Only the test of
life. Of course, the people of Puerto
Rico shouldn’t be (too) insulted. After
all, most Americans can’t name the capital of Canada (it’s Ottawa) or even half
the ten provinces or any one of the three territories (“Territories? Canada has territories?” “Yes, there is Yukon, Northwest, and . . .
that other one . . . Nerfball?” [Okay, Nunavut, which nobody even in Canada can pronounce]).
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| Puerto Rico, Gateway to the Caribbean |
So, the people of
Puerto Rico can at least take some satisfaction in the fact that while most
Americans don’t know too much (if anything) about the U.S. territories, they
don’t even know that Canada has any at all.
The people of Guam, American Samoa, the United States Virgin Island, and
the Northern Mariana Islands (got you on that one, didn’t we?) might be a
little peeved, and justifiably so, but at least people are vaguely aware of
them . . . not like the “Uninhabited Territories” of Bajo Nuevo Ban, Baker
Island, Howland Island, Jarvis Island, Johnston Atoll, Kingman Reef, Midway
Atoll (population 40), Navassa Island, Palmyra Atoll (population 20),
Serranilla Bank, and Wake Island (population 150). We don’t talk about Diego Garcia, which is
allegedly British, anyway, although occupied by the U.S. under suspicious
circumstances.
To get people up
to speed on a rather important piece of real estate, then, the Commonwealth of
Puerto Rico is an “unincorporated territory of the United States" strategically
located at the opening of the Caribbean Sea, a thousand miles or so southeast
of Miami, Florida. It’s not just one
island, but a number of them. Probably
best known today as a vacation spot for people around the world, it is ideally
situated to be a commercial hub between North America, Central America, South
America, and Africa. Not so much Europe
any more, but when the China trade came through New Spain (Mexico), Puerto Rico
was also uniquely positioned for Europe and Asia as well.
So, what
happened? Long story short: Decline of
the Spanish seaborne empire, Monroe Doctrine, Spanish American War, and so
on. Puerto Rico shifted from being a key
player militarily and commercially, to being important militarily for a region
not usually threatened by invasion any more.
It became a relative backwater when trade policies and regulations
favored “real” U.S. locations and internal development pretty much
disappeared. As was the case with
Ireland for so long, the country’s biggest export became people . . . not a
good way to sustain an economy or encourage development.
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| Widespread devastation |
Consequently,
government programs were funded primarily with debt instead of tax
revenues. This is because if nothing is being produced locally, then
consumption can only be financed by what other people produce somewhere else .
. . and that means debt just keeps mounting.
By August 2017, Puerto Rico’s debt was a staggering $72 billion, and the
poverty rate was an even more staggering 45%.
Then in September
2017 things got even worse when Hurricane Maria hit the archipelago, spreading
devastation everywhere. The electrical
grid was almost completely destroyed, and what productive capacity still
existed was almost totally wiped out.
With massive emigration, the population shrank by more than a tenth. Aid efforts have been inadequate, to say the
least.
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| Luis Ferré |
Maybe it’s time
to take another look at something that was proposed in the early 1970s, just
before the initial enabling legislation for the Employee Stock Ownership Plan
(ESOP) was passed. Since both were
proposed by Louis O. Kelso, and the ESOP has turned millions of workers into
part owners of the companies that employ them without taking a cent of workers’
savings or reducing take-home pay, surely something can be done for Puerto
Rico, and in a way that doesn’t cost the taxpayers a dime.
Not that there
weren’t some significant weaknesses in what ended up being proposed for Puerto Rico
(such as requiring investors to pony up their own money . . . which Kelso would NOT have said; we suspect somebody changed that or misunderstood that part, he advocated self-liquidating assets that pay for themselves so that the poor would benefit just as much as the rich), but it was a lot
better than anything else and the system in place today. As Juan M. Vasquez reported in the January
16, 1972 issue of the New York Times
(page 29, if you’re interested), under the heading, “Stock Fund Sought to Aid
Puerto Rico” —
SAN JUAN, P. R., Jan 15—
Gov. Luis. A. Ferré proposed last night the creation of a public venture
capital fund as a novel approach toward improving the island's sagging economy. In his annual State of the Commonwealth
message, the 68‐year‐old Governor described the Proprietary Fund for the Progress
of Puerto Rico as an instrument “designed to attack, the deficiency of our
present economic order.” The plan seems
to reflect the Governor's disenchantment with policies that have failed to cure
Puerto Rico's persistent economic problems, such as an unemployment rate of nearly
13 percent and a rate of growth that has been slowed by the impact of the
United States recession. . . . The plan is an attempt to put into practice, on
a grand scale, the economic theories of Louis O. Kelso, a 58‐year‐old San Francisco lawyer
and economist who is the co‐author of “The Capitalist Manifesto” and “The New
Capitalists.” Mr. Kelso said at the briefing that a number of United States companies
were at present trying the plan with their employees.
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| Reagan: capital ownership is good for ALL Americans |
The good thing is
that expanded ownership “technologies” have advanced greatly since Ferré announced
his proposal. It is now possible to make
every child, woman, and man in Puerto Rico (or anywhere else, for that matter)
into an owner of capital that does not merely supplement income but has the
potential to become the main source of income in the event jobs become scarce
or “real” wage rates fall relative to the increased cost of living.
In addition,
where the original proposal required participants to put up their own money
(out of a 13% unemployment rate in the 1970s or today’s 45% poverty rate?), it
is possible today to help people purchase capital that pays for itself out of
its own future earnings, and thereafter provides consumption income. Ordinary people would not only participate in
economic development by providing labor, but ownership as well, ensuring that
all income adds to consumption power and thus the prospects for growth in which
everyone participates.
If Congress was
truly concerned about Puerto Rico, it would immediately put together an effort
to study the application of the findings of President
Reagan’s Presidential Task Force for Project Economic Justice back in 1986,
which was expressly designed for Central America and the Caribbean Basin. Copies of the Task Force Report were
presented not only to President Reagan, but to Pope John Paul II. Anyone concerned with truly helping the poor
(actual people, not the abstract concept) cannot afford to ignore the potential
of the Just Third Way to establish and maintain an economically just society in
Puerto Rico — or anywhere else.
#30#
