensured that a member in good standing of the Political Class got the top job.

        Did all that housing drive transit congestion? You betcha.
        Did that transit congestion drive a need for more government, in the form of an agency insulated from direct democracy? You betcha.

        Just for fun at NC: did Cascade Bank end up taking TARP money? Apparently so.
        Here’s an article from May 2011: http://www.bizjournals.com/seattle/blog/2011/05/cascade-bank-lays-out-stakes-of-merger.html

        If the merger goes through, Cascade Financial will be able to shed $39 million in TARP (Troubled Asset Relief Program) money off its balance sheet, which will be repaid to the government at a discount by Opus Bank. The merger will also allow the holding company to line up with regulator capital requirements.
        And if the deal closes, Cascade’s common shareholders will get an estimated 45 cents for their shares, which were valued at 42 cents at the end of trading Wednesday.
        If the merger is not approved, the bank and holding company will be out of compliance with two regulatory enforcement orders, which say Cascade Bank needs to raise $68 million.

        So we have here one example of a member of the Political Class whose ‘expertise’ seems to straddle private and public, including the juicy topic of mortgage banking.

        However, whether Joni Earl left the board of Cascade Bank before things went wobbly, I don’t know. She was certainly on the bank board back in the go-go years of homebuilding frenzy.

        Experiences in the private sector shape the attitudes that members of the Political Class bring back into government. If you serve on a bank board, you probably tend to see people as ‘customers’.
        And you then bring assumptions about implementing good ‘customer service’ into government; that shift in attitude was pervasive in the 90s, and Joni Earl was part of that social shift.

        In a customer service context-framework, you don’t ask, “Isn’t this a cockeyed notion I’m being asked to fulfill?!”
        That mindset has zilch to do with democracy.
        Who needs to worry about ‘voters’ in that scenario? It’s all about buttering the bread of those who have resources.

        So in my mind, this post raises a question: who do we think that the Political Class perceive as their real constituency?
        From what I’ve seen, the Political Class seeks to serve private, generally business, interests.
        In this way, subtle assumptions, like the importance of customer service, then find their way into government and alter institutions.

        Traditionally, the assessors office or the elections office were *extremely* courteous, civil, orderly, effective — because they took pride in the fact that they worked for their communities.

        From my observation, the Political Class controls budgets, performance reviews, working conditions, and project priorities of many civil servants. In other words, the Political Class dominate over the civil servants most of the time.
        Thus, they alter institutions.
        From what I’ve seen, those shifts generally come from ideas picked up in the private sector, or in business schools.

        There is a real need, IMVHO, for Public Administration to be as well financed, supported, taught, and implemented as Business School curricula. For the last generation, at least, the schools of Public Administration (except for possibly Harvard) have been the poor stepchildren of Higher Ed.

        The Political Class are those who best straddle private-public, in my observation. They operate within agencies and structures that insulate them from direct democratic accountability, and that is probably unwise over the long term.

        1. RanDomino

          They may call themselves the “Business Class” from the experience here in Wisconsin, where “Open For Business” (affixed lovingly to every “Welcome To Wisconsin” sign on the borders) really means “Open To Takeover By Businessmen”. Clearly they think of their activity as “business” (which, I suppose, makes everyone else’s activity “laziness”).

        2. Spaniardfbm

          Great, great comment.
          It´s funny because I was writing yesterday a reply about how the Spanish “Cajas” (commercial banks under public control) were organized and I think it´s right as you tell about “Sound Transport”. Cajas were supposed to help to finance small businesses and citizens in small areas (Say, one on each medium size city) and be “non for profit” but they have to have profits, that should go to a 100% public funded Foundation. To make this story short, under a 1985 August the second law, local authorities had 40% of votes, the Foundation (more politicians) a 11% (we have already a 51%), workers 5%, and clients 44%.
          The main similarity: Under its management, Cajas have become the main financial problem for Spain, outstripping by far any problem in the really private banking sector.

