Figure 1: Evolution of fiscal deficit in Catalonia (% GDP \u2013 cash flow method)<\/strong><\/p>\n\n\n\n Source: Generalitat de Catalunya[1]<\/strong><\/sup><\/a><\/em> (years 2017 and 2018 extrapolated because no data from this source is available for them)<\/p>\n\n\n\n Yet the moon is still there, and it is hard to miss. Nat\u00e0lia Mas, the Generalitat<\/em>\u2019s minister of Economics and Finance, described the report\u2019s main findings as revealing \u201ca sustained, unfair and deliberate financial strangulation \u201d[2]<\/sup><\/a> of Catalonia\u2019s economy. Was she right? And, if so, why would Spanish governments of otherwise bitterly opposed political allegiances consistently follow such a harmful\u00a0 policy against one of the largest regions under their responsibility?<\/p>\n\n\n\n As always happens with politically charged debates, fiscal balance discussions in Spain are all too often stoked\u00a0 up around remarkably baseless objections. One of them is methodological. The approach the Generalitat<\/em> uses (the \u201ccash flow method\u201d) is the most straightforward and intuitive: it simply computes taxes and tax-like transfers from Catalonia to Spanish government institutions, minus those institutions\u2019 transfers and spending in Catalonia. The only major correction relates to Spain\u2019s public debt build-up, which allows governments to spend more than they collect as taxes and other sources of revenue every year. Not adjusting for this would thus be like counting one\u2019s overdraft as income, for the debts incurred must eventually be paid[3]<\/sup><\/a>.<\/p>\n\n\n\n In Spain, another\u00a0 approach to the calculation, the \u201ccost-benefit method\u201d, has sometimes been advanced\u00a0 as a more accurate reflection of reality. In it, the costs incurred by Spanish institutions that are somehow deemed beneficial to everyone, ranging from ministries and shared services to museums regarded as \u201cof national interest\u201d such as El Prado in Madrid, are allocated to all regions regardless of where the expenditure is\u00a0 actually made.\u00a0 However, this method has two major drawbacks. First, the allocation rules may be more or less sensible \u2013 why would the costs of El Prado be reallocated but not those of museums located in other Spanish cities?\u00a0 At any rate, they are inevitably arbitrary and therefore introduce a strongly subjective element in a calculation that is meant to be clear-cut and objective. Second, regional spending has a local macroeconomic impact (higher GDP, more jobs, etc.) that cost-benefit allocations disguise: whoever may benefit from their work, it is the people hired by El Prado who work in Madrid and spend most of their income there. It is thus the cash flow method that lends itself best to an objective assessment, as well as elucidating\u00a0 the macroeconomic impact of fiscal balances.<\/p>\n\n\n\n The debate is so lively in Spain, of course, because Catalonia\u2019 fiscal deficit figures are nothing short of shocking by international standards. One rarely, if ever, finds any developed democracy, no matter how\u00a0 progressive its tax and spending policies may be, where any regions are subject to such a high fiscal deficit. In the USA[4]<\/sup><\/a> for example, the states acting as the country\u2019s core economic drivers have fiscal deficits amounting to less than half of Catalonia\u2019s, e.g., 4% for New York or 4.2% for California in 2005, and even a state like Connecticut, with a GDP per capita 31% above US average, had a deficit of 7.3% in 2005. In Britain, London\u2019s fiscal deficit, the UK\u2019s highest, was 6.6% of GDP in 2016-2017, while its GDP per capita was 80% above the British average[5]<\/sup><\/a>\u2026 The comparison makes Catalonia\u2019s case, whose GDP per capita is barely 17% above Spain\u2019s[6]<\/sup><\/a> and yet is burdened with a fiscal deficit of nearly 10% of its GDP, all the more outlandish.