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PUERTO RICO REPORT
What Business And Government Could Learn From Each
by Lance Oliver
January 28, 2000
Copyright © 2000 THE PUERTO RICO HERALD. All Rights Reserved.
Despite efforts by the administration of Gov. Pedro Rosselló
to modernize public-private sector relations, and as much as both
sides could potentially learn from each other, there remains a
gap of understanding between the people who run the government
and those who run the main engines of the Puerto Rican economy.
In recent conversations with half a dozen people who are accustomed
to moving in the island's business circles I've heard several
"If you counted the off-the-books economy, Puerto Rico
would be richer than any state," one fellow said to me recently.
He cited a statistic suggesting that 30 percent of the island's
economic activity is unreported.
Assuming that figure is correct, however, (another serious
estimate I've heard is 24 percent) and assuming that there is
zero off-the-books economic activity in the United States, a 30
percent increase would still leave Puerto Rico with significantly
lower per capita income than any state. Aside from drug dealing,
the vast majority of that unreported income consists of people
cutting lawns and trimming hedges for very low pay.
Those who would diminish Puerto Rico's economic challenges
also like to cite the high sales of luxury cars and the record-setting
per-store sales recorded at local retailers such as JC Penney,
whose Hato Rey store outsells any other in the chain. What they
don't take into account is that despite the recent building boom
in retail space, Puerto Rico still has far fewer square feet of
retail space per capita than the United States. Sales are concentrated
in fewer stores. An importer sells a lot of Mercedes-Benz cars
because there is less competition.
Another factor inflating those sales figures is the negative
savings rate in Puerto Rico. If people spend a lot of money it
doesn't necessarily mean they're wealthier than we think. It
also means they have more debt than is reasonable.
One person who is accustomed to moving among both the top circles
in the public and private sectors told me recently, "The
business people all think they could run the government better,
but what they don't realize is you can't run a government like
"They think times are good," he went on, "because
they are doing well. They think the government and the press
are too negative and focus too much on problems in society. So
I ask them for a show of hands. How many of you have your children
in private schools? How many of you live in a closed neighborhood?
How many of you have private security? How many of you have
to have your car's front end aligned because of the potholes in
the roads? Those are all signs of a system that is not working
the way it should."
Being able to afford to buy your way out of society's problems
does not mean they no longer exist or can be reasonably ignored.
While many business people do put time and money into projects
for the good of society as a whole, others make a cursory show
of contributing or else contribute to causes that benefit the
fellow wealthy, rather than the neediest.
The government knows first-hand the problems that exist because,
especially in Puerto Rico, the government is expected to solve
each and every one of them. Whether it's a hurricane or simply
a lack of income, the government is the first resort for relief,
not the last.
But while business people soothed by their own personal success
could learn from some time in the public sector, the government
types could also pick up some pointers.
Government officials could learn from successful business people
that understanding and responding to the needs of the customers
is key to success.
The government in Puerto Rico responds most often, however,
to the noisiest constituency of the moment rather than to the
common good. There are legislators wringing their hands over
the troubles of a thousand colmado owners or a few hundred
truck drivers, but a person with real business sense would remember
to look first at the big picture. There are 3.8 million "customers"
of the Puerto Rico government and their interests as a whole must
be met first.
No good business person would make decisions that would please
1 percent of the customers to the detriment of the rest, but government
does it all the time.
For much of the 20th century, government and business were
adversaries, especially in the days when absentee owners were
squeezing the blood out of desperate Puerto Rican workers. Those
times have changed. Government and business should not be partners,
exactly, because they have distinct jobs to do and different goals
But it would be great if they learn from each other a little
Lance Oliver writes The Puerto Rico Report weekly
for The Puerto Rico Herald. He can be reached by email