          1. readerOfTeaLeaves

            Thanks for your kind remarks.
            Yes, it looks from your example as if the workers have too few votes in your scheme, and the politicians too many.
            Politicians are always under pressure to over promise, and are just as susceptible as Wall Street to IBGYBG (“I’ll be gone, you’ll be gone”) short-termism.

            Extremely imprudent.
            The structures governing these agencies – and it sounds like the cajas – create a lot of room for mischief.

    4. Ruben

      Thanks for your interesting comment on the political system in Germany.

      However, even the German situation as described by you would be a good development for countries like Greece, Spain, and Italy.

      Recently the former German president was fired on account of receiving special treatment for a loan by a German and other misdemeanors. In Spain, the king is caught with their pants down killing elephants in Africa at the same time that the Spaniards were badly beaten by the first round of cuts, and the quasi-most remarkable thing is that to face the accusation of spending Spaniards taxes in their hobby of killing noble savages, the king explained that his trip was paid by a rich Saudi friend!

      I say “quasi-most remarkable” because the most remarkable thing is that even the press accepted this explanation as good. Not to mention that he was probably lying, the Spanish Head of State receives favours of that caliber from a foreign magnate and nobody in the establishment thinks that that is seriously wrong.

      Regarding your comment : “So, democracy as “Government of the people, by the people, for the people?” Nope, not really”. Every form of gov’t is based on Utopian principles, liberal democracy is no different, and the Utopia goes bad eventually. The only good gov’t is self-gov’t, which is the same to say, no gov’t at all.

    5. Maju

      “… but, alas, it was then really more about freedom and economics than about democracy.

      I remember being in Strasbourg parliament as vistor in the very late 80s or maybe 1990 and there was one MEP who gave us a speech praising the alleged freedom and democracy of the West and foreseeing the incorporation of Hungary and other Eastern states to the EU.

      I had to ask: let’s imagine if Hungary adopts formal democracy but keeps the socialist economy, would they be so much welcome in EU as you say.

      The MEP did not know where to hide. He managed to babble something about market economy… which is obviously what all is about: Capitalism, the rest is just a pretext, an ideological cover up.

      As for Schauble… he was already hated by many when the RAF failed to kill him and put in his wheelchair. When was that? The early 70s?

      I recall from the 80s how the Federal Republic of Germany was often described, together with Japan, as some sort of NATO military marche, in which democracy was particularly limited for reasons of the Cold War (single union, 5% barrier to enter parliament, illegalization of the communist party, very repressive police state in general). Obviously, as you say, the unification was a missed opportunity to improve German democracy.

    6. bmeisen

      RT’s arguments against proportional voting in Germany are imbalanced and unconvincing. To clarify: voters in German federal elections have 2 votes, the first one for a candidate for a Bundestag seat representing the voter’s district and the second one for a party. The candidate with a simple plurality of first votes wins the direct mandate for the seat in the Bundestag representing the district. Bundestag seats are distributed based on second votes to parties that receive 5% or more of the total vote. Thus parties can be represented in the Bundestag, the lower house of the national parliament, even if none of their candidates win a direct mandate. Smaller parties like the liberal FDP and the Greens have obtained a national presence and have participated in ruling coalitions, i.e. have had ministerial portfolios and exerted direct influence on national policy, through second votes.

      If a party can remain in power by finding a new coalition partner then the new partner – formerly in the opposition – has an opportunity via the coalition agreement to address the issues that caused the previous coalition to collapse. RT implies that a corrupt government in Hessen was thus able to stay in power, and an honest government is also able to stay in government using the same opportunity.

      RT also refers to the “Überhangmandaten” issue. This is constitutionally problematic and generally controversial. A complex calculation of second vote results is made after the voting and supplemental seats are rewarded to parties. There are arguments for and against it. No particular orientation benefits from it though ultimately only the larger parties can use it to obtain or hold on to the chancellorship.

      The fact that some representatives have been in the Bundestag a long time is appropriately a matter for the parties themselves. Unlike parties in the US, German parties are established in the Grundgesetz and observe formal and public position development processes, i.e. regular party conventions. Several per year are not uncommon. Some parties do more than others in regulating mandates. There is no guarantee that an individual Bundestag career will extend over decades.