<\/p>\n\n\n\n The devil in the details<\/strong><\/p>\n\n\n\n The Catalan case seems even more peculiar when we dive into the details. For instance, from the outside one might expect this huge fiscal deficit to be the unintended result of automatic redistribution rules \u2013 e.g. pensions financed by regions with more working-age people and paid to others with an older population. However, the figures tell a very different story[7]<\/sup><\/a>. In 2021 for example, Catalonia contributed 19.2% of the Spanish government\u2019s overall revenue, which seems reasonable considering that Catalan GDP is 19% of Spain\u2019s, but only got back 13.6% of the total expenditure\u2026 And, if we exclude social security payments and contributions, which in Catalonia\u2019s case are generally balanced, then the contrast becomes a lot starker: 19% of the Spanish government\u2019s tax revenue is sourced from Catalonia, again a reasonable figure, but only 9% is spent back in the region(!). In other words: the more discretionary a spending item, the less likely it is to be spent in Catalonia \u2013 or, in Natalia Mas\u2019 words, \u201cwhenever the state can choose where to do the spending, Catalonia ends up systematically shortchanged\u201d[8]<\/sup><\/a>.<\/p>\n\n\n\n This does not happen in Catalonia alone: comparable cases are those of Valencia, on the Mediterranean coast south of Catalonia, and the Balearic Islands. Although for political reasons and unlike Catalonia, their local governments do not calculate their fiscal deficit regularly, data available[9]<\/sup><\/a> for 2005 indicate that the Balearic Islands\u2019 deficit, at an outlandish 14.2% of its GDP, was even worse than Catalonia\u2019s, whereas Valencia\u2019s, estimated at 6.4% of its GDP, was in a way even more outrageous, for the region\u2019s GDP per capita was then 8% and is today 12% below<\/em> the Spanish average, and yet Valencia is still fiscally subsidising the rest of the country. These are the highest fiscal deficits in Spain: even Madrid\u2019s fiscal deficit, despite having Spain\u2019s highest GDP per capita (32% above the Spanish average in 2005), was found to be just 5.5% of its GDP. It may or may not be a coincidence that Catalonia, Valencia and the Balearic Islands are the three traditional Catalan-speaking regions in Spain \u2013 we will dive deeper into this point below.<\/p>\n\n\n\n Nor does it seem to be just a matter of syphoning off income from these three Mediterranean regions to the rest, for Spanish institutions often constrain investment in these regions, particularly Catalonia and Valencia, even when it is largely financed by EU subsidies. This is the case, for example, of the so-called \u201cMediterranean Corridor\u201d, a high-capacity, high-performance railway line that would run along Iberia\u2019s Mediterranean coast from the Pyrenees to the Peninsula\u2019s southern tip, around a third of which will be paid by the EU. Despite this financial incentive, and despite its covering the route with the greatest\u00a0 demand for transport anywhere south of the Pyrenees, the Spanish government systematically gives short shrift to this infrastructure both by repeatedly delaying its deployment and by designing it with such low-cost features that it will simply be unable to fulfil the objectives it was planned for in the first place\u2026 Whilst regions in the central and western Peninsula, where transport demand is five to ten times lower than along the Mediterranean coastline, see a much faster deployment and a much higher-performance design of their equivalent railway corridors[10]<\/sup><\/a>.<\/p>\n\n\n\n If we are to believe several Spanish politicians responsible for these policies, this discrimination is intentional. For example, in his memoirs, Jos\u00e9 Maria Aznar (Spain\u2019s Prime Minister from 1996 to 2004) recalls\u00a0 how he specifically decided to accelerate the deployment of transport infrastructure connecting Valencia with Madrid while delaying the one\u00a0 between Valencia and Barcelona, logistically in greater demand. Also under his watch, instead of following the route along the Mediterranean coast \u2013 in far greater demand as well as requiring the simpler civil engineering \u2013 Spain proposed to the EU that the future European railway corridor should cross the depopulated centre of the Peninsula from Algeciras in the south, via Madrid and Saragossa, to connect with Europe through an incredibly expensive 50 km tunnel under the Pyrenees, thus linking the most depopulated regions in both Spain and France. It is difficult to understand the logic of such an undertaking except for the obvious one \u2013 namely, to isolate the Mediterranean coast and redirect traffic and economic flows towards the centre.<\/p>\n\n\n\n Indeed, for 10 long years, Spanish governments run by both major parties \u2013 the conservative People\u2019s Party and the socialist PSOE \u2013 defended this economically absurd design against the obvious Mediterranean route until the European Transport Commission decided to pull it out of the project eventually approved by the\u00a0 European Parliament in December 2013\u2026 Even after that, the Spanish administration reacted by planning a low-cost design for the Mediterranean segments \u2013 so low-cost, in fact, that it simply cannot meet its intended objectives \u2013 and underfinancing even those works to the point that they are today hopelessly delayed: in November 2022, nine years after the start of the project, 82% of the segments planned for the Mediterranean route were still work in progress.