1/3/11 School "In Hoc Signo Vinces"

Song for the day: Alohamora- Pogo

We had our first day at IQS which is the university that we will be taking all of our seminars at. It was founded around 1905 and IQS stands for Instituto Químico de Sarrià (Chemistry Institute of Sarria) Sarria was a town before it was incorporated into the city of Barcelona. It was a short but beautiful walk to the jesuit university, it's been fifty degrees all week.

In our first class we learned about the history of IQS from the vice president and how they came up with this exchange program. He then went on to outline a little bit of Spanish history, how they have been a part of the European Union, and how they have dealt with the economic crisis.T

The European Union has increased from the initially 15 countries to a total of 25 in 2004 and are looking to expand to 28 by adding Bulgaria, Romania, and Turkey. This would affect Spain most directly in its labor market. Spain has historically had the lowest wage rates of any country in the Eurpoean Union, if Bulgaria, Romania, and Turkey join the EU they will make Spanish's advantage shrink because they have lower wages. If these three countries join the EU it will also mean the center of the EU will shift from France towards Germany. This will make it more difficult for Spain to ship goods to more distant parts of the UE.

In 1992-1993 there was an economic crisis due to the gulf war, unemployment skyrocketed to 24% but has since annual dropped to its lowest rate of 8% in 2007. With the new economic constriction unemployment has since reached 20%, which is the highest compared to countries withing the European Union. Spain is part of a disrepute group of countries going by the name of P.I.G.S. (Portugal, Italy, Greece, and Spain) Spain's credit was reduced which means that it's interest rates are higher.

For Spain it is very hard to regulate many things in the economy because they do not have an important fiscal tool, the ability to apply policies to money. Because many independent countries use the Euro it is impossible for one country to mess with it. What Spain does with its currency in terms of devaluation or the like affects everyone within the EU.

Unlike America which has state fiscal policies and then federal policies, the European Union just has state policies. There is no Internal Revenue Services to coordinate umbrella policies. Because there is no "Federal" power, countries who are well off such as Germany, Norway, and France are less likely to be willing to help the PIGS.

Another interesting thing about the Spanish economy is that when you get a job you are given a contract. For example, if you work for a company for 12 years and are then fired, the company is obligated by law you pay you for 45 days worth of pay for every year that you worked. In this case someone would be given 45x12= 450 days worth of pay, almost 1.5 years worth of pay. Because of this companies are less likely to fire people, but because they have such massive costs associated with firing people, they are more willing to simply reduce the hours of everyone. Also, companies are less likely to fire workers if they have worked there a long time, but their productivity has severely diminished. This goes along with the trend that Spain has had minimal productivity increases over the past decade. If there is not increase in productivity a country cannot flourish. Many companies have begun using short-term contracts where, after a year, they can evaluate their hire and either dismiss or offer a longer-term contract.