      Germany is in good company with regard to it’s missing Constitution: the UK also has no Constitition. The Grundgesetz is doing an excellent job.

      RT’s complaints about the 5% threshold ignore the substantial benefits delivered by the system: a modest diversity of political opinion is represented in the country’s most important legislative body. Currently 6 parties compete for power: CDU, CSU, FDP, SPD, Green, die Linke. The neo-fascist NPD might get a seat in the next election and the socialist/libertarian Pirate Party has even better chances. This is the kind of diversity of representation that is missing in the US. The current “Endzeitstimmung” in America, exhibited in the work coming out of Hollywood, is in my opinion a function of the country’s failed political processes.

      1. RT

        What you say isn’t wrong but it isn’t the real truth either. (1) If you monitored the legislation for the new voting law (which failed so far) then you could see that it wasn’t so much about the voters’ rights but about the larger parties abilities to take advantage over one another; (2) yes, there are “6″ parties in the Bundestag if you want to see it this way. But, for instance, I’d count CDU/CSU as one entity, and it was the SPD/Greens coalition who started demolishing social security which got smoothly carried on by the following CDU/CSU/FDP coalition. Now we’re discussing mounting risks of poverty among retirees and both political blocs are not fundamentally different in their proposals to “solve” that problem (no wonder, they both created the problem first of all). Hence, those 5 parties don’t really disagree much. Leaving Die Linke as the only truly opposing force but that party is under surveillance of our Federal Intelligence Service for their dissent to the common political mainstream (approved and overviewed by the other parties). For me, that remained a bad sign. And it is a bit akin to the meagre US “split” between Democrats and Republicans and the suppression of third parties.

        Also, this year the German military got for the first time past WWII approval by the Federal Court to operate domestically “in case of emergency”. Why now? There was no catastrophe which required such new rulings. This, to me, is a little bit akin to the NDAA rulings in the US. Plus, the European Court of Human Rights recently approved extradition of some EU citizens to the US. That means that US laws are in complete accordance with the EU. And that’s simply not true, it rather seems that the EU Court has chosen to look the other way (I therefore engaged in learning about the NDAA in detail, btw; there were only a very few and technical news in German MSM).

        And you can go on, e.g., we were bluntly lied to before entering the war in Kosovo (our first war after WWII), now what is going to happen in the Middle-East, Iran, or Syria next? Sorry, but to me, all these developments amount to really bad signs when thinking about where we’re headed. And, b/c of history, we need to rise our vigilance as early as ever possible. Even if proved wrong later that’s way better than waking up after the fact, again. I for one don’t like what I see.

        1. bmeisen

          I have the impression that most commenters here would go for the Piraten Partei. Socialist Libertarian.

  8. Norman

    As one who sits on the outside looking in, I can’t help but believe that there is no hope for the present direction humankind is going. The population keeps growing, but the same old problem exists, that being the few who want to control the many, by hook or ctook, the last being the forte of the day. I don’t see any good comming out of any of this looking back to see what went wrong, because so far, the mistakes are repeated, though with new window dressing. Perhaps, like climate change is showing, so to will the humans be thinned out, allowing the Phoenix to rise again.

  9. Max424

    Barca and Madrid tied 2-2 on Sunday past.

    The Clásico, held early this year. At the Camp Nou. The Mosaic was stunning.

    http://www.youtube.com/watch?v=PKXCI1m0_hQ&feature=related

    Xavi Hernandez, the Blaugrana’s veteran midfielder and interim captain, before he would take questions in the post-game, made it a point to thank the fans for their wonderful pre-game efforts, and said that his heart was with the people in this difficult time.

    The people? Which people? The people of Spain, or the people of Catalonia?

    One would think that Xavi was referring to all the people of Spain. He did just put on a masterfully determined performance in the recent Euro final, was easily the best player on the pitch as Spain beat Italy four-zero, setting off mass, joyous celebrations in every town, city, province and autonomous community in his country. His nation.

    But you never know. There are open and profound divisions on the national team. And it’s not just the old blues vs whites, Barcelona vs Madrid trivial divides, but deep regional, historical and political fractures.

