Needed: A Few Improvements in Paradise

It was one of those things I read in the middle of the night, and it didn’t tell me much that I didn’t know. And though the article in The New York Times was expansive, it could be more simply put: the island is a mess and people are getting out.

There’s the crime. Yes, we only had 883 murders last year, but the year before? Over 1100—a record for us.  And New York, with at least twice the population, had about half a many murders as we did.

Per capita income: $15,200, which is half that of the poorest state, Mississippi.

Infrastructure: you could swim in some of the potholes in the roads.

Electricity: sky high.

Public schools: can’t even assure the physical safety of the pupils, who are sent out to the streets if their teacher is absent (no one ever hearing of a substitute teacher…).

It goes on and on, the litany of ills affecting us, and so our professional classes are doing the obvious. Unlike the 1950’s, when poor people moved to the states to work in factories, our educated classes are leaving the island. Here’s what the Times had to say:

Puerto Rico’s drop in population has far outpaced that of American states. In 2011 and 2012, the population fell by nearly 1 percent, according to census figures. From July 2012 to July 2013, it declined again by 1 percent, or about 36,000 people. That is more than seven times the drop in West Virginia, the state with the steepest population losses.

All this—however depressing—I get. What don’t I get? Well, check this out:

Un proyecto de ley senatorial que propone otorgar incentivos contributivos a puertorriqueños que han emigrado para que regresen y residan e inviertan en el país, recibió ayer el endoso del Departamento de Desarrollo Económico y Comercio (DDEC) y de varias entidades privadas.

(“A senate law project that proposes to award tax incentives to Puerto Ricans who have emigrated in order for them to return, live and invest in the island received the endorsement yesterday of the Department of Economic and Business Development and various private entities.”)

Guys?

In the first place, we’re broke and the governor has just had to raise taxes. In the second place, has anyone thought of why all those doctors, lawyers, nurses and teachers left the island in the first place? A sudden desire for 20-below zero weather? The joys of shoveling snow? Struggling daily with a language that is not your own, a feeling every day that you’re an outsider?

Listen, guys, it was one of the hardest things I’ve ever done, and one of the three things that neurologists say completely remap your brain (the other two being having children and getting married…). Do you think any of these people, having made such a sacrifice, are going to be lured back by a tax incentive? And by the way, how big a tax incentive will it have to be to compensate for the loss of income with which they’ll be hit by moving back to the island?

More to the point, why did all these people leave in the first place? The crime, the infrastructure, the lousy pay and horrible government—has any of that changed? Everything that prompted people to leave in the first place is not the same—it’s worse.

So what should be done? Well, as I write in the café that is my office, I’m seeing the owner busy rearranging her shop. So I asked her: “what’s the hardest part of running your business?”

She’s stunned, can’t speak, and makes circular gestures with her hands. In short, it’s everything. I give her prompts: the cost of electricity, the regulations, the permits, the…

“The taxes,” she says. “Yeah, that’s the hardest….”

I read recently that Georgia had improved their economy by improving their ease of doing business from a ranking of x to eight. Right—so what was Puerto Rico?

Well, we’re number 40. And our neighbors? Dominican Republic is 112; Haiti is 177. Both Cuba and the Virgin Islands are unranked. Singapore is number 1, the United States is number 4.

The ranking is done by the World Bank; here, drawn from their website, is their description of the ranking:

Economies are ranked on their ease of doing business, from 1 – 189. A high ranking on the ease of doing business index means the regulatory environment is more conducive to the starting and operation of a local firm. This index averages the country's percentile rankings on 10 topics, made up of a variety of indicators, giving equal weight to each topic. The rankings for all economies are benchmarked to June 2013.  

And what are the ten topics?

