Thursday, October 23, 2014

Is the Free Rider Problem Behind the Catalan Secessionist Movement?

We are all aware of the recent referendum in Scotland, and their decision not to secede from the United Kingdom. While the issue of Scottish independence seems to have been put to rest for the time being, the movement for an independent Catalonia, a region in northeastern Spain, shows no signs of letting up.

Catalonia is a region with its own history, culture, and language that are distinct from Spanish, so separatist sentiment among Catalan nationalists is nothing new. What is unique about this most recent wave of secessionism is the underlying economic component- According to this article from The Economist, "many Catalans believe their taxes pay for poor, lazy southerners to live off government hand-outs". Despite being the wealthiest and most economically vibrant region of Spain, it is also the most in debt, and this is largely due to the tax policies imposed on them by Madrid:  As of 2012, Catalans pay 12-16 billion euros more in federal taxes a year than they get back in federal services.

There has been mutual distrust between Catalonia and the Spanish goverment for generations, and it appears that the Catalans are finally fed up with the redistributive policies of the social planners in Madrid. We learned in class that when it comes to paying for public goods people tend to free-ride and not contribute when they can, and this appears to be the main driving force behind the separatists. According to the article from The Economist, many Catalans view themselves as not only having a different culture from other Spaniards, but a superior work ethic as well, which is why they believe that they would be more prosperous as an independent state that was not being weighed down by the less productive Spaniards from other regions. Time will tell if the free-rider problem will indeed tear the Spanish nation apart, but we can expect the Spanish government to do everything it can to prevent Catalonia from leaving, and taking with it a huge portion of Spain's tax revenue.

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