The Fair Price: The Romney Model

In the same week that we learned that the unemployment rate exceeds 25 percent, we became angry with Romney for using Spain as an example of a bad economic model. Aside from the unpleasant negative publicity, I understand very well what the Republican presidential candidate of United States is saying. He thinks that the private sector and individual drive cause a country to prosper and considers excessive presence of public administration in the economy undesirable.

I do not know whether the presence of the public sector in Spain is excessive, but what is certain is that it is inefficient and ineffective. For example, in Spain, we have a system of generous unemployment benefits, which cost us nearly $30 billion each year, compared to the $3.7 billion that we invest in active employment policies. What are we doing with this model? Does it suit us to review it? What would happen if we reduced unemployment benefits? Would unemployment increase or decrease? Keeping in mind that our unemployment rate is somewhat higher than those of Greece, Gabon or Nigeria, I am surprised to see that our model is questioned more in the United States than it is here.

Over in the United States, of the cities with more than 250,000 inhabitants, there are nine in which 25 percent of the population lives below the poverty line: Detroit, Buffalo, Cincinnati, Cleveland, Miami, St. Louis, El Paso, Milwaukee and Philadelphia. In addition to high levels of poverty, these cities have two other things in common: enormous social spending programs and Democratic mayors. In fact, the last time there was a Republican mayor in one of these cities was Cleveland in 1989.

Socialists believe in public spending to alleviate poverty; Romney believes in granting the means for an individual to get out of it.