Fourteen years is a long time for organized labor to keep its whistle in its pocket. In Spain, it took more than a decade of stagnant wages, youth unemployment rates that would trigger civil unrest in more serious economies, and the slow-motion decay of the eurozone’s periphery to finally summon a general strike. And for what grand injustice have the banners been unrolled? The cost of an apartment in Madrid.
There is a peculiar, almost theatrical vanity in walking off the job to protest an asset price. One can strike against an employer; an employer possesses a balance sheet, a board of directors, and a threshold for pain. One cannot strike against aggregate demand. Pickets do not pour concrete. A work stoppage does not lower the price of rebar, nor does chanting in the Plaza del Sol magically increase the residential density of Barcelona. Yet hundreds of thousands have taken to the avenues under the impression that the price of shelter is a political dial, casually dialed up by malice and easily dialed down by bureaucratic decree.
Naturally, the culprits have been assembled for their customary public flogging: foreign buyers, holiday rentals, and that eternal boogeyman of European social democracy, the predatory fund. It is an enduring comfort to believe that housing is expensive because someone, somewhere, is excessively greedy. It spares the public from confronting the arithmetic. Spain, like much of the continent, suffers from a pathology of its own making: a paralysis of planning permissions, absurdly restrictive zoning, and a legal architecture that treats the eviction of non-paying tenants as an existential violation of human dignity. Capital is cowardly. When you threaten to cap yields and confiscate returns, it simply relocates to jurisdictions where private property remains a legally enforceable concept.
The proposed remedies, inevitably, will exacerbate the disease. Spain’s political class, ever eager to purchase tranquility with other people’s balance sheets, will offer the standard cocktail of price ceilings and punitive levies on landlords. We have seen this tape run to its conclusion in Berlin, in Paris, and in Scotland. The results are as predictable as the tides: supply evaporates, the rental market vanishes into the informal economy, and those without existing leases are locked out entirely. To demand cheaper rent via government fiat is to demand that water flow uphill; politicians may pass the law, but the plumbing remains stubbornly indifferent.
There is a grim detachment from reality in watching Southern Europe convulse over metropolitan square footage while the rest of the world grinds on with far uglier business. In Eastern Europe, Russian recruiters are drawing desperate Indonesian laborers into frozen trenches for a handful of dollars, while Washington issues stern communiqués to Madagascar over naval berths. Capital, energy, and labor are reallocating globally under the cold pressure of real scarcity. Yet in Western Europe, the dominant political impulse remains the belief that comfortable urban living in historic city centers is a natural birthright, decoupled from productivity, growth, or construction.
A general strike does not create a single square meter of floor space. If anything, it subtracts productivity from an economy that has none to spare. If the unions truly wished to halve rents, they would not be blocking traffic; they would be demanding the deregulatory demolition of historical preservation zones, the gutting of environmental review processes, and the immediate slashing of construction taxes. But that would require an appetite for building things, rather than merely dividing what already exists. The market will clear, as it always does. The only question is how much capital Spain must frighten away before its protestors realize that you cannot live inside an ideology.
— Gideon Frost