The Burundanga is burning hot. The governor of Puerto Rico, after statements to the New York Times, appeared on local television to declare that the state will not be able to pay the $72 billion dollar debt it has with investors. In a brief message that must have had record audiences, Puerto Rico´s chief executive mentioned some measures, and called for the unified will of the country. As soon as he was finished, all analysts and partisan spokespeople jumped on his neck to point out that his message was insubstantial and intended to advance their particular ideological positions. Proof that closing ranks is not feasible and that the way to recovery is steep and uphill.
Poor Puerto Rico, the notoriety and prominence this provides puts us next to the Greek debacle and discredits us as unable to pay debts and keep commitments.
In order to maintain our common sense and the sovereignty of the people we are, we must make a distinction: the government (all previous governors included) has not been a worthy representative of the common sense and rationality that should prevail in a nation. You need to be out of your mind, drunk or hallucinating to continue creating debt with total disregard for the future and the inability to pay. A disgrace of this magnitude naturally calls for insight and thought, and the need to question why and how we have arrived to such a regrettable situation. Now, especially when the North American ideology is showing hopeful signs of dealing with racism and sexism.
The attempt to answer these questions is a moral, as well as an intellectual obligation. For it is, without doubt, a transcendental event with a load of very serious implications. To begin, I use the answer our first elected governor Muñoz Marin gave when asked: “Don Luis, to what do we owe that there are so many cars in Puerto Rico?” The astute politician and poet laconically answered: “That we owe.” At present, we need to dwell deeper into why we owe.
The answer is equally simple. You borrow if you can, with the understanding that you will pay. But the premise has ceased to apply; the governor has publicly recognized we owe more that we are capable of paying. And that is a terrible thing. It shows a lack of the most fundamental sense of proportion and communicates a message of incapacity; it also conveys a sense of impotence, never to be taken as praise. So we need to answer: how could we?
With very broad strokes, we can say that the economy of the Island has undergone different strategies for its development since the occupation in 1898. First it was sugar, followed by a first wave of labor intensive industrialization, then the capital intensive period, accompanied by urban development and automobilization (easy credit to buy cars) which started the expansion of credit cards, and now megastores, to flood us. The underlying principle has been, and still is, the attraction of foreign capital, with incentives that makes it feasible to have a high yield, protected by tributary and labor laws that allow and promote it, making it impossible for us to save. Regrettably the debt is as much a personal as well as a national problem since individual debt is also huge.
The insufficiency of economic development is evidenced in the sustained unemployment rate of 15%, under employment estimated in three times that, an average yearly income of $17,000 with half of the population living in poverty, according to official statistics. That doesn’t quite explain our phenomenon for these statistics don’t take into account the underground economy. Agriculture was abandoned and we import close to 85% of what we consume, and tax protection leads to a massive flight of the capital yield.
It has also contributed to a massive migration of the young and more educated fleeing the Island. We live in a fictional paradise, better seen in our conspicuous consumption and the luxury in which we live.
We used to be good on paying, our government bonds had an excellent rating, and banks made it easy to borrow, but, we have never had the power or developed the instruments so the benefits of our labor and creativity could give way to our own capitalization. It was easy and it seemed comfortable to us that our future was held in the hands of Wall Street, and that the money went mostly to foreign investors. Then something changed, and it has been proven painfully clear that it is not the same to live in times of plenty and abundance than to live in scarcity and limitations.
The crisis of the financial markets and the periodic corrections that its value undergoes, together with the stagnation and negative growth of our economy, has led to the massive devaluation of our worth, which has been rendered below junk status. Something similar happened 117 years ago with the occupation, when local currency was devalued 40% making us cheap prey for acquisition.
Among the wise things my father taught me was not to spend more that what I had. To state it more clearly: don’t live beyond your means. It served me well and now I see how radical and counter cultural his thought and practice was. His lesson lost its meaning in our culture, defeated by the possibility of instant gratification, the illusion that the moon is made of honey, and the future is always rosy. Big mistake.
It cannot go unnoticed that debt is a two part equation; there has to be a creditor for there to be a debtor. The creditor needs to have the resources that define the margin of possibilities. The offer was appealing, so we rushed with little or no sense of proportion to having it here and now, seduced by acquisition with bank ownership included, without thought to its consequence. And here we are, feeling sorry and ashamed.
The responsibility of incurring in debt is personal and governmental. I have to respond for what I owe, the state has to respond for the bonds and investment instruments it has issued to balance the budget and subsidize our appearance as a first world country. What is pitiful is that the People of Puerto Rico are the ones who pay, aggravated by the fact that every four years we face the choice of bad or worse, parties and incumbents that have given away the country and provide no way out of the mud hole. But it is the people who carry the stigma and pay for the consequences of their actions. Our vote has placed them and taken them out of office, I don’t think the effervescence created by this situation will be content with that and won’t wait for elections. Public manifestation of outrage and the echo of public opinion is to be heard everywhere.
The search for some sense or logic to the Burundanga inevitably leads me to the obsessive issue of status. The declaration by the governor that the state is unable to meet its debt, points to the bankruptcy of the Commonwealth formula; it is plain to see it is not such, since wealth has proven not to be quite common. The insufficiency of power and resources to manage our interests and concerns has brought us here; it makes us gravitate in a vicious circle of limited options, of being property but not part of the United States of America. Together with the rash and foolish actions of those we have given our vote or acted passively. These times are over.
Nevertheless, I have not ceased being an optimist and remain convinced that crisis make creativity a necessity, the present situation leads us to face our Burndanga with options that will really solve our issues.
Copyright 2015 by José M.Umpierre. Photo of the Hosue of Representatives by the author.All other photos in the public domain.