January 16th, 2012

Courtesy of El Pais, a photo of an uncompleted 30-ton statue of Carlos Fabra, former PP boss of Castellón province:

This €300,000 monument stands in front of Fabra’s pet project, the Castellón international airport. The €124m facility may never open – to flights that is, you can tour the empty halls if you want. Castellón (pop. 180k) is about 50 miles north of the unsaturated airport of the regional capital Valencia, to which it is connected by two motorways and a main rail line. You will not be surprised to learn that Sr. Fabra is now helping police with their inquiries into corruption.

The statue could stand as an icon of the German view of Spain and the Mediterranean generally: waste! vanity! boondoggles! uncontrolled spending! laziness! The allegations are a bit inconsistent: it takes a lot of leadership and effort, as P.J. O’Rourke observed about Washington, to waste money on the scale of Castellón airport and the Osprey plane.

Overt monuments to Me by serving politicians like Fabra are in fact very rare in democracies. Self-preservation shifts the monumental urge to retirement, or a plaque on the metro or whatever. Even most monarchs and dictators are fairly modest. The spectacular Bronze Horseman monument to Peter the Great in St. Petersburg wasn’t put up by Peter himself, not exactly a wilting flower, but by Catherine. Fabra’s statue suggests that he isn’t quite right in the head.

The dud airport model is more common. Lleida in Catalonia and nearby Huesca in Aragon both have shiny new ones. The former has no scheduled services, the latter only nine. Both small cities are connected by a high-speed rail line to the hub airport at Barcelona.

On a smaller scale, my home town of Vélez-Málaga (pop. 50,000) is about to close the underused new tram built by the previous mayor, connecting the old town inland to its coastal satellite Torre del Mar.

Two observations which won’t be noticed against the tide of stereotyping. Over the last decade, Spain’s central government has been running a very conservative fiscal policy, with a a primary surplus until the property boom imploded and banks had to be rescued on a massive scale. (In retrospect, the central bank should have seized and bankrupted them like the FDIC, paid off the retail depositors, and let the German wholesale lenders go begging to Mrs. Merkel. They’d be facing the same lectures now, but without the imposed austerity.) National investment spending has been pretty sensible: motorways, research, high-speed rail lines – justified by the poor quality of the legacy network -, and perhaps we should count subsidies to investments by renewable energy operators. The waste has been by regional and local government. Most of the bust banks were regional Caixas, with ties to regional politicians. The Valencia region was within days of a default a week ago and had to be bailed out by the central government.

There is some structural flaw in the post-Franco decentralisation, necessary as it was after a quarter-century of his dead hand. My guess: the regions get a big share of income tax automatically, so political accountability to regional taxpayers is weak. The autonomy is not balanced either by any national equivalent of the brutal audits of the French Cour des Comptes, which proudly traces its history back to 1303, when the Chambre des comptes de Paris was created as a deliberately scary instrument of centralising royal power. (Not that royal finance was a safe job: at least six royal treasurers were hanged, and Fouquet died in prison.) Similarly the Spanish regions have allowed mayors far too much leeway over development, though this is changing at least in Andalusia.

Incidentally, it’s nothing to do with socialism: most of the regions, including Valencia, are PP fiefs. The mayor responsible for my local tram fiasco was PSOE, as is the decent regional government in Seville. The spectacularly bent former leadership of Marbella was PP, like well-run Málaga. The mess has very little to do with ideology.

It’s a pity that public-sector bankruptcy is so rare. The assets of private-sector enterprises mostly make money: but only because the many mistakes are quickly written down, and the assets recycled at a better valuation, by the great institution of bankruptcy, turbocharged by limited liability. The taxpayers of Vélez-Málaga (including me) are stuck for ever with the debt on the tram, so it will always appear to make a loss. With 600,000 tickets a year (half the estimated ridership), I reckon it should meet its direct operating costs, the strictly economic test for an unsaleable public asset. The only reason to close it is the dumb contract the city signed with the operator, guaranteeing it a minimum revenue and assuming all the economic risk.

Question for discussion: would more frequent bankruptcy by local government be worth it, weighing higher interest costs against the benefit of truth in accounts?