Empire State Madrid

Stagnant Europe is starved for positive signs. Spain has been presented as a growth miracle — a bright spot in an otherwise grim economic picture of the continent. Led by the socialist Pedro Sánchez, the country looks, on the surface, healthy among the sick economies of the Mediterranean. Beneath, however, lies a dysfunctional welfare state whose survival is secured by extinguishing the opportunities of the young. Spain is a model liberal gerontocracy. 

Young Spaniards are the biggest losers of the twenty-first century. Since the beginning of the new millennium, they have become poorer: in 2002 those aged 35 and below had 7.5 per cent of national wealth, now it is 2 per cent. The gerontocratic shift is stark: during the same period, those over 75 increased their share from 8 to 20% of national wealth. Between 2008 and 2024, real income of workers aged 19–29 fell by 3 per cent, while for those over 65 it rose by 18 per cent. Today, freshly minted pensioners receive more than the average salary of a worker under 35 (€1,760 vs €1,670). Since 2006, the only group to increase its real consumption was the over-65 slice of the population. Spaniards 30 and younger spend 36 per cent less than 20 years ago. Spain has one of the most generous pension systems in Europe — pensioners receive 60% more than they contributed — and the highest youth unemployment rate on the continent, more than 10 percentage points above the EU average and four times higher than Germany’s. Pensions are cannibalising the budget, and the holes are patched up with migration. But even the flow of new people shouldering the burden of gerontocracy is turning grey: nearly one immigrant in ten is older than 55. Perhaps no statistic is more telling about a country where the future has been sacrificed than the child poverty risk rate: it reached 29.2 per cent last year. One in three Spanish children is at risk of poverty, the highest rate in the EU. 

The young know that the system is skewed against them. Sixty-eight percent of young Spaniards doubt that democracy can deliver results and would favour “tougher measures”. One in three of those aged 18–24 believes that not paying taxes would make everyone’s life better. Liberal gerontocracy produces libertarians of despair.  

Some corners of the Spanish commentariat have begun pointing to these generational inequalities. But the proposed vision — clawing back to the income levels of 20 years ago — sounds wildly unambitious. And even thisuncharismatic vision is far-fetched, since every political calculation has a built-in assumption: you have to win the grey electorate. 

That doesn’t mean that the future is completely lost in Spain. Reform at the national level is blocked by the structural forces underpinning the ageing welfare state. The way to circumvent gerontocracy lies below the level of national politics; Spain isn’t drained of energy completely.  What remains has been concentrated in its capital. How Madrid became the exception and what it means is the topic of Fernando Caballero’s latest book, Madrid DF. 

Caballero compares Madrid to Paris. Madrid never imposed itself as a centralising force draining the country but rather functioned as a hub connecting a polycentric Spanish structure. And while Paris is slowly declining, like the rest of continental Europe, Madrid can become a new model, not only for Spain, but for Latin America, where its civilisational reach becomes a force multiplier. 

Spanish elites, Caballero points out, have displayed a penchant for imitation for more than three centuries. Instead of projecting their views beyond Spain, they echo what they hear in other capitals; instead of putting forth their own solutions, they choose complacency and wait for answers from “the West”. Intellectually, Spain has become sterile, reducing itself, as one writer quipped, “to sun, beaches, restaurants, and foreign ideas”. 

The complacency of the elites translates into economic choices: rent-seeking and speculation. Just as in the time of the Bourbons, state bureaucracy is more rewarding than entrepreneurship (in the public sector, graduates under 39 earn significantly more than their private-sector counterparts). Just as in the age of imperial decline, real estate speculation is more profitable than productive use of capital. 

But, as Caballero reminds us, it wasn’t always like this. In the seventeenth century Spain set the standard: the façade of Versailles imitated the palace of Buen Retiro; the Place Dauphine in Paris was inspired by the plazas of Madrid and Valladolid. Cervantes and Velázquez left a decisive mark on European culture in their time. Now, after centuries of decline and imitation, Madrid finds itself at a critical juncture. A governing class committed to economic liberalism has made it the dynamic centre of the Spanish economy, but the old temptations — real estate speculation, bureaucratic hypertrophy, and complacent copying of others — remain. 