·      Starting a business

·      Dealing with construction permits

·      Getting electricity

·      Registering property

·      Getting credit

·      Protecting investors

·      Paying taxes

·      Trading across borders

·      Enforcing contracts

·      Resolving insolvency

OK—so how does Puerto Rico do? Here’s the list with Puerto Rico’s rankings

·      Starting a business---------------------------18

·      Dealing with construction permits--------172

·      Getting electricity----------------------------38

·      Registering property-------------------------132

·      Getting credit---------------------------------13

·      Protecting investors--------------------------16

·      Paying taxes-----------------------------------110

·      Trading across borders-----------------------87

·      Enforcing contracts---------------------------101

·      Resolving insolvency-------------------------21

What’s interesting is how skewed these numbers are. Getting credit is 13, our lowest score; dealing with construction permits is a whopping 172. Shouldn’t that suggest something to our lawmakers?

Look, I’m a blogger, I’m a musician. What am I not? An economist. But shouldn’t we be putting our efforts to streamlining the permission permits, clearing up the monumental backload in the Registry of Property, revising the tax structure, and making it easier to enforce contracts?

Maybe, in fact, we could send some guys over to Singapore to figure out how they do it?

Might be money better spent than trying to lure professionals back to the island….

Bad Party, Terrible Hangover

The good news?

I did not wake up this morning with a hangover.

The bad news?

The island did.

Whatever you think of the current governor, nobody can dispute that, on at least one point in the news conference yesterday, he was right: both the major parties that rule Puerto Rico got us into this mess. And that is? Yesterday, after years of waving red flags, Standard & Poor’s degraded our credit rating to junk status.

Terrible golpe al país shouts the The New Day’s headline in a special 15-page extra to today’s regular printed edition. Conscientious blogger that I am, I read all 15 pages, which told me basically what I knew, as well as some things I didn’t.

The gist of it is that for forty years, the public has allowed our political leaders to engage in politicking, instead of providing services, making fiscally responsible decisions, and running efficient governments. And how did they do that? By doing on a collective basis what many of us do on a personal level: living on credit.

There’s nothing too sexy about economics—nothing as sexy as building a great whacking (thanks, Franny!) stadium or investing a billion dollars in “special communities,” which today remain just as special as they were when the program began. (The program identified poor communities and tried to invest funds for improvements to infrastructure and social services…)

OK—so how bad is it? Some facts lifted from the special edition of today, as well as a New York Times article on the topic:

•       Our debt is almost 70 billion dollars
•       Each person—man woman and child—would have to pay $10, 635 dollars up front to clear this debt. That’s ten times the average per state
•       As a result of this decision, we’re going to have to pay about 940 million bucks, since we promised we would if our rating was sunk to junk status
•       We had been planning to go ask the market to buy bonds that would give us an additional 1 to 2 billion next month
•       Puerto Rico is the third largest issuer of municipal bonds, after California and New York
•       Many of these bonds are collected in mutual funds, which are attractive: you don’t have to pay taxes on the interest you collect on them. Therefore, a lot of mutual funds in the US hold Puerto Rico bonds. However, a lot of the bonds are held by the Puerto Rican middle and upper classes, especially retirees; some 1.5 billion dollars of Puerto Rico debt is held on the island

Now, how’s the economy doing?

•        In December of 2013, the rate of unemployment was (officially) 15.4%
•       Largest employer in Puerto Rico is…the government of Puerto Rico: 27.8% of the work force works for the government. Estimates for the average state public sector range from 10% to 15%
•       Manufacturing accounts for only 9% of the non-farming Gross National Product
•       25% of the commonwealth budget comes in federal funds
•       The population of Puerto Rico is 3.67 million: in 2013, the government estimated that 1.3 million people were working. That means that one in three Puerto Ricans is working

OK—so what was the response on the island? Well, the editorial in The New Day called for…unity. Now is not the time, it said, for finger pointing. The governor, as well, said that now is the time for all Puerto Ricans to come together and figure out what to do with this mess.

Though there were some who couldn’t resist, of course. The governor himself couldn’t resist suggesting that his government, though young, had acted like adults, but that it was time for the local Supreme Court to “put on the toga of adulthood.” Why the jab? Because the Supreme Court had put the reform of the teacher retirement system on hold until the lawsuit brought by the unions had been resolved.

