Before you condemn Europeans protesting the severe austerity measures the International Monetary Fund and the European Central Bank wants to impose on Greece and Spain, step into their shoes for a moment, please.
I bring a unique perspective to the dialogue and want to share with you my understanding of events on the continent. You may or may not know this, but I live in Barcelona. And you may or may not have heard about the significant protests going on in Barcelona, Madrid, and some other major cities throughout Spain. These events form part of the bigger story of Europe's economic malaise and unfolding social problems.
In what's becoming a series of mostly-peaceful mass demonstrations, people are gathering to voice their frustrations with an economic, political, and banking crisis that seems to have no end in sight. They are called indignados — infuriated or enraged — for a reason. El Movimiento 15-M , as it has been dubbed, is the people's way of standing up and saying enough is enough (#M15 or 15-M on Twitter). It's not just the hippies, anarchists, the unemployed, or the labor unions, either. Senior citizens, families, students, people who wear suits and ties during the week, and everyday Joes are participating with the hope of affecting much-needed change.
So when I read EBN Editor-in-chief Bolaji Ojo's take on the crisis in Greece and Spain and the impact it may have, I cringed at this part:
- It seems there is a major disconnect between what many wish for and the sacrifices they are prepared to make for longer-term gains. The Greeks and the Spaniards want to continue living in a past where the government coddles them and where minimal tax is collected, even as demands for social services keep skyrocketing. (See: Wishbone vs. Backbone.)
I don't think that's a wholly accurate depiction of what's going in Greece or Spain. Yes, some services and fat should be trimmed, and people are slow in letting go of things they've become accustomed to. And, I am not 100 percent clear on what the indignados truly want or what measures they think should be put in place. Calling for a collapse of capitalism or jobs for all doesn't quite go far enough, although the conversation is deepening. TV, radio, newspapers, and intellectuals are doing their jobs and beginning to run well-thought-out commentaries of what could be possible.
Here are just a handful of reasons people are taking to the streets, at least in my backyard:
- The unemployment rate in Spain is 20.7 percent, way higher than the euro zone's 9.9 percent rate and Germany's 6.1 percent, according to Eurostat, the EU's stat-keeping office. Among youth under 25 years old, that number skyrockets to 44.4 percent, far from the euro zone's 19.6 percent average.
- The average salary in Spain, depending on the information source, is less than 22,000 euros (about $32,000). But a commonly quoted take-home salary now comes in at under 16,000 euros ($23,000). While this data may be a bit old, the average European brings in 27,000 euros ($39,000), while people in Holland and Germany take home more than 40,000 euros (almost $58,000), according to several news reports.
- Inflation was running at about 3.4 percent in May, again higher than the 2.7 percent for the euro area, according to the latest Eurostat data. Tack on this year's increases for utilities and food prices, and paychecks don't go very far. Forget about buying a flat in my middle-class neighborhood; prices have not come down as much as people expected, and few could get a mortgage for the average starting price at 300,000 euros ($434,000).
- Corruption is endemic at financial and government institutions. I can't even begin to summarize the corruption people perceive happening within their banking and government institutions, even as politicians redline proposed budgets and cut services. I would need three blog posts for that.
With this backdrop, let's re-ask the question of why places like Spain, Greece, Tunisia, or Egypt matter to the high-tech sector and what impact continued civil unrest could have in near-term or further down the road:
- Europe's inability to solve its crisis situation with Greece, Spain, and, on the fringe, Portugal and Ireland will put the brakes on any sustainable recovery being led by Germany and France. Until the thorn is plucked, policy makers will not be able to focus on long-term growth.
- Instability in Western Europe will affect US trade with the continent. It already has. Bloomberg News reported this week that the International Monetary Fund cut its 2011 US growth forecast for the second time in two months, “warning that further setbacks to a recovery pose growing threats to the world economy, along with potential contagion from the European debt crisis.”
- If the US economy softens, consumer spending will weaken further.
In the conversations I've had with locals, I've advocated the idea that a real investment in cross-sector innovation will make a difference. Obviously, government stimulus packages and opening mom-and-pop shops won't be enough. I think it's time for industry to start tapping the creative, skilled, well-trained, and relatively low-cost (compared to other European countries) labor pool that's hungry for new opportunities. The pharmaceutical and renewable energy segments seem to have particularly strong potential, based on what I'm reading, and locals have an incredible eye for design, which could be applied in product development.
Maybe if the high-tech industry stopped letting governments around the world drive all the austerity measures and decided to use some of the cash on their income statements, perhaps we'd see greater growth momentum globally. Maybe, just maybe, the people on the streets taking a stand have the backbone the industry wishes it had.