Historically, the engines of Spanish growth were located on the coasts. The outward orientation of Catalonia, the Basque Country, and parts of Andalusia led Spain into modernity. The great paradox of post-Franco Spain is what autonomy produced: the regions that had strained under centralisation didn’t realise the potential that autonomy was supposed to unlock. Regionalisation activated Madrid, not Catalonia or the Basque Country, which were supposed to profit from the new constitutional arrangement. In 1955, Catalonia’s economy was 22 per cent larger than Madrid’s; by 2019, the capital had surpassed Catalonia by 2.3 per cent. Since 1978, Catalonia expanded its working population by 67 per cent, while Madrid’s grew by 114 per cent. Madrid’s take-off started with the new constitution: decentralisation was good for the centre. 

The agglomeration effect is powerful, but Barcelona, after all, is a large agglomeration as well. The main factor behind the sorpasso is political choice: the liberal-conservative Partido Popular, which governed Madrid, pursued growth and deregulation. Barcelona was held hostage by Catalan nationalism with a socialist and green colouring. As Josep Maria Martí Font wrote in his book on the rivalry between Madrid and Barcelona, the curse of the latter was its political elites, who rejected the reality of a metropolis capable of becoming an engine of growth and a magnet for global talent, in favour of a decentralising policy concentrated on smaller towns. 

Much of the Catalan deceleration can be attributed to degrowth policies. Caballero caustically remarks that while in Barcelona the expansion of the airport was derailed by ducks living in wetlands next to the runway, in Madrid ducks are served in high-end restaurants. In Madrid, a liberal elite took over and forged ahead with a pro-growth agenda. Today, the working-class barrios, which tilted naturally to the left, are all for the right: public services are of good quality, infrastructure is being built, the housing supply is expanding faster than in other areas of Spain. 

Caballero argues that Madrid shouldn’t be an island surrounded by declining peripheries. The growth of Madrid should spill over into the region and beyond through a network of railway connections. Dying population centres in a radius of 100–150 miles from Madrid could be brought back to life, as has already happened with Toledo. The capital didn’t depopulate Toledo but fuelled its growth, lifting living standards. 

Madrid also has the power to project itself beyond Spain. The 2018 Copa Libertadores final was a symbol of this new destiny: when violence between River Plate and Boca Juniors fans made it impossible to hold the match in Buenos Aires, it took place in Madrid. The whole Latin American continent, claims Caballero, is bogged down in perpetual turmoil — rising insecurity and political chaos that appear to have no remedy. A new social contract for Latin America won’t be found in Sweden or the United States, but in Madrid. Here, hundreds of thousands of Latinos have already found their place; they are upwardly mobile and, even with working-class jobs, can achieve a standard of living impossible to reach in their countries. Mexican and Venezuelan millionaires won’t turn Madrid into a city of maids and masters; there is an opportunity to offer Latin Americans a new vision that could drive change on the other side of the Atlantic. 

Julián Marías, a twentieth-century Spanish thinker, saw Spain’s role much as Caballero does today. Spain should become a plaza mayor of all Hispanics — not an imperial centre but a main square where Latin Americans could meet, exchange ideas, compete, and experiment. Madrid, in Caballero’s vision, should embody the civilizational project of Hispanics from both hemispheres.  

Optimistic and concrete visions of the future are scarce in Europe. Madrid D.F. adds to the supply. It isn’t a display of wishful thinking: international structures are in a state of decomposition and transformation; in this volatile environment, there is a place not only for nation-states and great powers, but also for great cities. If Madrid matches the ambitions outlined by Caballero, Spain may yet regain its optimism. Caballero is a young writer and maybe the ultimate message of his book isn’t a political idea. It’s a piece of advice: if you’re young, there is a future in a gerontocracy after all, there still is Madrid.