04/10/2017

Spain's 'Wasted Generation' And Its Lessons For The U.S.

John Tamny, Forbes.com

As the economy in Spain sputters along at a fraction of its potential, some of the enlightened in its political class have taken to explaining the light growth as an effect of the country’s “wasted generation.” It seems youngish individuals of Spanish descent are thriving, only not in Spain.

Thanks to the suffocation of production by the country’s legislators, many of its best and brightest have taken their talents elsewhere.  A visit to London confirms the latter, and not just about Spain.  Notable about England’s capital city is that French presidential candidates routinely campaign there on account of London being one of the largest French cities in the world.  Money goes where it’s treated well at a click of a mouse, and so does human capital (the most important growth input of all) migrate to where opportunity is greatest.  “Wasted generation” in Spain is merely a euphemism for “talent goes elsewhere” to the country’s economic detriment.

Moving farther east, Dubai is the largest and most heavily populated city within the United Arab Emirates (UAE), and a visit there confirms that it’s also easily one of the most prosperous cities in the UAE, or anywhere else in the world for that matter.  Everywhere one looks there are cranes that signal feverish construction of new skyscrapers to accompany the countless others that already exist.

Some would say this frenzied economic activity is due to oil wealth, but then the price of oil, while still high relative to the end of the 20th century, is well off of record levels (in dollars) reached between 2008 and 2014.  Despite oil’s decline, rampant economic activity in Dubai is easy to spot by virtue of traveling the city by car as this writer did in concert with a speech given there at last week’s Annual Investment Meeting.  A dinner while in Dubai with a luxury hotel executive, and who is also a Spanish expat, similarly revealed something unfortunate about human capital flows as it applies to the United States.

My wife and I, along with a former work colleague of my wife’s were taken to dinner by this expat at one of the top hotels in Dubai.  Our host, despite having earned two graduate degrees in the United States, ultimately chose to express her operational and marketing talents in Dubai’s burgeoning restaurant/hotel scene.  She told us that Dubai is thick with fellow Spaniards, along with strivers from countries around the world.

It turns out this booming city is very open to outsiders eager to work, regardless of country origin.  Indeed, it is truly a working city.  By this there are no retirees there.  Individuals who quit working or retire generally have 30 days to exit.  If you live in Dubai, you work.  It’s that simple.  What’s also simple is attaining a work visa.  Unless you have a worrisome disease, your work there is legal.  Citizenship is not part of the bargain, and is really not the point.  People once again migrate to Dubai to work, and the opportunities are endless.

Hearing all this, the proud American in me asked our Spanish host why not the U.S. for her and other members of Spain’s “wasted generation.” The answer received was rather blunt: it’s only paraphrasing the Spaniard slightly for me to say that the reply was “the U.S. is too difficult to attain legal working status in, and it’s not worth the hassle.” 

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