November 29, 2008

Luis Fortuño, Obama, and the problems of Puerto Rico today

Damien Cave has written an interesting article about Fortuño's victory in the New York Times, but I thought I'd argue a few points, particularly since there wasn't anywhere to comment on the article as far as I could see.

First off, I thought the opening was very telling:

Republicans in Washington cheered when Luis G. Fortuño, one of their own, was elected governor of Puerto Rico on Nov. 4. But here on the island, where American affiliations are often worn and dropped like accessories, he now describes his victory as Obamaesque.

But then begin the understatements:

Mr. Fortuño emphasized in an interview that “cambio,” or “change,” had been his slogan since 2006. And like President-elect Barack Obama, Mr. Fortuño said the economy would be Job 1 for his administration, managed with a youthful nonpartisan approach.

Not only that, but there were blatant accusations that Fortuño had stolen a great deal of his campaign from Obama, in particular his website layout, which looked admittedly very much like Obama's. And Puerto Ricans were hearing as much about "change" as we were. From a distance they could have been the same campaign.

The recession now emerging in places like Florida and Ohio has been a fact of life in Puerto Rico for three years. Unemployment has climbed to nearly 12 percent. Taxes have gone up, purchasing power has declined, and the island’s roughly four million residents are unlikely to be patient with their new leader.

Very true and yet doesn't nearly begin to describe the problem. The unemployment rate? That's the official number--it is in reality significantly higher and has been for a long time. Taxes have gone up in the sense that the IVU/sales tax didn't exist until a couple years ago. Certainly purchasing power has declined--and it was already terrible enough. Something this quotation and really the rest of the article ignores is that, even more than all these factors, Puerto Rico's economy is dramatically affected by the American economy, and anything felt in the States is felt at least twice as strong on the island. It's hard, then, for us to find all the causes of the current problem on the island itself, and harder still to expect a politician to be able to solve the problem without the U.S. improving its own economy... no matter what Luis Fortuño thinks.

However, I would still encourage him to try to do as much as possible, of course. No sense in giving up.

Another problem the article correctly points out:

The structural challenges are immense. Government here plays an outsize role, employing 20 percent to 30 percent of workers on the island, and it is on the verge of bankruptcy. The current administration said this week that it would end the year with a $2 billion budget deficit. One official suggested it was struggling to make payroll, and some institutions — like the Center for Puerto Rican Studies — already report that they have not received government money they are owed.

Luis Fortuño, however, has come up with a solution that I (and others) fear is not really going to solve anything:

Specifically, he said he would institute a hiring freeze that would, with attrition, lead to a 3 percent to 5 percent cut in government staffing annually and save $1.5 billion in four years. He has also turned to the private sector for cabinet-level posts, and called on wealthy business owners to invest more on the island.

Yes, you'll get rid of some employees, but then where do they go? Which is a bigger problem, the government being too large of an employer or unemployment? While yes, I agree that something must be done, is now really the time? These people are not going to be able to find a job as even more companies and their factories leave the island. It's not mentioned in the article if Fortuño has some way of magically attracting businesses, but it'd be really irresponsible to just ignore the people who won't get a job or will lose a job.

Despite laying out all the problems, there's still optimism expressed by the interviewees. I find it kind of hard to believe. After all the cynicism in this last election... well, we'll see, I suppose. What other choice do we have?

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