<\/p>\n\n\n\n The social cost of economic discrimination<\/strong><\/p>\n\n\n\n We could go on listing examples of Spanish government policies that seem deliberately aimed at clipping the wings in economic terms of not only Catalonia but also its neighbours and natural hinterland in Valencia and the Islands \u2013 policies that may or may not be reflected in their enormous fiscal deficit. These policies\u2019 welfare impact is huge, and has become particularly concerning since the early 21st<\/sup> century, as the massive wave of immigration\u00a0 these three regions received stretched their\u00a0 public services: between 1997 and 2022 Catalonia\u2019s population went from 6.2 to 8 million, Valencia\u2019s from 4 to 5.3 million and the Balearic Islands\u2019 from 0.8 to 1.2 million[11]<\/sup><\/a> \u2013 i.e. increments of between 30% and 50% in 25 years. That is not the case of the rest of Spain: in the last 25 years, the Spanish population outside Catalonia, Valencia and the Balearic Island grew by just 12% (from 29 to 32.5 million), and if we also exclude the always-special case of Madrid, which being the capital, has grown at rates similar to those of the Mediterranean coastline, then this rate drops to a paltry 7.5% over a quarter of a century.<\/p>\n\n\n\n Immigrants obviously move to Spain\u2019s Mediterranean regions attracted by economic opportunity and, as they work at their jobs, create value. In return however, they also generate greater demand for public services (health care, transport, education, etc.) which of course under normal conditions could be financed via the government\u2019s share (through taxes, social security payments, etc.) of the additional value these immigrants create with their work. Yet that is not how it has worked: as migration flooded Catalonia as well as Valencia and the Balearic Islands, and as their GDP per capita fell due to the newcomers\u2019 activities being, on average, of comparatively low value added (hospitality and tourism, construction, food processing, etc.), these regions\u2019 fiscal deficit not only did not ease but became an even heavier burden.<\/p>\n\n\n\n The social impact is huge. For example, Catalonia, which has the fourth highest GDP per capita in Spain, drops to the 12th<\/sup> position in terms of its Regional Social Progress Index according to EU estimates[12]<\/sup><\/a>, whilst the Balearic Islands, with the fifth highest GDP per capita, stand at the 13th<\/sup> position in this ranking. This also helps to explain why so little of Catalonia\u2019s growth has transformed into increased consumption: between 2000 and 2019, Catalan GDP per capita grew by 14.2%, whereas consumption per capita only did so by an insignificant 1.7%\u00a0 \u2013 the Spanish equivalent averages being respectively 17.8% and 8.6%[13]<\/sup><\/a>. The lack of funds naturally pushed these regions\u2019 autonomous governments to compensate by raising\u00a0 regional taxes \u2013 Catalonia and Valencia occupy the two last positions in Spain\u2019s regional tax competitiveness rankings[14]<\/sup><\/a> \u2013 and if that was not enough, to borrow \u2013 which has turned Catalonia and Valencia into the Spanish regions with the highest debt per capita[15]<\/sup><\/a>.<\/p>\n\n\n\n If mass immigration fuelled by the appeal of tourism and a construction boom was the most obvious feature of this process in the first decade of the 21st<\/sup> century, now that both the Eurozone crisis of the 2010s and the COVID crisis of the early 2020s are over, a second factor has popped up that impacts Catalonia much more intensely than either Valencia or the Islands: gentrification driven by its residential appeal for high income professionals, which raises lease rents and threatens to expel current residents from their homes. These are again growing pains whose impact could potentially be mitigated through policies (e.g., public housing, or improved transport connection between downtown and surrounding areas) financed by the public revenues growth itself generates. Yet the oversized fiscal deficit prevents this, and reduces regionalgovernments either to impotent complaining or, worse, to low-budget populist measures that transfer the cost to the private sector (e.g., general rent freezes, or mandatory \u201csocial rate\u201d rents for flats owned by \u201clarge landlords\u201d) and, characteristically, only make the problem worse.