Arturo Ignacio Sánchez*
Dinner is ready, the rice and beans are on the table, and the predatory financial vultures have sat down to feast on the main dish – the Puerto Rican economy. The question is: Who will pay for the meal? As things stand, the Puerto Rican people – who can least offered it – will pick up the bill.
Puerto Rico’s economy is in crisis. Currently, the Island has $72 billion dollars in outstanding public debt which, according to the Island’s governor, is largely un-payable. As a result, in February 2014, U.S. credit agencies downgraded Puerto Rican bonds to junk grade status. Which means, in effect, that Puerto Rico is, for all practical purposes, locked out of the capital bond market, and will not be able to access the economic resources to pay for basic public services.
This situation, as in the recent case of Greece, means that the Island’s economy will be forced to cut back on basic expenditures. This will negatively affect employment and the current standard of living, which is already very low.
According the U.S. Bureau of Labor Statistics, during 1976–2015 the unemployment rate averaged 15.35 percent annually. The economic situation is such that 56 percent of children are living below the poverty level. And, to complicate matters, in the last two years 31,000 jobs have vanished, which further reduces tax revenues and limits the government’s ability to deliver such essential public as education, police, sanitation and electrical power.
With the intent of increasing falling government revenues a sales tax of 11.5 percent was recently implemented, further hurting the most economically vulnerable sectors of the population. In effect, increasing unemployment levels, a diminished tax base, and constraints on public expenditures have only made a bad situation dramatically worse. The growing economic contradictions, in short, have resulted in a massive outmigration to the U.S. mainland. What we are witnessing, in effect, is the long-term downward spiral of the Puerto Rican economy which triggered an on-going mass expulsion of local resident from a structurally debilitated economy.
While most mainstream economists, money managers and political analysts claim that the economic crisis is due to fiscal imprudence, poor management, economic inefficiencies and a fossilized and self-serving political environment, the reality is more in keeping with Puerto Rico’s long-term role as a financial honey pot for U.S. corporations and financial speculators. Which brings to the fore another important question: In addressing the explosive economic crisis, what proposals are on the table and whose interests are being represented?
Currently, two well-known proposals are being seriously discussed. The first is titled “Puerto Rico – A Way Forward” – otherwise known as the “Krueger Report.” This policy study/proposal was crafted under the leadership of Anne O. Krueger -a former Chief Economist of the World Bank and First Deputy Manager of the International Monetary Fund (IMF). While the second report – “For Puerto Rico, There is a Better Way” – was written by three former IMF economists employed by Centennial Group which specializes in private sector economic growth strategies in the global south.
Both reports and the accompanying strategies mirror – with minor differences – the market driven assumptions associated with the current mainstream theology of economic austerity, deregulation and privatization. In this respect, most of the proposed policies are similar to the strategies imposed throughout Latin America with devastating economic costs for the most vulnerable populations. As such, the call for lower labor costs, a smaller and less proactive state, finance-driven economic growth, deregulation, and the establishment of a supervisory fiscal control board favor the interest of profits over people.
These harsh economic policies – particularly the call for a fiscal control board – have the ideological and political support of the right wing Heritage Foundation and the conservative billionaire Koch brothers. The endgame – as some analysts have argued – is the restructuring of the Island’s economy along technocratic market-based lines that largely benefit hedge funds and rich mainlanders who are buying up distressed, but valuable real estate, at a rapid clip. This growing development is leading to the gentrifying of Puerto Rico by speculative mainland investors and is fast-tracking outmigration. These inequitable processes – in many ways – reflect the harsh economic policies and modes of residential and commercial displacement that are currently sweeping through many economically vulnerable Latino communities on the U.S. mainland, and immigrant cities like New York. Displacement and outmigration, at the end of the day, represents the involuntary exportation of the Puerto Rican crisis to the U.S. mainland, which merely extends the problem from Juan to John.
Clearly, Puerto Rico is in the midst of a growing crisis, and as a poet once wrote: “The darkest place in hell is reserved for those who maintain their neutrality in times of moral crisis.”
*Arturo Ignacio Sánchez, Ph.D. is chairperson of the Newest New Yorkers Committee of Queens Community Board 3. He has taught courses on immigration, entrepreneurship, and globalization at Barnard College, The City University of New York, Columbia University, Cornell University, New York University, Pratt Institute and at various universities in Colombia, S.A.