Zapatero pledged Spain would outgrow Germany's income per capita by 2010
In 2007, Spain's Zapatero promised to overtake Germany's per capita income by 2010. Productivity barely grew and convergence never came.
English · Original discussion in Spanish · Published
Zapatero promised to overtake Germany in per capita income, and the archives tell the story
In 2007, José Luis Rodríguez Zapatero sat down with a reporter from El País and dropped a promise with an expiration date. "By 2010 we can perfectly well overtake them," he said of Germany's per capita income. "We are certain we will surpass Germany and Italy in per capita income within two or three years. We're going to catch up with them," he added. The quote spread through the news agencies —Europa Press picked it up— and landed in the economic talk shows, where someone grabbed a calculator before the coffee went cold.
What Zapatero promised and the figures he relied on
The official argument rested on three pillars. Spain was growing at rates close to 4% and, according to the prime minister, generating 60% of all the jobs in Europe. The 2006 budget surplus —1.6% of GDP, around 14 billion euros— left the country "economically secure" and allowed debt to approach 30% of GDP. To top it off, the National Reform Plan pledged to raise R&D spending from the current 1.13% to 2% by 2010.
On paper, these were figures of prosperity. The question is what they actually measure.
The calculation a forum user set against the promise
With the third-quarter 2006 data on the table, a forum user did the math. GDP was growing 3.80% year-on-year. The employed population rose from 19,191,000 to 19,895,600 people, up 3.67%. If barely anything more is produced with an almost identical increase in workers, productivity —what truly sustains a high per capita income— comes out at 0.13%, practically zero.
There was the flaw. Per capita income can rise along two paths: working better or working with more people. Spain was taking the second, and that path has a ceiling.
Why Spain never caught up with Germany in per capita income
Because the gap was not one of growth, but of level. According to the figure circulating in the thread —the CIA list reproduced by Wikipedia—, adjusted for purchasing power, German per capita income stood at around $34,100 in 2009 versus Spain's $33,700. Four hundred dollars.
The detail, according to another forum user, is that Germany reached that figure paying its workers an average net salary of between €3,200 and €3,300 a month. Spain approached the same indicator with a different structure: lower wages and a construction boom driving employment. Two countries with similar figures and opposite engines.
The indicator's trap: per capita income is not the same as living standards
There is an objection worth taking seriously: macroeconomic indices flatter themselves. Unemployment falls if people emigrate or stop looking for work; per capita income rises if jobs are destroyed and only the higher salaries remain. Economies with very high incomes from natural resources are not welfare paradises.
And then there is the fine print. A household earning €3,000 a month with a €700,000 mortgage does not live better than one earning €2,999 with a €30,000 debt. Per capita income looks at the snapshot of income; per capita debt looks at the burden. With both figures in view, the comparison with Germany changes sign.
From the 2010 promise to the archives of 2012
The deadline came and went. Convergence never arrived, and the country supposed to overtake Germany ended up, according to the forum users' tally, with more than 4.5 million unemployed. In 2012, when the affair already smelled like an old joke, a news item brought the former prime minister back into the spotlight: he had set off for Lanzarote to spend three weeks with his family and was thinking of buying a house on the island. Write, run and sleep without nightmares, the headline summed up.
The promise died so slowly it became a literary genre. Every so often someone digs the quote up again and it starts circulating once more.
One figure remains jarring. In 2009, according to the numbers cited in the thread, two European partners flaunted nearly identical per capita incomes: $34,100 for Germany, $33,700 for Spain. Germany paid for it out of its own pocket; Spain, the same forum user argued, was collecting European funds and building housing at breakneck estimulante ilegal. Four hundred dollars of difference, and two incompatible ways of sustaining them. The figure added up; the model did not.
In 2007, José Luis Rodríguez Zapatero sat down with a reporter from El País and dropped a promise with an expiration date. "By 2010 we can perfectly well overtake them," he said of Germany's per capita income. "We are certain we will surpass Germany and Italy in per capita income within two or three years. We're going to catch up with them," he added. The quote spread through the news agencies —Europa Press picked it up— and landed in the economic talk shows, where someone grabbed a calculator before the coffee went cold.
What Zapatero promised and the figures he relied on
The official argument rested on three pillars. Spain was growing at rates close to 4% and, according to the prime minister, generating 60% of all the jobs in Europe. The 2006 budget surplus —1.6% of GDP, around 14 billion euros— left the country "economically secure" and allowed debt to approach 30% of GDP. To top it off, the National Reform Plan pledged to raise R&D spending from the current 1.13% to 2% by 2010.
On paper, these were figures of prosperity. The question is what they actually measure.
The calculation a forum user set against the promise
With the third-quarter 2006 data on the table, a forum user did the math. GDP was growing 3.80% year-on-year. The employed population rose from 19,191,000 to 19,895,600 people, up 3.67%. If barely anything more is produced with an almost identical increase in workers, productivity —what truly sustains a high per capita income— comes out at 0.13%, practically zero.
There was the flaw. Per capita income can rise along two paths: working better or working with more people. Spain was taking the second, and that path has a ceiling.
Why Spain never caught up with Germany in per capita income
Because the gap was not one of growth, but of level. According to the figure circulating in the thread —the CIA list reproduced by Wikipedia—, adjusted for purchasing power, German per capita income stood at around $34,100 in 2009 versus Spain's $33,700. Four hundred dollars.
The detail, according to another forum user, is that Germany reached that figure paying its workers an average net salary of between €3,200 and €3,300 a month. Spain approached the same indicator with a different structure: lower wages and a construction boom driving employment. Two countries with similar figures and opposite engines.
The indicator's trap: per capita income is not the same as living standards
There is an objection worth taking seriously: macroeconomic indices flatter themselves. Unemployment falls if people emigrate or stop looking for work; per capita income rises if jobs are destroyed and only the higher salaries remain. Economies with very high incomes from natural resources are not welfare paradises.
And then there is the fine print. A household earning €3,000 a month with a €700,000 mortgage does not live better than one earning €2,999 with a €30,000 debt. Per capita income looks at the snapshot of income; per capita debt looks at the burden. With both figures in view, the comparison with Germany changes sign.
From the 2010 promise to the archives of 2012
The deadline came and went. Convergence never arrived, and the country supposed to overtake Germany ended up, according to the forum users' tally, with more than 4.5 million unemployed. In 2012, when the affair already smelled like an old joke, a news item brought the former prime minister back into the spotlight: he had set off for Lanzarote to spend three weeks with his family and was thinking of buying a house on the island. Write, run and sleep without nightmares, the headline summed up.
The promise died so slowly it became a literary genre. Every so often someone digs the quote up again and it starts circulating once more.
One figure remains jarring. In 2009, according to the numbers cited in the thread, two European partners flaunted nearly identical per capita incomes: $34,100 for Germany, $33,700 for Spain. Germany paid for it out of its own pocket; Spain, the same forum user argued, was collecting European funds and building housing at breakneck estimulante ilegal. Four hundred dollars of difference, and two incompatible ways of sustaining them. The figure added up; the model did not.
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Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (100 replies).
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