Puerto Rico… Is there any hope?

By: Edgardo Hernández Burés

Known as the “Island of Enchantment”, Puerto Rico, only with 3.7 million residents, has an actual $70 billion debt and a staggering 14 percent rate of unemployment surpassing that of any state in the United States.

Having the best infrastructure in the caribbean, Puerto Rico has many natural resources which the government does not exploit and which could help generate money to pay the debt. Right now the island is trying to develop its tourism as one of its sources of income.

While it might look like Puerto Rico is teetering toward default, in a press conference held at the University of Puerto Rico – Mayagüez on November 5, 2013 Dr. Edwin Irizarry Mora, economist and professor at UPRM said, “the possibilities of a default in the case of Puerto Rico are very low.” Irizarry Mora explains that the main reason for that is that our constitution prohibits it. The constitution states that creditors are first place in the line of recipients when the central government processes its payments.

“on the other hand, as higher debt is paid, much less funds are left for the central government budget. That has been the case in Puerto Rico for many years.” Irizarry Mora added.

Some economists say that Puerto Rico can not deal with its economic crisis without working with decolonization processes. But others blame the economic crisis on the island’s inability to develop an economy independent of the United States and its dependence on federal funds to fuel its economy.

What most of these funds have done is create an economy of dependence. People prefer to receive federal help rather than work causing a marked reduction in labor participation.  People who receive this welfare do not generate more income, which causes less contribution in taxes and forces the government to raise taxes in order to generate more money to fund its system. This increase in taxes suffocates the working middle class and they cannot cope and are forced to leave the island or stay and join the ranks of those on welfare thus creating an ever growing gap between rich and poor.

Social inequality generates a situation in which individual groups in a society do not have equal status;this differences affect access to education, transportation, quality housing, health care, and other social goods and services.

In the Annual Economic Conference of 2012 Sergio Marxuach, public policy director for the Center for the New Economy said “one of the areas where social inequality is most evident in Puerto Rico is in wealth. The average income reported in the top 5 percent of local households is 33 times greater than households in the lowest tier. In the U.S., the top income earning group is 15 times higher than the lowest strata.”

According to the American Labor Market Information System, nowadays the unemployment rate in Puerto Rico stands at 14 percent.

“When there is less influential people inserted in the labor force, there is going to more exclusion, marginalization and social inequality,” said social activist Javier Smith at a press conference about social inequality held at UPRM on November 5, 2013. Smith explained that social inequality and marginalization can be eradicated or diminished through activism but it cannot effectively reduce it without the legal restructuring of power structures and the political will to do so.

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Same Boat

The social activist said that there is an imbalance because the vision political parties have is that once they are in control they have to generate funds to make social work without involving the people, which are the beneficiaries. “This relationship should be developed from the ground up. There should be a symbiotic relationship between the political and social bases and that power should be shared,”  Smith added.

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