And the President of the Senate came out and said that the current government had been firm and financially responsible; nowhere else in the states had a government acted as Puerto Rico had to correct their problems. Puerto Rico didn’t deserve this betrayal.

The teachers, too, pointed out that since we got degraded to junk status, it was clearly proof that a reform of the retirement system wasn’t needed in the first place.

Yes, you say, but beyond calls for unity—however successfully heeded—what does the government propose to do?

It would be premature, said the governor—donning the mantle of a serious and wise leader—to discuss any specific measure until they had been carefully and thoroughly scrutinized and examined in order to assure that the measures taken will have the maximal impact on the economy while minimizing any adverse effects on the private lives of the people of Puerto Rico, who working together, hand in hand, making ties that extend beyond petty politicking, can go forward confidently towards a better future.

All right—I made that up. That’s what I would have said. The governor doesn’t know what he’s gonna do—so he fell back on rhetoric.

Nor does the average person know what this means: according to The New Day, even business people didn’t really understand what all this meant. The reality is that almost 90% of the students I have taught over the last 20 years have tuned out politics. And now that the crisis is here? Many people are confused.

And the worst of it? However bad the hangover, it was never a very good party anyway….   

Two Wings and a Lady

Cuba y Puerto Rico son

De un pájaro las dos alas

It’s a famous quote from a poem by Lola Rodríguez de Tió, and can be translated roughly as “Cuba and Puerto Rico are two wings of the same bird.”

Well if true, it may be that the wings of the bird are flying in completely different directions.

From the video below, it seems that the Cuban wing is set to soar. Raúl Castro has had to face the inevitable: the economy, supported all those years by the Iron Curtain buying Cuba’s sugar at inflated prices, was broke. The fields—five million acres of them—were overrun with a weed called marabú (marabou.) Nor is it just a weed—it’s highly invasive and thorny. If you attack it with a machete—pretty much the only thing at hand in lightly mechanized Cuba—you’ll end up bloody at the end of the day.

The buildings are falling down in Havana, and the state workers, who are supposed to repair the houses, are backlogged and slow to respond. How slow? One woman interviewed has waited 16 years with her ceiling propped up with four-by-fours. She worries that the roof will collapse every time it rains.

Seventy percent of the food has to be imported; supplies in the state-run shops are scant. Doctors make twenty-five dollars a month; one doctor interviewed makes a better living selling copper tubing on the side.

And so, you say, how can the wing be flapping skyward?

Well, Cuba’s economy grew 3% last year, and is expected to grow about the same this year as well. Sure, it’s not quite the 3.6% that Castro wanted, but it’s not far off.

And by allowing 181 jobs to be done by licensed private individuals, the government has at last introduced some incentive to work. In the past, there was a saying, “the government pretends to pay us; we pretend to work.” Now, there’s the beginning of an independent, free market economy.

And let’s face it, where was Miami before the Cubans arrived?

My friend Harry has a story. In those days when Harry was selling shoes, he entered a small shop, got tossed out, and went to a café. Still burning with the humiliation, he overheard a conversation among the boys—a group of middle-aged guys who were complaining: the damned Cubans had come and taken all the jobs away in Puerto Rico. Harry turned to address them.

“If the Cubans are working and you are not, it’s because they are NOT sitting in cafés drinking beer at 10 o’clock in the morning. They came with nothing and got a bike and sold what they could sell and now they have multinational corporations and live in gated communities. Oh, and I’m not Cuban but Puerto Rican….”

Which will explain why the Puerto Rican wing seems to be plummeting.

La producción propia es la tarea urgente contra la dependencia de fondos federales en Puerto Rico

That’s one of the headlines in today’s El Nuevo Día. Economists are urging us—as they have for all the twenty odd years I’ve lived here, to create jobs to avoid dependency on federal funds.

And on the double, since 24,200 fewer people are working here on the island than last year. Granted, that may not be a problem, since we are also shrinking in population, but government (the largest employer on the island) is reporting 20,600 fewer jobs this year than last.

