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Catalan Academics Press Separatist Drive

Professors Form 'Wilson Initiative' to Promote Independence from Spain

By

Matt Moffett

 

Jan. 24, 2014 7:04 p.m. ET

BARCELONA—In the sulfurous debate over the future of Spain's wealthy Catalonia region, Xavier Sala-i-Martin is the most notable and quotable member of a self-styled truth squad of pro-independence Catalan economists.

When the head of the American Chamber of Commerce in Spain warned in October that talk of a breakup was making foreign investors skittish, Mr. Sala-i-Martin retorted on Catalan radio that Spain was a "midget market" and globalized Catalonia would thrive on its own.

Amid rumors that elderly Catalans would lose their public pensions in a split, the economist went on his blog to assail the talk as a lie, adding that an independent Catalonia might be able to raise pensions by 10%.

"Since 1800, 22 former Spanish colonies have become independent," said Mr. Sala-i-Martin, a Columbia University professor who co-wrote an economics textbook and helped develop the Global Competitiveness Report for this past week's World Economic Forum in Davos. "None of them regrets it."

Mr. Sala-i-Martin is one of six respected Catalan academics who have stepped from the ivory tower into a political battle with high stakes for Spain and the rest of the European Union—including its common currency.

Economist Xavier Sala-i-Martin EFE/Zuma Press

They are high-profile protagonists in a long-running public debate over what Catalonia, the so-called factory of Spain, could gain or lose from breaking away.

Buoyed by polls showing majority support for secession, the Catalan parliament in Barcelona this month voted to hold a referendum on Nov. 9. The central government in Madrid has vowed to block a vote, which it says would be unconstitutional, but that hasn't quieted the debate.

On blogs, in interviews and in meetings with business and citizen groups, the six academics argue that Spain's system of sharing tax revenues among the 17 regions shortchanges Catalonia by about €16 billion ($22 billion) annually. That amounts to more than €2,000 per inhabitant, or around 8% of Catalonia's output, based on public tax and investment data, the academics say.

They argue that the northeastern region of 7.5 million people could become not only a viable country, but quite possibly an economic juggernaut.

Catalonia, which has a distinctive culture and language, has long had a strained relationship with Madrid, but the collapse of Spain's economy in 2008 has left regions scrambling for resources and brought tensions to a boil.

The scholars—five economists and a political scientist from Harvard, Princeton, Columbia, the London School of Economics and prominent institutions—call themselves the Wilson Initiative, after U.S. President Woodrow Wilson, a champion of national self-determination.

While acknowledging their influence, some other economists say the big-name professors overstate the potential benefits of independence while understating the transition costs and the risk that Spain could splinter further.

The critics note that while sales of goods from Catalan companies to the rest of the world—€58 billion in 2012—surpassed their €49 billion in sales to the rest of Spain that year, Spain still accounts for a massive chunk.

Mr. Sali-i-Martin "did serious work once but he's become frivolous," said Francesc Trillas, an economist at the Autonomous University of Barcelona, who favors giving Catalonia greater autonomy but not independence.

Mr. Sala-i-Martin says he has gotten inured to criticism from opponents of independence, and that the "tons of hate" he gets from Spanish nationalists on Twitter TWTR -1.69% and elsewhere is a small price for the gratification he got when he heard elderly callers on Catalan talk radio quoting his arguments.

"I translate complicated concepts for regular people to understand," he said.

In addition to serving as go-to economist for the local media, Mr. Sala-i-Martin is also widely known for his connection to the Barcelona soccer club, where he once served as treasurer. His wardrobe of 200 brightly colored jackets garner additional attention. "I didn't want to be a slave to fashion so I invented my own," he explains.

Activists for Catalan independence say he lends intellectual legitimacy to their cause. "Spain is trying to frighten Catalans about the economic consequences of independence, but Sala-i-Martin is able to rebut those arguments with numbers and the authority of his position," said Eduardo Reyes, head of a pro-independence group called Sumate.

The Wilson Initiative has drawn the attention of economists elsewhere, though few publicly embrace its arguments.

"If you were to ask in which ways economists today are having the most influence on the world, this movement would be close to the top of the list," George Mason University economist Tyler Cowen wrote in his widely read "Marginal Revolution" blog.

But he added: "I am still waiting to hear why Catalonian independence wouldn't bring the fiscal death knell of current Spain, and thus also the collapse of current euro-zone arrangements and perhaps also a euro-zone-wide depression."

Other analysts say some of the Wilson academics too often speak as Catalans first and economists second.

Luis Garicano, a professor at the London School of Economics from central Spain, said exchanges about Catalonia on the blog he founded were "some of the least pleasant and most aggressive debates we have ever had…as emotions quickly ruled the discussion."

He also favors more autonomy without independence.

In an interview, Mr. Sala-i-Martin said it is too late to patch up the relationship with Spain and that Catalans "aren't going to be satisfied with accepting some cookie crumbs from Madrid."

Thus, the moment for independence is now, he insists.

Spanish government officials have said they are vigorously pursuing all wrongdoing that comes to light, and Spain's institutions are stronger for their efforts.

Similar economic issues are being debated in other separatist-minded regions. Scotland is set to vote on independence from the U.K. in September.

Top EU officials have stated repeatedly that any part of any member state that becomes independent would be automatically outside the EU. If it wanted to join, its application would have to be ratified by the rest.

Mr. Sala-i-Martin said the EU would be hard-pressed to follow through on such tough talk since the many large European companies with operations in Catalonia would resist the loss of free-trade benefits. Many Spanish exporters also need to pass through Catalonia to get their goods to Northern Europe, he noted.

"If Spain imposes barriers, there's going to be thousands of kilometers lined with tomatoes rotting on roads trying to get into Catalonia," he said.

While the economics are hotly contested, no one disputes Mr. Sala-i-Martin's academic credentials. "This guy knows a lot about economic growth and I can testify he's good at it," said Nobel Prize laureate Robert Lucas of the University of Chicago. As for the independence issue, Mr. Lucas said, "I'm not going to touch that."