Spain's General Strike: gearing up for round two

Labor unions stage massive protests across Spain leaving the government groggy but not out. Unfortunately, this is only round one.

It was like watching a game score instant replay only five months later. Yesterday's general strike was highly reminiscent of Athens last October and the unions are promising more of the same unless the government of Mariano Rajoy backs down on its labor reforms.

Facing massive debt, unprecedented levels of unemployment and a stagnant economy, Rajoy's measures include the reduction of worker compensation, company incentives for new hires, higher taxes and lower government spending, all in an attempt to reverse the country's economic fortunes of late.

Sounds like a solid plan, right? So how come my gut tells me it's all marron glacé? You know, as in sugar coated pellets of doo-doo? I understand the reduction in worker comp. I understand the company incentives for new hires. And I understand lower government spending. But higher taxes???

The administration needs to increase revenue to cover pensions, health care and unemployment benefits, I get that. But raising taxes is a double edged sword, one that will have serious consequences. It is not feasibly possible or proper to raise taxes on a populace that is already reeling from the devastating effects of the unconscionable decisions taken by the previous administration.

I don't have the exact figures but there's approximately one million households that have zero income; every eligible member is unemployed and their benefits have run out. That's translates to about 4 million people with no means of livelihood. Other families are surviving under heavy strain because only one member has a job. So, if we now increase basic staples such as food, shelter and energy, where does that leave these people?

I'm not an economist nor do I claim to understand all the nuances of fiscal policy. But through sheer common sense, I can tell you this: you raise taxes and you are not going to induce increased private spending and investment which is what leads to higher productivity and employment. On the contrary, it has the opposite effect. It's time tested and proven. If you want to increase investment, employment, production and turnover, reduce taxes and reduce public spending.

The only thing this government has achieved thus far is to provide cannon fodder for the leftist unions. And more rhetorical bombs are going to fly before the situation gets better. Get ready for round two.