<\/p>\n\n\n\n Raison d\u2019\u00e9tat<\/em><\/strong><\/p>\n\n\n\n In short, through overly extractive policies and various forms of discrimination, Spanish policies are choking the economic potential of its most promising region, as failure to soften the collateral impact of growth increases social dysfunction, conflict, and general discontent. The question is, why? Here is where we need to understand the specific drivers of Spain\u2019s raison d\u2019\u00e9tat<\/em>.<\/p>\n\n\n\n Figure 2: Demographic density in Europe (NUTS2 level), year 2018<\/strong><\/p>\n\n\n\n Source: Eurostat[16]<\/strong><\/sup><\/a> (the dotted line to indicate the eastern border of the Continental Diagonal has been added for visual clarity)<\/em><\/p>\n\n\n\n First, Spain is probably the European state whose demographic map has changed the most as a result of global integration[17]<\/sup><\/a>. Look at the highly depopulated area known as the \u201cContinental Diagonal\u201d (Figure 2), which runs approximately from Li\u00e8ge, in Southern Belgium, cutting France in half (where it is known as \u201cla diagonale du vide\u201d, i.e. the\u00a0 Empty Diagonal) and covering most of Spain (where it is known as \u201cla Espa\u00f1a vac\u00eda\u201d, i.e. empty Spain) to end in Portugal just before reaching its more densely populated coastal area. This\u00a0 encompasses old wheat-producing plateaus (\u201cle massif central\u201d in France, \u201cla meseta\u201d in Spain) whose economic and demographic relevance was greatest before the Industrial Revolution but has steadily decayed since. As the most value-adding activities tend to be those that most benefit from economies of scale, and activity also attracts workers who, in turn, demand a whole range of services wherever they live, activity concentration in a few privileged places (which in Western Europe are primarily the axis England to Northern Italy and the one from the Alps to Valencia) not only accelerates with economic integration but also ends up taking a momentum of its own.<\/p>\n\n\n\n In most of Europe, however, this shift tends to reinforce the old centres of power, as global economic integration tends to increase their economic weight: think of the Seine and Rhone valleys in France (Paris, Lyon, Marseille) or the Atlantic coast in Portugal (Porto, Lisbon). The same pattern repeats across Western Europe: economic integration favours London and England\u2019s South-East, Western Germany, the centre-north of Italy\u2026 Spain, conversely, sees its population and its economic activity consistently moving away from its historical power centre in Castille and primarily towards, the Mediterranean coast \u2013 the only exception being Madrid, the third\u2013largest metropolitan region in the EU, proudly defying market forces from the middle of the most depopulated European region south of Lapland.<\/p>\n\n\n\n Figure 3: Efficiency and value-added growth in Spanish regions, 2000-2015<\/strong><\/p>\n\n\n\n Source: Data from Ivie (2019)[18]<\/strong><\/sup><\/a>. Diagram and analysis from Gracia (2021)[19]<\/strong><\/sup><\/a><\/em><\/p>\n\n\n\n This explains why Madrid\u2019s economic success presents some strange features. For example, to the right of Figure 3, which shows gross value-added growth (i.e., for all practical purposes, GDP growth) between 2000 and 2015, Madrid clearly appears as the fastest-growing region in Spain. Yet, to the left, the evolution of productive efficiency[20]<\/sup><\/a> (i.e. the economy\u2019s ability to produce more output per unit of input) over the same period tells quite a different story. That the most touristic regions (the Balearic and Canary Islands) would have lost efficiency is no surprise: nothing is more inefficient than an empty building, and these regions, after a spectacular construction boom, found themselves with a lot of empty property. That the emptiest regions in empty Spain (e.g. Asturias or Extremadura) would increase their efficiency is no surprise either: as economic activities drift towards more attractive places, those that remain are obviously the most efficient of the lot, so their average improves. The real question mark is Madrid.