The Euro's Final Battleground: Spain - WSJ.com

WORKER AND EMPLOYER BACKPACKS: The Euro's Final Battleground: Spain - WSJ.com

It's interesting to see how all of the problems in Spain also exist in certain states in the US (e.g. California). And, the result is in the US that businesses move out of the state.

If Spain had its own currency, the devaluation would cut the value of salaries in real terms if not in nominal terms.

Perhaps, as was said recently by a commentator on Bloomberg re: air line unions, legacy jobs and benefits are going away and people are frustrated. Not that there is a clear answer - the idea that things can go back to the way they were (in terms of jobs and benefits and share of the world's resources, while concomitantly people are living longer, demanding more and better health care and trying to have society provide more and more benefits to those who aren't paying for the benefits themselves) - well, we are putting more and more demands on an economic model that doesn't produce any more than it did before.

Thus, it's like trying to take 4 gallons an hour from a well that only produces 2. You can borrow the extra 2 from a neighbor, but eventually the neighbor wants to get paid back.

Likewise, it's like going mountain climbing and the climber is the employee or employer. Society decides to put taxes on both in the form of a heavier and heavier pack. Eventually, climbing goes from slower and slower to no climbing at all.

Thus, as seen in Spain and the US, there is a higher unemployment rate because the business person or investor decides the 'tax pack' put on them is too great (either not enough return to the investor or business person; or, the product or service gets priced out of the market). Either way, the jobs disappear.

Similarly, workers have burdens and don't make enough (i.e. their pack is too heavy), so they decide not to work. Better to take a rest; or, better to do less, strive less, study less, etc.

One way out is clearly to reduce the weight of social redistribution taxes to lessen the weight in the 'packs' put on the back of workers and businesses.

But, this will mean less for those who want to shift and add to the weight these people and businesses are being asked to carry - i.e. some people will have to make do with less in government benefits. And, some will have to do more for themselves.