Portugal Declines While Visitors Enjoy

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Portugal Declines While Visitors Enjoy

By: John A. Baden, Ph.D.
Posted on July 07, 2016 FREE Insights

Ramona and I are traveling through Portugal observing the culture and economy of Lisbon and Porto.  We are in route to give lectures at the University of Aix en Provence in France arriving in Lisbon the day after the Brexit vote to leave the EU.  People here were far more interested in the European soccer games. 

I began writing this while sitting on the Avenida Libertad’s greenway park waiting for the Portugal Communist Party (PCP) headquarters to open for lunch. The PCP is next door to Gucci store, two doors down from Louis Vuitton in the high fashion section of the Avenida Libertad. I’m wearing a Hayek T shirt from the Heartland Institute, a FREE visor, and carrying a Liberty Fund book bag. No one commented on my attire.  (Who’s Hayek? What’s liberty?)  All patrons and staff were pleasant and one took my photo. 


Bozeman friends assured us Portugal is an excellent place to visit. We agree and found Portugal sunny, warm, inexpensive and beautiful.  The locals we’ve met were uniformly pleasant and helpful.  Portugal has wonderful qualities, especially for a country in serious decline. Demography has a huge impact on destiny--and in the developed world economics greatly influences demography.  And their economy doesn’t work well. 

The Portuguese led the age of discovery and developed Europe’s premier maritime empire.  It was the major economic power during the Renaissance with trading outposts in South America, Asia, and Africa.  Its economy featured gold and silver, spices, and slaves.   Specialists evaluated the regions of the world providing the best slaves for specific types of work.  In much of the Portuguese empire, including Brazil, slaves could buy their freedom, a form of manumission.  (Understanding incentives, some owners would loan slaves the money to buy freedom.) 

With a long history of dictatorship and cronyism, today the major political party is socialist, Portugal is on a long downward slide.  Problems in small towns resemble those in rural Montana.  Young people with high potential flee toward opportunities--but few exist in Portugal.  Its institutions don’t foster wealth creation and entrepreneurial experiments. Natural endowments languish.  Ramona met a thirty something registered architect working as a waitress, her best opportunity.

Summer weather in Lisbon resembles ours, 80º F and sunny, but we noticed major lifestyle differences from Montana’s Gallatin Valley.  First, in one day we saw more people smoking cigarettes than we see in a year back home. Second, runners and cyclists were rare.  We saw no “Bozeman girls” here.  No bumper signs proclaimed “Don’t let the pink confuse you” or “Ski like a girl!”

Our quite accommodating and pleasant art deco Hotel Britania Heritage had no fitness room--nor did any of its affiliates.  Three days use of the health club near the PCP headquarters exceeded a month dues for any in Bozeman.  No other was nearby. 

The great majority of cars were tiny two +/- liter machines and we saw no F 250s—and only one Harley among hundreds of motorcycles. Of course the great majority of vehicles were diesel and most appeared to be in good shape. 

The Organization for Economic Cooperation and Development developed metrics for quality of life.  It notes: “in the Better Life Index Portugal ranks …. below average in income and wealth, health status, social connections, civic engagement, education and skills, subjective well-being, and jobs and earnings.

Money …is an important means to achieving higher living standards.

In Portugal, the average household net-adjusted disposable income per capita is USD $19,882 a year, less than the OECD average of USD 29 016 a year.”

http://www.oecdbetterlifeindex.org/countries/portugal/  Montana has a per capita income of $26,000--but the Gallup Poll reports Montanans rank their state as top for living satisfaction.  (fn  Gallup Pollup  APRIL 24, 2014

Montanans, Alaskans Say States Among Top Places to Live by Justin McCarthy

I consider it great success to be 38th in income and first in satisfaction. 

Portugal has the lowest level of life satisfaction in the EU.

Portugal’s birth rate is only 1.28 babies per woman, just over half the replacement rate of 2.1.  It is the EU country hit hardest by a Europe-wide demographic problem.  Low and declining fertility rates combine with an ageing populations kill hope for progress. A Financial Times, August 12, 2015, article observed  “Young people are delaying starting a family ….  One third of young people are unemployed in Portugal and over half, some 58% want to leave the country.” 

As a result of these forces, pensions, public health entitlements, and services for elderly care are unsustainable. In this regard, Portugal is a leader among EU nations.   Absent substantial reform as the Nordic nations achieved, their social welfare model is doomed by entitlement and demographic logic.

Lisbon and Porto’s economy are the opposite of Gallatin Valley’s.  At home everyone qualified for a job has one and “HELP WANTED” is the most common business sign.  Bozemanites worry about constraining growth and competing with wealthy newcomers.  It is a magnet for cheerful fun –hogs, people who enjoy our outdoors, and many creative, successful people.  Travel here makes me appreciate home even more.




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