<\/p>\n\n\n\n Indeed, why would Madrid\u2019s efficiency drop more than that of any other region except the Balearic Islands when the economies of scale of its high value-added activities should have the opposite effect? Because many more productive resources (both labour and capital) have been poured into it than efficiency would justify \u2013 and since most of this labour and capital belong to the private sector, this must be because the margins of those activities in Madrid are so much greater than elsewhere to justify such waste. And why would those margins be so much greater than elsewhere in an otherwise competitive market? Because of the presence in Madrid of Spain top public decision-making institutions, which reward companies whose behaviour is aligned to their political intent and, since Spain\u2019s institutional quality is among the lowest in Western Europe, also to the personal interests of some decision-makers.<\/p>\n\n\n\n Thus, for example, despite Madrid hosting the bulk of the Spanish financial sector, its financial market is tiny compared not just\u00a0 to those of London and Paris but also Frankfurt, Zurich, Amsterdam and Geneva. Spanish governments can leverage their economic and regulatory power to nudge Spanish banks\u2019 headquarters and shared services to the capital, but European financial markets are fiercely competitive, and Madrid can hardly play in that league.<\/p>\n\n\n\n That is also why, to pose another example, Madrid\u2019s Research & Development ecosystem consistently trails behind Catalonia\u2019s \u2013 despite Madrid\u2019s R&D budgets being consistently greater \u2013 in terms of results reflected by international patents registered per million GDP for example, or in the share of published articles among the world\u2019s 10% most quoted[21]<\/sup><\/a>. The reason is that Catalonia, and particularly its capital, Barcelona, has both a more attractive (even touristic) environment for young knowledge professionals and a substantially R&D-relevant private local industrial base (e.g., in pharma). In an integrated, competitive EU market where the Spanish government\u2019s R&D financing competes with EU public funds and with multinationals, the advantages that Catalonia offers may trump, at least in some areas, Madrid\u2019s long-time advantage as Spain\u2019s seat of power.<\/p>\n\n\n\n There are many more examples of activities where Madrid\u2019s competitiveness does not measure up either to its foreign competitors\u2019 or to that of its eternal rival: Barcelona, the capital of Catalonia. Yet, while the comparison with foreign competitors is easy to accept as a fact of life (there will always be someone in the world that is better at this or that), the latter triggers an old atavistic conflict, for in Spain, the Catalans constitute a traditionally unpopular minority.<\/p>\n\n\n\n The Spanish disease<\/strong><\/p>\n\n\n\n This brings us to the heart of the problem. Relying on his deep, global academic perspective on social and political conflict, and not just his own Catalan experience, Carles Boix, Professor of Politics and Public Affairs at Princeton University, summarises it as follows:<\/p>\n\n\n\n In my view, Spain is sick. Its sickness, which takes the shape of a compulsive obsession, is called Catalonia. And the internal discomfort is so deep that, against the prediction everyone made during the democratic transition, neither the economic growth nor the political liberties or the social transfers of the last decades have been able to soothe it.[22]<\/strong><\/sup><\/a><\/em><\/p>\n\n\n\n The Catalan case is akin to those of other groups that have traditionally taken entrepreneurial roles in the economies of otherwise traditional societies: Jews, Greeks, Armenians, Arab Christians, East-African Indians, South-East-Asian Chinese and other so-called \u201cmiddleman minorities\u201d[23]<\/sup><\/a>. Just like them, Catalans have historically spearheaded industrialisation and economic development in Spain and, just like them, have become the target of their neighbours\u2019 envy and hate. Resorting to anti-Catalan feeling to advance a political career is such an old, well-known ploy in Spain that it even has a byword deriving from the name of a politician who made it his trademark: Lerrouxism. The ploy is so frequently used that, when politicians and celebrities spout hate speech against Catalans, they barely cause a stir in the Spanish news, whereas politically incorrect statements against any other minority invariably cause widespread outrage.