Here’s Caribbean Business Report on the subject:

Puerto Rico’s population was pegged at 3,725,789 in the 2010 Census, down from the 3,808,610 registered in the 2000 Census. It marked the first time the island population had declined between census counts. The 2010 Census also showed there were 4.7 million Puerto Ricans living in the states, marking the first time more Puerto Ricans lived stateside than on the island. Only one state, Michigan, registered a drop in population in the 2010 Census, dipping 0.6 percent.

It’s happened before—in the Great Depression, droves of Puerto Ricans left, primarily workers who would man the factories of the (then) industrialized North East. Who’s leaving now?

Young professionals.

Which is why the article in Caribbean Business Report ends thus:

The population drop of nearly 83,000 over the last 10 years and the continuing exodus raises the prospect of less federal funding for Puerto Rico, increased pressure on the financially ailing public-pension system and a dramatically aging population with fewer financial resources.

Yes and no.

I’m sitting in a terrific local business, Poet’s Passage, run by a great lady, and named in fact, Lady. She explained this curious fact by noting that her father’s family came from Australia via Scotland, where they were all lords and ladies. (Tactfully, I never inquired as to the exact circumstances of the move to Australia).

And Lady has been here since 11AM—busy getting her sister store adjoining the café ready for an activity tonight. Which means that she will be here until the wee hours of the morning.

“There’s money in poetry,” she told me once, “and I sat down with the board of directors of WesternBank and convinced them—I’d made a great business plan. And in six years of business, I’ve never missed a payment.”

She’s less person than dynamo, raising the emotional temperature by several degrees every time she comes into the café. She kisses everyone; she calls out, “Hi, Marc!” from fifty feet away. She’s home-schooling her child or she’s painting one of her poems onto a piece of canvas or she’s busy telling a customer about poetry night, every Tuesday night at 7 PM. She admits it privately—some of the poetry heard there may not last in the canon of Puerto Rican / Latin American literature, but that’s not the point. She’s seen poets grow, as she has; she’s seen self-esteem bloom. It’s a space, a necessary space.

An embracing space. How embracing? The gentleman at the table two doors down is busy working at his computer. He also serves me coffee—and very good it is—when he’s working. How many other workers choose to hang out at their workplace when not on the job? (I except bars….)

Lady dropped out of high school to help in the family business. But it hasn’t stopped her. “Who’s your favorite female poet of the 20^th century,” she once asked me, and we went on to talk about Audre Lorde, Sylvia Plath, Marianne Moore—an army of great poets. I was sweating to hold up my end of the conversation. 

The only resource Puerto Rico has is an amazing human potential. And looking at Lady charge into her café, greet the customers, kiss the staff, give the order to clean the bathrooms, and then take a dirty plate off the table while kissing the customer—I’m convinced.

The two wings can soar upward again.

Tropical Winds

Well, the opportunities down here in the tropics are blossoming like cherry trees.

While our northern friends may be worrying themselves about Syria, the IRS / PRISM / HSA affairs, climate change and the Iraq / Afghanistan debacles, we have other things on our mind.

First off—did the mucama / bedchamber maid kill Georgina Ortiz Ortiz? Well, she’s being tried in the murder of 17 August 2010, but nasty tongues are saying otherwise. The couple had stopped having marital intimacy, they communicated through others on the Internet, and Georgina had declared that she wanted to divorce herself from her husband. Worse, according to those savage tongues, Georgina was having an affair with her 48 year-old personal trainer.

People are interested in all this because, well, it’s interesting. Oh, and Georgina’s husband Carlos Irizarry Yunqué, whom the aforementioned evil tongues suspect of actually committing the crime, is a retired Supreme Court judge, now on the faculty of one of the best law schools on the island.

The police suspect the maid, who is in fact on trial this week. And it’s true—well, it’s supposed to be true—that she had told the security guard, as she passed him, “I’m gonna kill that bitch,” using the word perra. Unfortunately, Georgina has a little dog, and yes, it’s female. So who knows what she meant?

