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The Business Of Colonialism, Part III

By Arturo J. Guzmán

February 19, 2002
Copyright © 2002 SAN JUAN STAR. All Rights Reserved.

The fact that colonialism is a business in Puerto Rico was amply exposed during the recent budget message delivered to the local legislature by the governor. While President Bush is pressing Congress to enact legislation that would bring tax relief to families and individuals and allow them extra resources to stimulate the economy, Calderon’s is proposing to raise taxes and thus restrict the flow of disposable income to further weaken the local economy. Instead of saving by streamlining an already unacceptably bloated government structure, her solution is to create even more governmental dependencies at taxpayer’s expense.

Our economy has suffered from an endemically low per-capita ratio of personal savings, so sound economic policy dictates that our population should be encouraged to save. Instead, in one of the most transparent acts yet designed to benefit the ruling colonial economic oligarchy, Calderon is proposing a "moratorium" allowing people to withdraw funds from their retirement savings (IRA’s). Those that fall into the trap without considering alternate sources, will allow Calderon’s partners in the banking industry to make "a killing" by helping them to dispose of portfolios that were contracted at much higher than the prevailing interest rates. But such is the business of colonialism!

These and other economic practices designed not for the common good but to provide special privileges to the ruling economic classes reveal why recent studies at Harvard University have concluded that instead of converging with the national economy, Puerto Rico is diverging at an accelerated pace and descending towards a "Third World" economy. However, these conclusions should not come as a surprise to a society that has been burdened with a governmental structure that encompasses more than a hundred and twenty departments, agencies and public corporations that account for the employment of more than a third of the total active workforce.

Since the incentives, dedication, and motivation of private sector enterprise are absent because government can always dip into more local or federal funds, float bonds, get loans-or raise taxes, these dependencies are allowed to become perennial economic drains so long as the political objectives of the ruling party are met.

Under the current system public employees become under-productive and demoralized before governmental practices that foster mediocrity as the operational criteria and partisan politics as the rule. The less efficient these employees and the government enterprises become, the greater the benefit for the party in power. If four people can be assigned to do a job that would require only two, that’s two more party members that can be accommodated, and that’s four people who either pledge electoral support or else they will be out on the street.

If governmental transactions, from getting driver’s licenses to construction permits, were to be made less cumbersome and simple that would mean less government employment, and thus reduced political loyalties. As a matter of fact, the larger and more intrusive the governmental structure, the higher the dependency of the citizenry on government, and the easier they can be politically and ideologically manipulated.

If Puerto Rico were to undertake the necessary but radical changes their scope would be simple although the task of implementation would be gargantuan. The role of government would be re-defined from that of a burdensome obstacle and often time competitor, to a facilitator of private sector enterprise while still retaining through laws, oversight, and regulation its ministerial responsibility to safeguard the common interest of the people.

To accomplish this objective the government would have to divest itself from all but the most essential services. How much would you pay in taxes if they were not used to support and augment a bloated governmental burocracy, and if day after day and year after year your tax dollar were not used to subsidize the losses and waste purposely induced by the present system? How much would you pay for electricity if your bill did not include in addition to your own consumption, a hidden subsidy to preferred businesses and industries, towns and entire municipalities, public housing projects, and often time political parties and even individuals?

Modern healthy economic systems are nurtured by the innovation, agility and competition provided by the private sector, not by the preservation of monolithic governmental monopolies. Inefficiency, losses, waste, and corruption should never be borne and fiscally overcome with federal tax incentives. Unfortunately there are forces that impede these changes essential to our future, and they will be the subject of my next and concluding column on this issue. Meanwhile, in a phrase attributed to Marie Antoinette, but which also summarizes the economic policies of our governor: eat cake!

Arturo J. Guzman can be contacted at:

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