<\/p>\n\n\n\n There is actually an old Spanish reformist tradition that poses \u201cSpain\u2019s catalanisation\u201d as the way to modernise the country, but even this strand of literature implicitly regards Catalans as an alien people. Already in the 1770s, Enlightenment authors like Francisco Nifo and Jos\u00e9 Cadalso proposed that all Spanish provinces imitate Catalonia because it was \u201ca little England\u201d (Nifo)[24]<\/sup><\/a> and its inhabitants \u201cthe Dutch of Spain\u201d (Cadalso)[25]<\/sup><\/a>. Two centuries later, in 1978 and just a few months before the (so far) last Spanish Constitution was approved, conservative journalist Jos\u00e9 Mar\u00eda Carrascal proposed again to \u201ccatalanise Spain\u201d[26]<\/sup><\/a>, because in his view, the Catalans displayed the \u201ccivic virtues\u201d that characterise age-old democratic peoples like \u201cthe Swiss and the English\u201d. Ten years ago (September 2013), a conservative politician, Esperanza Aguirre, put forward the same idea in a speech she gave in Barcelona[27]<\/sup><\/a>. Flattering as these proposals might seem to Catalans, the experience of similar conflicts should remind us that praise flips into hatred just as easily as admiration turns into envy: just compare Friedrich Nietzsche\u2019s praise of the Jews in Beyond Good and Evil<\/em>[28]<\/sup><\/a> with the words (and deeds) of the Nazis who claimed to be his admirers.<\/p>\n\n\n\n Two new factors may have made the conflict even worse over the last few decades: the rise of the welfare state and European economic integration. Catalonia\u2019s fiscal deficit has existed at least since the late 19th<\/sup> century, but until the 1980s, Spanish government spending was no more than 20% of Spain\u2019s GDP, so the burden was more tolerable. Since the 1980s however, Spain has become a full-blown welfare state whose expenditure represents close to half of its GDP. So, as the overall tax burden has become much heavier, so has the fiscal deficit. In parallel, as part of the price for European economic integration, Spain has given up many economic control tools such as tariffs, monetary policy and various forms of discretionary subsidies. European integration has brought widespread prosperity but has also accelerated Spain\u2019s economic drift towards the Mediterranean coast. As economic activity is also a form of power, left to market forces, Spain\u2019s internal power balance might thus eventually tip in the same direction \u2013 which may well have triggered the Spanish establishment\u2019s self-protecting instinct. Yet at the same time, as the regions most favoured by the market happen to be those with the strongest Catalan cultural substrate, starting with the largest of the lot, namely Catalonia itself, it becomes just too tempting to leverage that old popular hatred against a people that has always seemed readier to ply the winds of modernity.<\/p>\n\n\n\n An oversized fiscal deficit and other discriminatory economic measures may therefore reflect the use of the state\u2019s coercive power to redirect economic flows towards regions, businesses, and purses more to its \u00e9lite\u2019s liking \u2013 even at a colossal cost in terms of loss of economic efficiency and thus ultimately welfare. Such discriminatory measures might not be easy to justify to the public in a democratic system, but in Spain they would be facilitated by those old prejudices against Catalans \u2013 which, unlike other forms of cultural prejudice (e.g., against immigrants\u2019 cultures, or against LGTBI communities), are today not just tolerated but also echoed, and even actively promoted by some Spanish mainstream media anchors (notably in the COPE network).<\/p>\n\n\n\n This is where Spain\u2019s institutional promotion of Madrid\u2019s economic role plays in. To attract high-value-added activities towards a location that reinforces Spain\u2019s historical power balance, these activities must be offered a home in a major metropolitan area with the scale, services and opportunities that they require, and within Spain, only Madrid and Barcelona can compete in this league. With market forces favouring Barcelona as a naturally more attractive location (more touristic, industrially relevant, logistically accessible\u2026) and state institutions using their coercive power to redirect wealth flows towards Madrid (Spain\u2019s traditional seat of power), the bitter conflict between the two metropolises can only get worse. Ramon Tremosa \u2013 an author, professor of economics at the University of Barcelona, and a Member of the Catalan and European Parliaments, as well as the former minister of Business and Knowledge of the Catalan Government (Generalitat) \u2013 puts is succinctly: it is a struggle of \u201cthe state against the market\u201d[29]<\/sup><\/a>.