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Editorial & Column


Guilty As Charged


July 10, 2003
Copyright © 2003 CARIBBEAN BUSINESS. All Rights Reserved.

The jury’s in, and its verdict deals a heavy blow to this administration. The vast majority of people in Puerto Rico think the results of the Calderon administration’s economic development program thus far are terrible.

That’s the feeling that our readers and our sources have been expressing to us, on and off the record, for more than two years.

Although most of them were willing to give the administration enough time to work through a reasonable transition process after it was sworn in, most had grown impatient and frustrated by the end of the administration’s second full year in office. Many have, by now, simply given up on any hope that the island’s economic fortunes might experience an upturn before the end of Calderon’s term.

Lack of an overall economic development strategy of its own, a politically driven, anal-retentive obsession for blaming every mishap on the previous administration, and an unusually high turnover of cabinet heads, specially among economic development agencies, some of which have gone through three bosses in two-and-a-half years, are all blamed for the disaster.

To be fair, the administration is not solely to be blamed for our current economic woes. It has had the misfortune of governing through tough economic times, including a recession in the last couple of years and a lingering economic malaise that has not allowed the national stateside economy to bounce back to more vigorous growth. That, and not the alleged mismanagement of the economy or the government’s finances by the last administration–so often used as a scapegoat by those in charge now–is really the most serious external factor to affect the present administration’s chances of economic success.

On the other hand, other external factors have been favorable to the administration, notably, the historically low interest rate environment. As we have said several times, the administration deserves credit for having taken advantage of it by refinancing old debt and borrowing money for capital improvement projects well into the future.

But at the end of the day, the administration has only its own bad choices to blame for the widespread public opinion that its economic development program has been a failure. It cannot get off the hook by blaming others, or the unfavorable overall economic environment. After two-and-a-half years in full control of all government decisions and two full fiscal years of budgets prepared and passed by this administration, the time for blaming predecessors is long gone.

The administration’s bad choices three years in a row in putting together the government’s budget–including the infamous tax increases on consumers, and increases in government fat spending at a time of declining government revenue–the virtual stoppage of the vast majority of the government’s construction program, even though billions had been raised for that purpose in late 2001 and early 2002, the lack of an effective promotional effort, particularly for manufacturing, and the total absence of any proposal for new major economic development projects of its own, are just four examples that illustrate why the administration has been its own worst enemy when it comes to handling the economy.

Now, in a rush to make up for lost time, or possibly to coincide with the electoral campaign, government construction is moving into high gear. But at what cost! Crews working at night and weekends with giant floodlights powered by portable generators must be costing a mint in overtime. The same projects will end up costing a lot more than if they had been spaced out throughout the past years.

Two weeks ago, the governor barely outlined a series of economic development initiatives that the administration says it will now pursue with renewed vigor in the hope of making an economic turnaround in the next 18 months. We look forward to hearing the specifics. If it works, no one will be happier than we will to say "better late than never." In the meantime, we can only hope that the individual private-sector success stories like the ones chronicled in our front-page story today, particularly among the small-business sector, continue to inspire our hope in a better economic future tomorrow.

This Caribbean Business article appears courtesy of Casiano Communications.
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