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Who puts the P in PIIGS?

I was pretty excited when frequent contributor, Dorabug, offered to sit down with her father — who is from Portugal — and get his “unqualified” take on Portugal’s economic situation.

My parents were born in the mid 1940s and left Portugal in the late 70s, at the height of political unrest stemming from the Carnation Revolution.

While asking him questions, he kept insisting that he was not an economist and was “unqualified” to give these kinds of opinions.  He didn’t know the name of the site…

He’s always a little surprised at how liberally people are living in Portugal. The younger generation (my dad used the word “juventude,” which generally encompassed people from 20 to 35 in this particular conversation) does not care as much about the future, he believes. They live and spend their money in the present. Savings are not a high priority for the juventude, but adventure, nice cars, brand names, and big houses are. Although he is not like this at all, he agrees with this “revolution of times and attitudes.”

In the last several years, there has a definite downturn in US spending, but while my parents and I were vacationing in Portugal last summer, people were still eager to take their August-long vacations. A lot of things seemed to be cheaper–my parents rented a large house with a private pool in the summer destination Algarve with four other family members, and it was extremely affordable–but they just couldn’t believe how many other families were still doing things like that despite the economy being shit. I asked my dad if spending continues because the Portuguese economy has basically been really terrible for 100 years (despite adopting the Euro to climb out of what seems like a constant recession), and Portuguese people are just used to the economy being really bad.  “No,” he said, “It’s just because they don’t care about saving.”

People aren’t feeling obligated to leave their children property or large sums of money anymore. The people who are in their 50s and above are still holding on to the old traditions, such as saving money for when it may be necessary later, but the juventude are living far better than when he was growing up in the 50s because the general sentiment among young people is to be more carefree than in the past.

The New York Times article also touched on the halting of the Porto to Vigo train to save money. Both my father and I agree that it should be a priority to build this train, but for different reasons.  My dad believes that the trains in Portugal are not a necessity, but we are in the 21st century, and Portugal needs to catch up. It may still be a small country where tourists are comfortable in its quaint backwardness, but that won’t get the country anywhere in the next 20 years. In old times, if kings had not taken the money and resources to construct the castles, palaces, large churches, and other monuments that Portugal is now known for, they would not have been given half the world (see the Treaty of Tordesillas of 1492), thereby ruling enough countries to keep Portuguese ranked even today as the 6th most spoken language in the world, nor would Portugal have had enough power to be a large factor in starting the Atlantic slave trade (although that wasn’t really a good thing…).

The general theme is that in 2010 we don’t make castles, but we must build other things- such as high-speed train lines, maintain high-speed internet, and grow our cities. Portugal needs to be up to date. Despite some possible negative repercussions in building such things- such as accumulating debt- it’s still necessary in order to be with the times.  Trains are far more important in Portugal, especially given the small scale of the country.  Flying can be a hassle, and high-speed trains are the way to go.

I personally think that in the long term, the train would be beneficial. It would not help the economy as far as jobs goes, because it’d be an odd commute. The tourism that would result from it in the long run, though, would be positive. Portugal is one of the few European countries that isn’t easily accessible by rail (my friends from UK go to France on the weekends by rail, as though it’s no big thing), and they need to promote tourism to help the economy. There are actually quite a few rail lines that go from various parts of Spain and two from France to Portugal, though I imagine few, if any, are direct. I can’t imagine, though, Portugal will immediately lose any tourism from not building, as the majority of tourists are most likely heading to Lisbon, and that’s the most easily accessible place in the country (by land, air, and sea).

Also, Porto has an airport, so anyone wanting to come from Spain/Vigo could do that in the meantime (Probably not as cheap as a train, though?)

In 2007, Portugal was #20 in the top 50 international most visited countries list. My dad wasn’t surprised to hear this. Portugal was extremely poor in the 1970s, when most of Europe was already experiencing a decent economic boom, and slowly climbed the ranks of visitable countries. The prices in Portugal were—and still are—far lower for tourists, especially when compared with France and Spain. Portugal’s climate is also favorable for tourism, especially compared with other northern European countries; it is far more temperate, even in the winter. In the southern tip of Portugal, temperatures are steady in the 40s, even in the dead of winter. The climate has also added a novelty to Portugal, because the south is far warmer than the north. You can drive for just 6 hours and experience what almost feels like different seasons, different panoramas and landscapes, and extremely varied vegetation, as well as see pretty much the entire length of the country.

The best way for Portugal to save its economy and get out of debt, my dad believes, is by capping wages, but still allowing for some growth in order for the country’s overall growth. The highest paid people should not be given raises, and people should not have to live like kings. Wages need to be more evenly distributed. He might move back to Portugal right now and make around $50,000, but someone with just a little more training might make closer to $160,000. The disparity is overwhelming, and that’s part of what keeps Portgual’s economy in the gutter.


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