Terra Mitica, the world’s best theme park,
opened in 2000, in the bright dawn of Spain’s Euro Zone membership. Money was
cheap and plentiful, the economy embarking on a boom. The pound was on a high
and the local economy in Benidorm was re-inventing itself from cheap package
holiday destination to appeal to a wider clientele. The local savings banks
were happy to finance a theme park, as well as hotels, a golf course and a
nature reserve.
Twelve years on and Terra Mitica is still
the world’s best theme park. For visitors, not for the Cajas who financed it.
What makes it so good is partly the theme of the rides – a journey through the
Ancient World, allowing a small dose of cultural education along with the
thrills. More than that though, visitors can enjoy far, far smaller queues than
they would at most other theme parks.
Since my children were 1 and 4 years old
when the park opened, it has been a regular destination, the rides they enjoy
changing gradually as they have got older. My annual season pass costs me Eur
51, and since I can visit as many times as I want, I tend to indulge the children’s
appetite for frequent visits, either keeping them company for a ride or two in
between cups of coffee, or simply dropping them off and heading for the gym of
golf course down the road. As the chosen rides got scarier, coffee and golf
started to appeal more and more.
Terra Mitica has lost several hundred
million euros in its short life. It has changed ownership and management,
running a profit only briefly in the halcyon days before the credit bubble
burst – and is now run by a waterpark operator. I have regularly fretted that
it would close down and deprive the children of one of their favourite holiday
treats, but the banks are still trying to avoid writing off all their loans.
Since it ran into trouble, some rides have
changed, and restaurants have abandoned all but the quickest fast food.
Pondering the thinking about what to change or close, it is clear that one
factor above all makes the difference – how labour intensive a ride, or
restaurant is. So my wife’s favourite ‘cultural’ ride, a genteel water ride
based on Odysseus’ journey round the Med, is no more, and the aerial climbing
centre has closed down. As for the days when I could sit down and have a four
course a la carte meal, they are a distant memory.
The trouble is that since Spain joined the
Eurozone, wages have risen sharply. And European labour laws have been
imported. That’s not a bad thing, but closing down labour intensive jobs in a
part of Spain with incredibly high unemployment doesn’t actually make sense. If
labour costs were a bit lower, there would be demand for many more services,
and the work would create its own demand.
Closing a ride on the grounds of labour
cost while youth unemployment heads ever higher, hits local demand twice over –
tourists have less to spend their cash on and locals just have less cash.
Europe’s austerity-solution will be to reduce unemployment benefit, and raise
consumption taxes. That will reduce demand even further, obviously.
The latest twist is a cut in unemployment
benefit and an increase in VAT. Will that boost employment? Probably, but not
at Terra Mitica. The successful businesses around here are small
family-operated ones, where unemployed children with degrees in architecture
help work in the family bar, for example. Here, prices have been cut. Are these
businesses diligently reporting all their income for VAT? Who knows!
It all ends with the banks writing off the
loans to finance all sorts of
infrastructure projects. It ends with freer labour markets and a scaled
back social welfare system. It would be nice if there were an offset in the
form of cheap money, or cheaper currency but at the moment neither is on offer.
In the absence of either, tighter fiscal policy will result in weaker demand,
higher unemployment, weaker tax receipts, reduced government spending, a lower
credit rating, higher borrowing costs and on round and round the austerity carousel…
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