This month, The Heritage Foundation took its message of economic freedom on the road to Spain.
The first stop was the ancient city of Córdoba, a medium-sized town on the Guadalquivir River about 250 miles south of Madrid. It has been part of the region of Andalucia in the south of the country since the days of the Roman Empire, a region that is now one of the poorest in Spain.
Córdoba was Christianized in the first century and was conquered by Muslims invading from North Africa in the eighth century. Muslims ruled the region for 500 years before it was reconquered by Christians.
As wealth rolled in from the Spanish conquest of the New World in the 16th and 17th centuries, Córdoba grew into a large and prosperous city. Unfortunately, it faces economic challenges today.
Córdoba’s economy has suffered as a result of the long-term governance of Spain’s PSOE socialist party. According to data from Eurostat, unemployment rates in Andalucía are among the highest in Europe.
Eurostat reports that the region’s unemployment rate soared in the aftermath of the 2008 financial and 2012 sovereign debt crises, and that just 52.6 percent of working-age (20-64) people in the region were employed as of 2015.
The economy has not yet recovered from the collapse of the real estate bubble that ended a building boom of vacation homes for northern Europeans in the early years of the eurozone.
According to The Guardian, many people counted as unemployed are actually working “off the books” (“en negro”) in the informal economy.
While Córdoba continues to benefit from tourism and the production of olive oil and wine, local business leaders told The Heritage Foundation that the region’s economy would not truly recover until the over-regulation and onerous taxation rates that are hallmarks of the socialists’ brand are rolled back. Unless that happens, new business startups will be few and far between.
As The Guardian also reported, “corruption is endemic in Andalucía and the socialist party, which has governed the region for 30 years, is embroiled in a scandal involving, ironically, allegations of fake redundancy payments totaling hundreds of millions of euros of public money.”
The regional government is also under investigation over missing funds from the EU meant for retraining the unemployed. According to Der Spiegel, during the period 2007-2013:
Some €2.3 billion, most of it from the European Social Fund, was provided for training programs for unemployed Andalusians. But Spanish anti-corruption officials believe that many of the registered vocational training courses never actually took place.
The Spanish economy overall has slowly recovered from the deep economic slump that began during the 2008 global financial crisis. Spain ranked 69th out of 180 countries scored in The Heritage Foundation’s 2017 edition of its annual Index of Economic Freedom.
Since 2012, the conservative government of Prime Minister Mariano Rajoy has led Spain to a notable rebound, due largely to cuts to the inefficient and oversized government sector and labor market reforms that enabled an impressive turnaround in terms of job creation. Lower world oil prices and a reduction of high marginal income tax rates on individuals and corporations in 2015 also spurred growth.
But the economy around Córdoba will not be able to fully join in the national recovery until its citizens abandon their local socialist government leaders and embrace the principles of economic freedom.