Four decades after it exploded, tourism on the islands overheated, leaving in its ashes a forest of massive, block-booked hotels and beach-hugging villa communities with few discernible ties to Spain'places lined with German bier halls, English fish  n' chips joints, and low-rent bars and discos.
Because of the tourism boom, the islands are strewn with artifacts of foreign culture that bear little relation to Spain.
What Krugman appears to be saying is that demand for a given commodity will become more inelastic as one's income or wealth increases.