Escrito por Wilma E. Reverón Collazo / Copresidenta del MINH
I am sure that all of you will agree with me that people do not choose to be poor, that having the adequate opportunities people will choose to have a life that is good.
Women in Puerto Rico have not chosen to be the poorest of the poor, but they are. Families with one head of household and one or two child are twice as likely to be poor as revealed by statistic prepared by the Índice de Desarrollo Humano (IDH) para Puerto Rico (http://www.estadisticas.gobierno.pr/idh/). As explained in a recent column by the Director of Puerto Rico`s principal newspaper, El Nuevo Día,1 a women of 21 years of age most likely has not finished high school, will probably live in a town such as Ciales, Corozal or Culebra, where 7 or 8 of every ten children live under poverty levels and have little if none possibilities of getting out of that situation. Between 2000 to 2012, the amount of children living in households headed by women rose from 38% to 58%, and only half of the children between 2 to 4 years of age living in these homes go to a preschool or day care center. This means that these mothers´ head of household cannot work outside of the house because of lack of support and essential services such as day care, making them totally dependent on government aid and subsidies. Before the economic crisis, almost three of every ten children lived in poverty. After the crisis one in every two children, that is 50% of the Puerto Rican children live in poverty.
As you may easily guess the social consequences of these cold but accurate statistics are terrifying. Puerto Rico has become a brewing ground for illiteracy, underdevelopment, unemployment, and informal economy, mainly that of drug trafficking, and thus of crime and social insecurity.
So those Puerto Ricans that can leave, are migrating in masses to the US. In 2015 alone 71,297 and in 2014, 83,010 migrated.2 These migrants are the skilled workers, family with both parents and children and young single professionals in their most productive stages of life. Behind are left the unskilled, unemployed female head of household and their children that have no way of getting out of their situation. So yes, poverty in Puerto Rico has the face of women and children.
And you may be by now asking yourselves, But What happened in Puerto Rico? How did we get this way?
Puerto Rico has been suffering an economic depression with a negative growth index for the last decade. This is the consequence of what economist are calling a ¨structural crisis¨. What is that structure that has gone into crisis? We are talking here of an economic structure but this structure is in place due to political decisions. Now, who made those political decisions? Was it the Puerto Rican government? In part, but in a very limited part. Why do I say this? Because the truth is that since 1898 the fundamental economic decisions are not made in Puerto Rico but are made in the US mainland by the US Congress and the US Executive and Judicial powers. Let me just give some examples.
The first economic action the US took upon invading and occupying Puerto Rico in 1898 was to devaluate the then existing Puerto Rico`s currency by a 40%. So the Puerto Rican people lost 40% of their capitals in one stroke of a US president, then Theodore Roosevelt’s pen. Thus started our decline.
We have gone from having a sustainable agriculture, and by that I mean that people produced what they ate and that agriculture represented almost 70% of the Island`s economy to the situation we face today in which we import 85% of what we eat and agriculture represents les that 4% of our national economic production. Not only do we eat what we do not produce, but also in top of that, being an Island, we have to transport our food in ships and by the mandates of the Jones Act we can only use US flag ships to transport our food to Puerto Rico. This alone means that each year we pay over $700 million dollars just in transport of goods to Puerto Rico. And of course this also applies to the transport of oil to produce electricity. And you know what, the US Merchant Marine is the most expensive of the world, so the end result is that we pay almost twice for goods in Puerto Rico as compared with the mainland. The electricity costs 28 cents per kilowatt in Puerto Rico. Compare to what you are paying, 15.3 cents here in Chicago.
So our agriculture, which produced our food and was exporting tobacco, coffee and fruits to the world, was destroyed and replaced by mono agriculture that is just one crop, which was sugar cane. Puerto Rico became one big sugar cane plantation owned by US capitalists. Puerto Rican farmers went from being landowners to peasants and the displacement from the countryside to the urban side thus began. Some of you might remember El Fanguito, the wooden shackles built on top of mud and water, and it was also the displaced people of the countryside who built the famous La Perla community. And thus also began the migration to the US.
When sugar production in the Island was no longer necessary for the US because the Southern farmers where producing enough sugar made out of beet to meet the US demand, the sugar cane plantations where abandoned and a new economic model was thought for Puerto Rico, that of manufacture under the program known as Operation Booth Strap. Thus we became the center for production of US clothes and goods. And we thought ¨life is good¨, this is producing jobs, a middle class was growing, we were investing in schools, public hospitals and for a moment there we thought we had made it.
But we were not aware of the underside of this economic model. To attract US investment we gave the investors incentives in the form of tax exemptions for a as long as 10 years, renewable for another ten; very cheap or free buildings and land; and no obligation to re-invest the profits they made in Puerto Rico, or at least some part of it or to keep their deposits in Puerto Rico`s banks. So yes, jobs were produced but they paid none or little taxes to the Puerto Rican Treasury, they did not deposit their profits in Puerto Rico banks and they did not re-invest in Puerto Rico. So our workers were making these US investors very rich but besides very low wages jobs we were not receiving anything in exchange. The Government of Puerto Rico was making sure those workers were healthy and thus productive through a very good public health system and were educating them with a very good public school system, for the exploitation and benefit of the US investors. And to provide this public services and aid, since the government was hardly collecting any taxes from the industries that were producing riches in Puerto Rico, what did the government do? It acquired debt to pay for those services.
