With Greece in the news and having lived in Spain during the worst years of the crisis, I wanted to ask publicly why the EU is trying so hard to reduce debt and deficit but is not at all focused on generating new wealth and jobs?
By focusing on reducing the deficit, lots of Spanish small and medium enterprises have gone bankrupt in the last years. The result was more unemployment and ricing deficit.
How to increase wealth, jobs and lower the deficit through higher tax incomes?
First of all it is incredibly painful to start and run a small business in Spain and likely in the South of Europe in general. Lots of red tape, useless processes, etc. Why? Why? Why?
Why not make it super easy to make a limited company via one website? Running a company and hiring less than 20 people should not take more than an afternoon every month. Just simplify tax laws, employment laws, paperwork, etc. Make it all digital and automated.
The next problem is that bad apples survive during a crisis and the good die. There were numerous small companies that ran out of money because their customers did not pay them while they paid their suppliers. What is needed is judges that in 2-4 weeks can decide if an invoice is valid, if the work has been done and as such if payment is not made force the customer to pay. This process can to a large extend be automated. This would oblige bad payers out of the economy.
Finally in Spain the local market imploded so export is very important. After many years of EU there has not been any effort put into simplifying cross-border transactions. There is no European VAT number. No common laws. No common easy conflict resolution. No easy way to open bank accounts in other countries. This should change urgently.
If the EU wants to succeed it should focus on wealth creation instead of subsidising farmers and being seen as bullying poor countries into paying an unrealistic debt. Greek’s public referendum results will be just the beginning if the Troika does not focus on wealth creation and only on debt reduction…