<\/p>\n\n\n\n For the last 20 years, the conflict has followed a steady pattern of escalation. To the Spanish governments\u2019 economic discrimination, at a time when, as we have seen, new economic opportunities arrived together with a whole host of social spending needs, the Catalan political and social forces reacted first by promoting a new Statute of Autonomy in Spain\u2019s parliament, including some explicit rules for fair resource allocation across regions. Against that however, Lerrouxism raised its ugly head and many Spanish politicians stepped up their hate speech against the Catalans: a good portion of the press lambasted the proposal, more than four million signatures against\u00a0 the Statute of Autonomy were collected around Spain, and despite its approval after substantial watering-down by the Spanish parliament, a heavily politicised Constitutional Court all but overturned it.<\/p>\n\n\n\n The signature collection episode was perhaps the most revealing: since Catalonia has a bit over five million people with a right to vote, four million signatures \u201cagainst the Catalans\u201d (for this is how this was often peddled) imply that any Spanish politician has more to lose than to gain from offering any fair deal to Catalonia, since Catalan voters could never outweigh the votes of those who are willing to punish the politician for offering any advantage to a people they dislike.<\/p>\n\n\n\n This refusal to entertain relatively low-key solutions to a pressing problem pushed the Catalan side into options that would not require Spanish institutional support to be implemented \u2013 and this obviously led very quickly to a push for independence. The Spanish government\u2019s response was violence and repression, while expressions of hatred against Catalans were heard in the media and on the streets. Perhaps most significantly, since the failed 2017 attempt to make Catalonia independent, next-step proposals by Spanish institutions and media have swung between heavy-handed repression and pardons to foster reconciliation, yet very seldom, if at all, have they included any credible approach to address the core problem. This may mean that the weight-power balance preservation and popular prejudice for those posing these proposals is so high as to trump the obvious aim of making any solution sustainable in the long run.<\/p>\n\n\n\n This is the ugly moon so many fingers are pointing at. As long as no solution to the core problem is put forward, the issue may temporarily remain subdued due to fear of political repression and low expectations for change, but over time is bound to grow and fester. So, stay tuned: this saga is far from over.<\/p>\n\n\n\n Eduard Gracia is an economist and MBA, as well as author of several books and articles about economic topics. For nearly three decades he worked as a management consultant based first in New York, then London and finally Dubai. He is currently a lecturer of international economics at the University of Barcelona.<\/strong><\/em><\/p>\n\n\n\n Notes\u00a0<\/strong><\/p>\n\n\n\n [1]<\/sup><\/a> La balan\u00e7a fiscal de Catalunya amb l’Administraci\u00f3 central. Departament d’Economia i Hisenda (gencat.cat)<\/a><\/p>\n\n\n\n [2]<\/sup><\/a> \u201cUn ofegament financer sostingut, injust i deliberat\u201d D\u00e8ficit fiscal hist\u00f2ric: 22.000 milions | L.B | barcelona | Economia | El Punt Avui<\/a><\/p>\n\n\n\n [3]<\/sup><\/a> Bizarrely, even this obvious point has been questioned by otherwise intelligent Spanish unionist characters like Josep Borrell, today\u2019s EU Foreign Relations Commissioner (as economist Xavier Sala-i-Martin pointed out a few years ago Encontrados los millones de Borrell! | @XSalaimartin Blog<\/a>)<\/u><\/p>\n\n\n\n [4]<\/sup><\/a> Manifest Economistes pel Benestar<\/em> Economistes pel benestar – Manifest (google.com)<\/a>, 2005 data.