At the same time that the US investors were getting all the incentives to invest in Puerto Rico, our local businesses had to pay taxes, high rents and could not compete with the US manufacturers. They were at a clear disadvantage. Puerto Rican local manufacturers of clothing, shoes, and furniture started failing and disappearing.
And then came globalization and the economic treaties. The US investors decided that they could get even lower paying workers in places like Mexico or India and with the treaties such as NAFTA, or TLC, as soon as their tax exemptions expired, rather than stay in Puerto Rico and pay taxes and federal minimum wages, they took their businesses to Mexico, India or China. Here in the US you have also been hard hit by this so-called globalization. The US today hardly produces anything in here. The US multinationals hardly pay any taxes in here and have a zillion tricks to evade their taxes obligations.
With manufacturing gone, the powers that be decided to go another route: lets send to the Island the highly contaminant industries that nobody in the US wants nearby. So the new economic model brought us the petrochemicals and the pharmaceutical industries. CORCO, PPG, SUNOCO established themselves in the eastern and southern coastline in the towns of Yabucoa, Peñuelas and the pharmaceuticals in Barceloneta, Cidra, Abonito. And again we said, this is good, these are high wages and highly skilled industries. But, the fact was and is that they are not labor intensive and their productions are highly contaminant.
Some of these industries were also what were known as 936, a section for the US Code that provided them with attractive tax exemptions upon bringing their profits into the US. Again, more tax exemptions in Puerto Rico and in top in the US. No re-investment in Puerto Rico and in top of that, destruction of the environment. Do you know that Barceloneta is one of the most highly contaminated towns included in what is called the Superfund, a US appropriation bill to help clean up the contamination that US multinationals leave behind?
In the 70s the oil market suffered a huge increase in prices and the oil refineries decide to close operations because they were no longer profitable.
So now we are in the 90s were we have reached high levels of unemployment, huge environmental destruction left by the pharmaceuticals and petrochemicals. In 1996, Section 936 incentives, that did include some manufacturing that at least produced jobs for the unskilled worker, were finished by the US Congress. So these industries decide to close shop in Puerto Rico.
We reach 2006 with an increase in oil prices, less than 40% of the workers actually working, the financial markets explode creating havoc and the real estate bubble explodes. Puerto Rico goes into recession and immediately into depression. They say that when the US catches a cold, in Puerto Rico we get pneumonia. That is exactly what happened in 2006. Unemployment rates hit the 17% ceiling. Real estates have lost a 60% of their value.
So we end were we began, who are the hardest hit by this situation? The frailest of the society, the single mothers and their children who cannot even escape from their dire situation.
Puerto Rico faces today very hard choices. It has to choose between paying the debt to the Wall Street and hedge funds owners of the public debt or it has to try to keep providing its people with education, health, security and paying the pensions of the retired public employee. Even though as you may have concluded by now, the economic structure that we have lived with has been designed to answer to US capitalists interests, the US does not want to even share in part, let alone in whole, the responsibility of the crisis created by these historically unfair US economic decisions.
$72 billion dollars in debt, the US can only offer to take away the historically acclaimed advantage of being a Commonwealth or Estado Libre Asociado, the fiscal autonomy of Puerto Rico. The US answer to our fiscal crisis is to impose upon us a so called Fiscal Control Board, whose members are going to be appointed by members of US Congress that as you know, their campaigns are funded by the owners of Puerto Rico’ s debt. Their recipe is: lay off massively government workers, consolidate and eliminate government agencies, reduce pension payments, eliminate private workers benefits such as the protection of dismissal without just cause, the minimum wage, the Christmas’s bonus, the 40 hour week, reduce vacation and health leave, eliminate the overtime compensation, and other benefits.
At the same time, the government insists in the unprofitable tax exemption incentives to attract foreign investment thus keeping local businesses at a disadvantage without any power to seek protection from the unfair competition of US capitalists. Ask a previous pharmacy owner or food storeowner what has Walgreen and Wal-Mart done for them: the failure of their business; the migration of their families.
What is the solution? The Puerto Rican people need and have to gain control of their decisions and stop being handled from the outside, to make decisions with our people’s interests in mind. We need to be able to restructure the debt that is truly our, to have access to other financial markets to refinance the debt that is our, to be able to enter into commercial and financing agreements with other nations. We need to insert ourselves in the economy of our region and to be part of the search for solutions to problems that affect us all like drug trafficking, climate change and the erosion of our coast lines, reduction of income inequality, education and health problems. For that we need political sovereignty. Only then can we turn upside down the economic structure that has destroyed our land, our production and our way of life.
Economic Crisis in Puerto Rico:
A Women’s Perspective: Conference before the Puerto Rican Arts and Cultural Center
Saturday March 12, 2016
1 Luis Alberto Ferré Rangel,domingo, 28 de febrero de 2016, La pobreza nuestra de cada día
2 Informe Negociado Estadísticas de Transporte de Estados Unidos.