    The national team has put it all aside, however, and over the last five years they have proven, that if they’re not the best football team of all-time, they are, without question, the most cohesive, and beautifully selfless, national sports team ever assembled.

    When they’re on the pitch.

    Note: Spain, get a currency of your own. If you don’t, you are going to split into pieces. That’s my opinion.

    1. Maju

      Basques and Catalans do not want anything Spanish coming back: not the peseta either.

      Actually Basque and Catalan economies, would we be independent (within or without EU) would be alright, because we have strong industrial economies, and being such small countries (2.5 and 6 million respectively) having your own currency may not be the best idea.

      In fact the best that can happen now to both Catalonia and the Basque Country is independence. However Spain has the military power and the political support of NATO, while we, unlike Croatia in the last Balcan War, have no external support.

      1. Max424

        Even if the Basque and Catalan regions separated from Spain, without their own currency, they would not be independent.

        Marching orders are marching orders, whether they come from central governments or they come from central banks.

        1. Maju

          I don’t have a strong opinion on that: nobody and certainly not a small nation like the Basque Country or Latvia can be 100% “independent”. But having a strong economy helps a lot: it’s not the same being the Netherlands than Portugal and we are much more like the Netherlands, sincerely. With a strong economy you can always issue your own currency almost overnight without negative effects, with a weak economy you can be trapped instead.

          Personally, within Capitalist parameters, I like the Swiss model: all the advantages of being in the Schengen free transit area and not any of the burdens of being a EU member (they can still pressure you but not the same). I don’t see any urgency on issuing a distinct Basque currency as we speak, but political power to issue and implement our own laws without those greedy Spaniards imposing their terms all the time by force… that is an urgent matter, if nothing else to save the oldest language of Western Europe from extinction. And also for reasons of dignity and democracy – we may also be the oldest democracy of Europe, Switzerland allowing.

  10. Jessica

    I am encouraged to read so much attentive and thoughtful discussion about the gap between electoral democracy and a truly democratic society. Understanding the details of how electoral democracy manages to combine the form of democracy with a deeply anti-democratic content is important for being able to move forward.
    I don’t think we understand yet exactly what a truly democratic society means because we have not created it yet, but the desire to shift to that is important.

  11. nonclassical

    …recalling a stat from bushit years-Clinton administration-under 450 “K-$treet” lobbyists…

    bushit administration, by 2007. 41,000 “K-$treet lobbyists”…

  12. charles sereno

    Far from understanding the ways of elites/kleptocrats, I know that German unions, such as they were (pretty good), allowed their leaders to seduce them into beggaring their southern neighbors (via too-cheap exports). Unions or their equivalents in Spain and Portugal were complicit in a reverse role. Good intentions don’t cut it.

  13. The Dork of Cork

    “which is necessary to move the project forward”

    no please no more Euro trash….please.

    Spain needs a Fiat King.

    Spain is different from Ireland in that at least some of its investments added to internal productive capacity so therefore it is a more viable nation state economy.

    In some areas it is richer then its northern counterparts as the Norhterners invested real resourses down there.
    However the banks cannot get a return on these investments if the market state continues.
    Catch 22 ?

    The problem is merely one of a lack of Spanish tokens.
    es.wikipedia.org/wiki/MetroValencia

    What British town of this size has 146.7 KM of metro and tram lines ?
    It ain’t Edinburgh thats for sure.

    1. Maju

      Valencia has 810,000 inhabitants in the municipality and 1.7 million in the metropolitan area. If anything I’d compare with Glasgow (600,000 and 2.5 million respectively) than with quite smaller Edinburgh (500,000 and no metropolitan area).

      Just sayin’…

      In Spain there have been many wasteful investments but that’s not probably one of them.

      1. The Dork of Cork

        Sure Maju
        I just mentioned Edinburgh because of its epic Tram disaster movie , they have a great Bus service but it appears they don’t do the Tram thingy too well.

        They should do a spoof movie about their Tram adventure though.

        http://www.youtube.com/watch?v=L90BduGKuTo

        GB & Ireland are very poor countries with massive claims on external productive capacity that is now turning red.

