Bicing Barcelona

Being an MBA student, you can request a meeting with practically anybody as long as your motive is pure (enough). And so I found myself in the Barcelona Serveis Municipals office earlier today to discuss the management of Bicing, the citywide bike share.

Bicing is a fascinating business: 6,000 bicycles, 340 stations, and a network of maintennance and replacements to hold it all together. Barcelona has outsourced day-to-day management to ClearChannel - ostensibly a media company but also a public tansport tactical partner - so city hall has only a skeleton liaison team. ClearChannel evidently has gone from operating these bike share schemes as a favor in exchange for advertising concessions to doing so because they're good at it.

Even with ClearChannel's logistic wherewithal, Bicing places great strain on Barcelona's finances. Membership dues from the roughly 120,000 socios amount to only a fraction of operating expenses so Barcelona city hall has to subsidize 60% of the cost of each Bicing trip, compared to only 40% for other public transport. Claims of indirect environmental benefits may be overly optimistic in view of the 30 maintennance trucks that circulate almost all day repairing and moving the bikes (and polluting). Moreover, lament Bicing directors, too many trips are coming from people who otherwise would simply walk to their destination - not those foregoing a car or moto.

One solution is a tiered fee structure (currently all users pay a yearly flat fee of €35) where riders pay more for traveling at peak times, traveling more often, or traveling "downwards" without a return journey, which is typical of beachgoers. But last year's contentious negotiations of just a €5 fare increase were highly politicized so a broader revision of fees would be difficult. Bicing could also offer day passes like in Paris or London, an idea which would likely find receptive tourists but which would generate more flow to the city center and the beach.

We're hoping to work more with Bicing at Esade, perhaps inviting them to do a case study with the Operations Club.

An Audience With Solana

About once a month, Esade offers a course on Geopolitics and Global Governance with Javier Solana, the noted Spanish physicist and, more importantly, former secretary general of the EU.

Last night's session focused on nuclear proliferation. First, Solana the physicist reviewed how uranium is enriched to produce an atomic bomb. Then, Solana the diplomat offered a series of stark predictions. Iran would continue its slow but steady progress, he said, until it eventually has the capacity to build and deliver a nuclear weapon. After Iran, Turkey and Saudi Arabia would likely feel pressured to join the club, and would have no problem buying the knowledge from Pakistan.

Solana didn't seem too bothered by the prospect of another rogue state with nuclear weapons. The detente argument still holds water since every country knows that one missile fired would launch a world war. Even the most hopeful disarmament treaties would leave weapon-holding countries with an arsenal sufficient to end the planet.

There is also a practical side to the argument. Developing countries are using much more energy since the 1990 and almost all of the increase has come from gas and coal. With the Stern Review recently estimating that carbon emissions must fall 80% to reach sustainable levels, nuclear energy is a cost effective (albeit dangerous) solution.

It was a pleasure to share time and space with the quick-witted Solana. As Spanish politicians continue to look inward and struggle to communicate in English, he is part of a historic generation of international Spanish diplomats.

Javier Solana - former secretary general of the EU
Rodrigo Rato - former managing director of the IMF
Juan Antonio Samaranch - former president of the International Olympic Committee
Federico Mayor Zaragoza - former director general of UNESCO

In a future post I'll dissect why Spain has a low incidence of English speaking.

Responses To Rajoy's Economic Policy

Republished from http://www.spainreview.net/index.php/2012/01/17/response-to-rajoy-economic-policy/

A month into Mariano Rajoy’s tenure as Spanish President, his economic policy has crystalized around better governance and austerity amidst the revelation that Spain’s deficit is larger than previously thought. In short, the economy policy contains the following elements:

The crackdown on provincial spending has produced perhaps the loudest political response, with the opposition socialist party accusing Rajoy of using the crisis as an excuse to impose his centrist ideology. Catalonia, Andalucia, and the Canary Islands vow to bring the matter to the Supreme Court. Catalonia in particular has made important strides in the last year through its own austerity measures and a local bond issuance, though its debt still straddles the prescribed limit.

But Rajoy’s tax policy is probably of most interest to European policymakers still searching for the right balance between austerity and stimulus. Rajoy’s hand was forced towards austerity after the finance ministry revealed that Spain’s deficit will reach 8.2% of GDP this year, up from a projected 6%. As late as November, the government estimated the deficit at just 4.8%.

Though the tax increase breaks Rajoy’s campaign promise, a majority of those surveyed by El País prefer this route over the alternative of cuts in social services. The sentiment is likely aided by rhetoric that the taxes disproportionately affect wealthy citizens and that the value-added tax will remain untouched. There is also a plan to recoup €8.17bn a year in unpaid taxes, mostly from corporate offenders – a quick hit that could reduce the deficit by up to 0.7% of GDP.

Meanwhile, the government will raise pensions for the country’s poorest and hold electricity tariffs constant for small consumers. The safety net, however, does not apply to the roughly 5 million illegal immigrants or the estimated 300,000 migrants who have lost working visas.

All told, the policies trim €16.5bn off the government bill and Rajoy is adamant Spain will meet the EU’s deficit target of 4.4% of GDP in 2012.

Pundits’ opinions about Rajoy’s strategy are mixed. An analysis from El País found that, while the top marginal rate had increased 7% to up to 55% in some autonomous communities, “working people” would still bear two thirds of the increase. With that in mind, Joachim Voth at the Barcelona Graduate School of Economics predicted in a blog post that the tax hike “will hardly produce any extra revenue” and that Spain would “repeat some of the Greek experience,” with growth slumping further.

The business journal Expansión simply accuses Rajoy of a political identity crisis since conservative candidates typically opt for supply-side regulation. The previous socialist government had already lowered the small business tax rate from 30% to 20%.