Oh, and the security guard certainly has a shifting memory. The murder took place at three in the afternoon, and the security guard testified yesterday that the judge was absent and came back at around 5PM. The problem? On the day of the murder, the security guard said the judge came home at 3PM.

Then there’s more confusion—a neighbor who was first on the scene (well, second, after the killer) states that the scene was altered: one of the knives had been moved, the hilt cleaned, and the knife placed in the right hand. The neighbor testified that the judge was muy mal and kept asking why his wife had wanted to kill herself.

OK—and the mucama? Well, she’s a Dominican by the name of Aida de los Santos; early reports mention that she’s undocumented, later reports don’t. But it’s significant that she’s Dominican because, yes, there is some prejudice against Dominicans. And her story turns a bit bizarre—a story in First Hour / Primera Hora reveals that while in custody in the Witness and Victims shelter, she either tried to hang herself, or someone slipped a rope around her neck and pulled it tight. De los Santos’ family says it was a murder attempt, the shelter says it was suicide. De los Santos, at any rate, woke up in a hospital bed the next day after guards at the shelter used their cellular phone to call the ambulance; the phones at the shelter weren’t working that night.

There is some evidence against de los Santos. Her granddaughter testified that de los Santos had given her three bracelets, worth $1,400, with the initials “G” and “C,” presumably standing for Georgina and Carlos. The granddaughter was to go find someone to remove the monograms, and then sell the bracelets, to finance a trip back to a new life in the Dominican Republic. There are rumors as well about a bloodstained fingerprint on the hilt of the knife—if it is de los Santos’ print, it would be hard evidence against her.

Then there is the age of the ex-judge: he was 88 at the time of the murder. Could a man of that age kill a woman strong enough to have a personal trainer? If he were in a rage, and if he surprised the victim, could he do it?

Stay tuned, readers. More later, as we say down here.

Then there’s the interesting news that the AMA, of Mass Transit Authority, has been a bit relaxed about checking the driver’s licenses of the bus drivers, 12 of whom have been found to be without valid licenses. So that means that 12 buses are idled, which is major anguish, since it can take up to an hour to catch a bus, which may well pass you by, if the bus is full or the driver thinks it’s full (there’s always room at the back) or if, for some reason, he is simply disinclined to stop.

“So why don’t they hire temporary drivers?” I said to my friend Tony.

“They’re broke,” he said, “They’re five or fifty million (can’t remember which) in the red.”

So I had to tell Tony the reason—half of the time, riders ride for free! Eight years ago, when the Urban Train started, all of the buses got refitted with new meters that would read the little cards that the train reads. And the train, in private hands, has been duly maintaining the readers. The Mass Transit Authority, on the other hand, a government agency….

“Well, now you can tell them,” I said, after he commented that the new head of the AMA can’t figure out why the train’s ridership is up and the AMA’s ridership is consistently sinking, essentially at the rate the meters break down.

“Or we could wait until the last meter breaks and ridership is at 0 and all the buses are totally crowded and the director is completely nuts,” he said.

We agreed, his was the better idea.

Oh, and did I mention that according to The New Day, our local paper, if we get downgraded by Moody’s and the like 100,000 jobs will be lost, investors will lose 4.6 billion dollars, our sales tax will hit 18.5%, and the economy will shrink by 5%?

Oh, and we have until June 25 to do something about it.

The governor is proposing, in this dire situation, lowering the sales tax. What’s the scoop, you ask? Well, the governor proposes taxing business to business; here’s how it works. At the moment, the government doesn’t charge a tax on Sony when it sells televisions to Wal-Mart; under the governor’s plan, it would. Now those good people at Wal-Mart could suck it up and absorb the bite, or they could turn around and sock it to the customer.

Well, in this situation, you’d expect urgent meeting, crisis management, guys in suits looking worried-but-calm going into and out of marble-walled capitol offices, right?

What—are you crazy?

The governor and most of the legislature are busy this weekend.

What are they doing?

You really wanna know?

Not sure…YES, tell me!

Attending the Puerto Rico Day Parade in New York City!