It’s all about Me

A striking but unrepresentative example of waste and vanity in Spanish public spending.

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 latter has no scheduled services, the former 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?

Author: James Wimberley

James Wimberley (b. 1946, an Englishman raised in the Channel Islands. three adult children) is a former career international bureaucrat with the Council of Europe in Strasbourg. His main achievements there were the Lisbon Convention on recognition of qualifications and the Kosovo law on school education. He retired in 2006 to a little white house in Andalucia, His first wife Patricia Morris died in 2009 after a long illness. He remarried in 2011. to the former Brazilian TV actress Lu Mendonça. The cat overlords are now three. I suppose I've been invited to join real scholars on the list because my skills, acquired in a decade of technical assistance work in eastern Europe, include being able to ask faux-naïf questions like the exotic Persians and Chinese of eighteenth-century philosophical fiction. So I'm quite comfortable in the role of country-cousin blogger with a European perspective. The other specialised skill I learnt was making toasts with a moral in the course of drunken Caucasian banquets. I'm open to expenses-paid offers to retell Noah the great Armenian and Columbus, the orange, and university reform in Georgia. James Wimberley's occasional publications on the web

15 thoughts on “It’s all about Me”

    1. The competing mega-airports in the Gulf must run it close. Dubai will presumably win out as a hub.

      Being a long way out isn’t a killer provided you have a proper heavy rail link. Arlanda is 37km from Stockholm and Gatwick is 45km from central London, vs Mirabel’s 39 km from Montreal, and they are both busy and successful.

  1. If that’s as big as it looks, I’m genuinely impressed that it will only cost 300,000 EUR. I’m tempted to say, “Hey, at least they’re getting a great deal on their boondoggle!” But of course in raw Keynesian stimulus-of-last-resort terms, they might have been better off with a 30,000,000 EUR statue. Oh well.

    I guess the lesson here is that if you’re going to have an egomaniac building monuments to himself on the public peseta, he should be a really, REALLY narcissistic bastard! Like, what this airport really needs is a Giza-sized pyramid in this guy’s honor.

    1. People still pay to go to see Cheops’ pyramid. It’s just possible,if the un-scaffolded statue is bad enough, that it will become a tourist attraction (cf. Wallace monument at Stirling). In this way it might have the positive social rate of return the airport surely won’t.

  2. You are certainly right about bankruptcy. Many of the great private-enterprise infrastructure projects of the 19th century went through this; a favorite tactic was re-incorporating (e.g.) the Glenmutchkin Railway as the Glenmutchkin Railroad (yes, this is a fictional name, but a relevant one: try a Google). And for a more recent example, consider the Iridium satellite network. To quote Wikipedia:

    Although the satellites and other assets and technology behind Iridium were
    estimated to have cost on the order of US$6 billion, the investors [after Chapter
    11] bought the firm for about US$25 million.

  3. (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.)

    See, this sort of thing is why you guys need a Facebook-style “Like” button.

  4. Your post brought up thoughts of the people of Benton Harbor (and now several other cities) in Michigan who have lost their ability to effect their management through the democratic process. I don’t know whether or not there are laws against municipalities declaring bankruptcy in the US. From DCA’s contribution it appears it could be a very wise decision.

  5. So are we talking (figuratively) chapter 11 or chapter 7? Because chapter 11 offers some interest-rate discipline (but not much) while chapter 7 (see Benton Harbor and other examples) offers way too much opportunity for people who want to seize political control in a town to manipulate the market and get a technical insolvency declared. (In the US, at least, there is a bankruptcy chapter for municipalities and other jurisdictions)

    But all this is really moot, because ultimately (as in the tram case cited here) it’s more about sweetheart contracts than about actual finance. Provinces and municipalities that pledge their general revenue to an iffy megaproject are being stupid; the typical, sensible approach is to float bonds backed by revenue from the project,or even to create an authority (tax-advantaged and with certain delegated powers) that borrows the money and can go belly-up without directly affecting the local government.

    What I think when I see stuff like this is more along the lines of savings glut. Some money manager thought that the bonds for these projects would be a good investment. Sure, partly backed by the implicit guarantee of taxing authority, but also because any default or renegotiation would happen long after their bonus check cleared and someone else was servicing the disgruntled clients.

    1. Not sure if Spanish municipalities can do this, especially as Vélez-Malaga got a grant from the EU’s regional fund which may insist on a full commitment by the grantees.
      The PP town hall in Malaga is now complaining that the PSOE regional government insisted on building the Malaga metro through a concession rather than as a direct public project!

  6. I was trying to make sense of the statue (in aesthetic terms) without success until I read that there is an aeroplane emerging from his head.

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