  14. The Dork of Cork

    The PIigs situation in general is not unlike when Cuba got cut off from the Soviet capital flows but is in fact much worse as the Euro Soviet has not fully collapsed yet and is demanding the PIigs buy its goods to sustain its exports while not getting its capital flows.

    Its a farcical situation really.
    Iceland was not buying much BMWs in 2009 & 2010 yet BMW still gives credit for its Diesel BMW 1 & 3s in Ireland.

    The BMW 3 was the biggest selling car model in Ireland last month – make of that what you may.

  15. The Dork of Cork

    The present Irish energy balance is not unlike this post 1989 with a 30 % + drop in oil consumption from peak

    http://www.iea.org/stats/pdf_graphs/CUTPES.pdf

    If Spain agrees to what the North is demanding all of its massive public transport investments will be written off.

    People will be walking around a capital intensive envoirment but with no tokens to use the stuff.

    They are going to take the oil away anyway – its best to stick pesetas in the ATM and transfer the energy shock to the core.

    BRING DOWN THE SOVIET

  16. bryanw

    http://elpais.com/elpais/2012/09/12/inenglish/1347449744_053124.html

    Additionally, Spain’s political class has colonized areas that are not the preserve of politics, such as the Constitutional Court, the General Council of the Judiciary (the legal watchdog), the Bank of Spain and the CNMV (the market watchdog). Their politicized nature has strangled their independence and deeply delegitimized them, severely deteriorating our political system. But there’s more. While it invaded new terrain, the Spanish political class abandoned its natural environment: parliament. Congress is not just the place where laws are made; it is also the institution that must demand accountability. This essential role completely disappeared in Spain many years ago. The downfall of Bankia, played out grotesquely in last July’s parliamentary appearances, is just the latest in a long series of cases that Congress has decided to treat as though they were natural disasters, like an earthquake, which has victims but no culprits.

  17. Alex SL

    Complex issue(s), of which I see at least four mentioned here: (1) The professionalization of the political class (and thus their insulation from the public), (2) corruption, (3) politicians “invading institutions that were designed to sit largely outside politics”, and (4) unelected and non-accountable technocrats forcing through unpopular or destructive policies.

    All four are surely not restricted to Spain, or to any region of the world, for that matter. (1) is probably very hard to avoid over time even if the political system were specifically designed to reduce the risk. (2) Could be fought with independent courts, an independent press and an informed, responsible electorate. But the cute thing for me is that (3) and (4) are, of course, two “problems” that are the solution for each other or, in other words, two alternatives. And it seems to me that if you have a political system that is really democratic and has an involved public, then there is nothing that speaks against (3), nothing that even makes it a problem. Why should some structure be excluded from democratic oversight and allowed to end up in situation (4)? I guess you may be thinking of the juidical system here, but even there somebody has to decide who becomes a judge on the high court.

  18. tiebie66

    It is clear to me that these problems are not unique to Spain, though their manifestations may be. Staring oneself blind against these manifestations as somehow being the cause of the problem is counterproductive. Thankfully, Yves and others have noted that similar problems occur in other countries.

    Having understood that, what solutions do you proffer? Is this problem at its core the same as that posed by viral infections? What are the principles in dealing with this sort of gradual decay (aging, infection, corruption, etc.)? Segregation, quarantine, segmentation, isolation coupled with renewal, maintenance, re-creation?

    I sometimes wonder if a jury-like system cannot be developed for governance purposes. Instead of the voters electing representatives, voters are selected randomly to represent their peers in the house. Just like a jury, they are isolated for a period of time (e.g. for as long as it takes to overhaul a specific law) to do their work. When done, they return to their normal lives while another set of ‘jurors’ is drawn to tackle the next problem. This is just the most brief of sketches, but perhaps someone can see how to flesh it out. And should such an approach be fractal (to borrow an insight from an earlier comment)?

    If you have different ideas, what are they? Some believe that the current systems are beyond salvation and redesign is necessary. But what? Anyone? Any pointers (I’m a laser guy, not much economics and/or social/political science background)? Thanks.

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