For my first article review, I took the article “Protecting
Spain’s Small Victories” by Hugo Dixon. I took it from the New York Times out
of the International Business section. At the end of this post, I will include
the link to the article if you’d like to read it for yourself to see where I’m
coming from. The article goes through the economy in Spain, which has been
struggling to recover since a crisis that struck Spain, along with several
other Eurozone countries, in the last several years. Dixon talks about how
Spain needs to celebrate the fact that despite their slow recovery, they still
have some things to keep their head up about. One of the small victories that
gets noted is that despite the extremely high unemployment rate of close to
26%, it has fallen early in the cycle, which harbors some good omens of things
to come. That has also boosted consumer confidence, which as a result has
helped out domestic demand. There are political measures that plan to be taken,
which are outlined in the article. Among them is the important action of making
it harder for people to receive benefits if they don’t find work, which could
encourage job growth in Spain.
Although
this article doesn’t relate to much of what we’ve talked about in class so far,
I’m going to do my best to try and make some connections. I didn’t place every
statistic from the article into the summary for a reason—I wanted to focus on
the things I felt that I could try and relate to what we’ve learned. Namely,
thing that really matters, is the boost in consumer confidence leading to
increased domestic demand. If we envision a typical supply and demand graph, we
see that an increase in demand will lead to increased quantity and increased
price. The fact of the matter is though, that the increase in price won’t
really bother Spanish consumers because increased employment, and presumably,
just an overall higher wealth for Spaniards. We recently studied supply and
demand, and so I felt this was an appropriate link. Other things that I tried
to consider when reading this article were how this would affect markets in
Spain, and the one thing I felt that was plausible to consider was that there
would be less overlap between what buyers are willing to pay and what sellers
are willing to sell.
What led to
this problem was the Euro crisis! And pretty much everything was wrong during
that. One of the key issues was that Spain, like Greece and other countries,
amassed so much debt under the Euro, and didn’t have the industry to pay for
it. Furthermore, labor is a much more liberal nature in Europe, with younger
retirement ages alongside much more lenient labor laws. I think that really the
only way to remedy the situation is what is mentioned in the article—increased encouragement
of employment. Once we learn more, I’m sure I’ll be able to try and think of
other solutions, but no form of fiscal or monetary policy is simple enough to
fix the issue immediately.
http://www.nytimes.com/2014/04/07/business/international/protecting-spains-small-victories.html?ref=spain&_r=0
No comments:
Post a Comment