<\/p>\n\n\n\n [5]<\/sup><\/a> London\u2019s fiscal surplus drifts further away from rest of UK \u2014 ONS<\/a>. London fiscal deficit (in UK terminology this is counter-intuitively referred to as \u201csurplus\u201d) was<\/p>\n\n\n\n [6]<\/sup><\/a> Year 2021 INEbase \/ Econom\u00eda \/Cuentas econ\u00f3micas \/Contabilidad regional de Espa\u00f1a \/ \u00daltimos datos<\/a><\/p>\n\n\n\n [7]<\/sup><\/a> El d\u00e8ficit fiscal de l’estat espanyol amb Catalunya ja voreja els 22.000 milions (vilaweb.cat)<\/a><\/p>\n\n\n\n [8]<\/sup><\/a> \u201cAll\u00e0 on l\u2019estat pot escollir on fa la despesa, Catalunya en surt malparada sistem\u00e0ticament\u201d Els 22.000 milions de raons per a dir prou! (vilaweb.cat)<\/a><\/p>\n\n\n\n [9]<\/sup><\/a> Reyner, Josep (2020): Informe Euromedi. An\u00e0lisi de les potencialitats de la regi\u00f3 mediterr\u00e0nia i de les limitacions que li son imposades<\/em>. Fundaci\u00f3 Vincle Informe-Euromedi-170×220-ENG-2022-web.pdf (fundaciovincle.com)<\/a><\/p>\n\n\n\n [10]<\/sup><\/a> For a detailed study see Gracia, Eduard (2022): Bastons a les rodes. El Corredor Mediterrani i la l\u00f2gica del poder a Espanya<\/em>. Fundaci\u00f3 Vincle\u00a0 fundaciovincle.com\/wp-content\/uploads\/2023\/02\/Bastons-a-les-rodes-al-Corredor-Mediterrani-Eduard-Gracia-Fundacio-Vincle.pdf<\/a><\/p>\n\n\n\n [11]<\/sup><\/a> INE Poblaci\u00f3n por comunidades y ciudades aut\u00f3nomas y tama\u00f1o de los municipios.(2915) (ine.es)<\/a><\/p>\n\n\n\n [12]<\/sup><\/a> European Regional Social Progress Index 2020 Inforegio – European Social Progress Index (europa.eu)<\/a><\/p>\n\n\n\n [13]<\/sup><\/a> Cambra de Comer\u00e7 de Barcelona (2020): Converg\u00e8ncia amb els \u201cfrugals i d\u00e8ficit fiscal<\/em> (p. 8) Microsoft Word – 2020 09 CAT vs Frugals – DEF_ok.docx (cambrabcn.org)<\/a><\/p>\n\n\n\n [14]<\/sup><\/a> \u00cdndice Auton\u00f3mico de Competitividad Fiscal 2022<\/em> IACF-2022-WEB.pdf (fundalib.org)<\/a><\/p>\n\n\n\n [15]<\/sup><\/a> Fundaci\u00f3n BBVA (2023) Endeudamiento de las comunidades aut\u00f3nomas<\/em> Endeudamiento_CCAA-1.pdf<\/a><\/p>\n\n\n\n [16]<\/sup><\/a> Statistics | Eurostat (europa.eu)<\/a><\/p>\n\n\n\n [17]<\/sup><\/a> For a more in-depth analysis see Gracia, Eduard (2021): Integraci\u00f3 europea o marginaci\u00f3 espanyola. El futur bifurcar de Catalunya, el Pa\u00eds Valenci\u00e0 i les Balears<\/em>. Fundaci\u00f3 Vincle Integracio-europea-o-marginacio-espanyola-Eduard-Gracia-Fundacio-Vincle.pdf (fundaciovincle.com)<\/a><\/p>\n\n\n\n [18]<\/sup><\/a> Ivie (2019): La productividad de la econom\u00eda valenciana en el contexto regional: determinantes. <\/em>IvieLAB i Generalitat Valenciana IvieLAB. La productividad de la Comunitat Valenciana en el contexto regional: determinantes – Web IvieWeb Ivie<\/a><\/p>\n\n\n\n [19]<\/sup><\/a> Gracia, Eduard (2021): Integraci\u00f3 europea o marginaci\u00f3 espanyola. El futur bifurcar de Catalunya, el Pa\u00eds Valenci\u00e0 i les Balears<\/em>. Fundaci\u00f3 Vincle Integracio-europea-o-marginacio-espanyola-Eduard-Gracia-Fundacio-Vincle.pdf (fundaciovincle.com)<\/a><\/p>\n\n\n\n [20]<\/sup><\/a> Measured as what economists call, somewhat cryptically, Multifactor Productivity<\/p>\n\n\n\n [21]<\/sup><\/a> According to the European Regional Innovation Index EIS 2023 – RIS 2023 | Research and Innovation (europa.eu)<\/a><\/p>\n\n\n\n [22]<\/sup><\/a> \u201cAl meu entendre, Espanya est\u00e0 malalta. La seva malaltia, que t\u00e9 forma d\u2019obsessi\u00f3 compulsiva, es diu Catalunya. I el desfici intern \u00e9s tan profund que, contra el pron\u00f2stic que tothom feia durant la transici\u00f3, ni el creixement econ\u00f2mic ni les llibertats pol\u00edtiques ni les transfer\u00e8ncies socials de les darreres d\u00e8cades l\u2019han pogut apaivagar.\u201d (p. 114). Carles Boix (2012): Cartes ianquis. Un passeig sense servituds per Catalunya i el m\u00f3n<\/em>. Acontravent. Amazon.com: Cartes ianquis. Un passeig sense servituds per Catalunya i el m\u00f3n: 9788493972288: Carles Boix: Libros<\/a><\/p>\n\n\n\n [23]<\/sup><\/a> Middleman minority – Wikipedia<\/a><\/p>\n\n\n\n [24]<\/sup><\/a> 1770 Francisco Mariano Nipho: opini\u00f3 de Catalunya – Museu d’Hist\u00f2ria de Catalunya (mhcat.cat)<\/a><\/p>\n\n\n\n [25]<\/sup><\/a> cartas-marruecas.pdf<\/a>, Carta XXVI<\/p>\n\n\n\n [26]<\/sup><\/a> ABC_19780203011 (lidiapujol.com)<\/a><\/p>\n\n\n\n [27]<\/sup><\/a> 610,8 KM = 0 KM – Esperanza Aguirre: “Hay que catalanizar Espa\u00f1a” – Blogs Expansi\u00f3n.com (expansion.com)<\/a><\/p>\n\n\n\n [28]<\/sup><\/a> beyond-good-and-evil.pdf<\/a>, Aphorism 251<\/p>\n\n\n\n [29]<\/sup><\/a> \u201cL\u2019Estat contra el mercat\u201d Tremosa, Ramon (2020): Catalunya, potencia log\u00edstica natural. L\u2019Estat contra el mercat<\/em>. P\u00f2rtic Catalunya, pot\u00e8ncia log\u00edstica natural: L’Estat contra el mercat: 148 (P.VISIONS) : Tremosa, Ramon: Amazon.es: Libros<\/a><\/p>\n","protected":false},"excerpt":{"rendered":" Some news, spectacular as it might seem, may not be relevant in its own right, but it is through the underlying reality it\u00a0 brings to the surface \u2013 like the proverbial finger pointing at the moon. 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