Fortuño
Argeo T. Quiñones Pérez
The current situation facing the economy of Puerto Rico, with the twin scourge of depression and fiscal crisis, is part of a continuous and long process of exhaustion and implosion of the economic strategy adopted by the end of War World, which began in the early 1970's and continues to this day. Fortuño Plan, as increasing evidence has failed. Failed to establish the conditions for sustained economic growth and still less for sustainable development. And it could be otherwise. The Plan, in addition to emphasizing everything the old failed model policy adopted based on false assumptions and understandings, historical and present-on the economy of Puerto Rico and ignored the situation was going through the world economy when it developed and implemented in early 2009.
The failure of neoliberal adjustment policies
Despite the claims of science, in its strongest sense, should be little doubt about the existence of economic philosophies with their respective worldviews. Visions are not limited to knowledge acquired through science alone. The dogma of market efficiency to its overall balance and full employment did not die with the Great Depression of 1930. Remained slightly doing work shoe until the phenomenon of "stagflation" made its appearance in early 1970. That was the golden opportunity that took the new orthodoxy to oust the illegitimate version called by the Keynesian model as Joan Robinson (Blanchard, O. 2002) developed by Hicks and Hansen, which dominated academic and political circles after the war. Anyone who has read Keynes's General Theory to understand why the crisis of 1970 does not ousted the true Keynesian thought, which sentenced by powerful institutional reasons that the market could not be adjusted as the classical model assumed, and that the two major flaws in the system were his capitalist inability to generate full employment and its arbitrary and inequitable distribution of income and wealth (Keynes 1936) Grounded
the neoliberal dogma, during the decade of 1980 a hypocritical and futile selective stage of fiscal discipline, and the process of liberalization and opening of markets, including financial and labor. Processes in the United States and other developed capitalist bloc led to the intensification of financial concentration and internationalization, deindustrialization and increased regressivity in the distribution of income and wealth. That same neoliberal dogma, extrapolated to the functioning of financial markets was the breeding ground in which conditions were created for the Great Crash of 2008. The financial capital dominates the world economy and not just the era of imperialism (Lenin 1916; Stockman / CNN 2011)
justified by the doctrine of "too big to collapse" of nation states, which advance tax situations faced a greater or lesser extent committed, rushed to the rescue of major institutions responsible for the crisis, funneling huge amounts of resources in a context of strong resistance to progressive taxation, thereby aggravating the difficult fiscal outlook of many nation states of the world system. After three decades of neoliberal policies on a global scale, the economy world makes its way along the path of a recovery plagued by uncertainty and proposals for adjustments and restructuring imposed by blatant coercion "speculative" financial markets, accrediting agencies and other supranational bodies. Proposed adjustments and restructuring very threatening to the weak economic recovery, international political relations, the European Union in particular, and the welfare of mankind.
In the United States, institutions before the crisis were "too big to collapse" now are 20% larger and most have returned to old practices as if it were "business as usual." Meanwhile, revived forces supporting the neo-liberal doctrines added to the murderous behavior of financial markets and the opinions of the evaluators, the same houses that contributed to the crisis by giving AAA ratings to structured financial instruments with the four legs (Bloomberg 22/10/2008 ) require fiscal discipline on governments that saved a major debacle greater financial and insurance pools and the world economy. The demand for fiscal discipline in this context, amounts to imposing the beleaguered taxpayers in the lowest quintiles of income distribution, those most affected by the crisis, pay the cost of the state fiscal crisis. It is therefore, a double instance of looting and plundering of finance capital and allies against global society.
The generosity displayed with the companies "too big to collapse" contrasts with the limited resources allocated to address the "human" side of the crisis. The ideological shift of epic proportions by means of conservative populism, despite the great crisis of the neoliberal model has become a cause for revival of thought and neo-conservative social policy. When it is needed most is solidarity attack the material basis for joint solutions to the crisis, to bleed the welfare state with the "fiscal crisis", but not the instrument of state domination, militarism y rescatista de los "muy grandes para colapsar". De momento, luce mucho más fuerte este modelo rapaz que "cierra su acto" con dos de los peores desastres ambientales en la historia: Golfo de México y Fukushima. Corresponde señalar que en Puerto Rico, el "cierre" simbólico se produce con CAPECO. Empresa que dos veces se fue a quiebra en este siglo, debiendo más de $200 millones en total al erario. Además, CAPECO fue el eje de uno de los peores desastres ambientales de los últimos años, vendió sus activos, se llevaron la marca Gulf del país y dejaron en el aire a más de 100 detallistas, dueños de pequeños negocios que operaban con la marca registrada.
La irracionalidad fundamental de las políticas neoliberal adjustment, from the perspective of the reproduction of the capitalist system, has been proclaimed by those who were once bastions of critical thinking. David Stockman (CNN 2011) budget chief under President Ronald Reagan, advocated tax cuts expire leaving Bush's son, new contributions and gradual restructuring (Mean Tested) of social security systems such as Medicare and Social Security. Birdsall & Fukuyama (2011) argues that:
"If the Global Financial Crisis and Stock Development model put on trial, it WAS the neoliberal or free-market model, Which Emphasize a small state, 'deregulation, private ownership, and low taxes."
Fortuño Fortuno Plan (PF) is not working and not going to work. The twin objectives of public finances and balance the relaunch economic growth has not been achieved. Early trained professionals in the field it warned. It is even suggested that without a generous loan of the Federal Reserve or the Treasury the PF had little chance of achieving their objectives (UIE, J. González 2009) When the president took office, the economy of Puerto Rico was close to fulfilling its third year of recession and had lost about 106.091 jobs between April 2006 and December 2008. Another so did the revenues that showed a reduction projected for fiscal 2009 of $ 687 million, of which $ 487 million related to the fall in economic activity and another $ 200 to the new tax credits (S & P 12/22/1908) In the U.S. the Great Depression destroyed jobs at more than 600,000 monthly between September 2008 and June 2009, the worst months of the crisis in that country. The economy of Puerto Rico, the U.S. and World were in free fall in early 2009 and no one knew for sure where it would lead to the situation.
The PF and, specifically, the law # 7 on March 9, 2009, taught him to fall faster. The direction of economic policy contravenes PF economic logic to try to enforce the reduction of public spending and higher taxes amid a severe local and global contraction. If satisfactory resolution of the crisis in question, a look at the economic history would have helped enough in the development of a more successful the therapy of shock imposed (Klein 2007) with the firing of tens of thousands of public servants.
successful period of Operation Bootstrap required a large public sector involvement in the economy, as evidenced by the debt ratios and public spending to GDP and the ratio of public employment to total employment. All grew significantly between 1947 and mid 1970. With the fiscal crisis the government could not continue to stimulate the economy at an increasing rate and did not alter the model to achieve greater private sector participation in it. Was continued old recipe to maintain low absolute costs to increase the "competitiveness" which, with the intensification of competition in the global economy has resulted in a race to the bottom, where rising costs are socialized model (which is increasing logical result of the development) with a declining share of the company in the profits distributed and concentrated in few hands or paid abroad (Villamil, 1978, JP 2010).
precisely by this recognition of the importance of government in the economy of Puerto Rico, in December 2008 Standard & Poor's has warned the incoming government that the reduction of public spending should not be made until the sector began to create private jobs. Representatives of the holders of government bonds and accrediting houses in one of the meetings with the public sector union in Puerto Rico in 2007, expressed that the country had to solve its fiscal problem but the way he did was not a matter of them. Even claimed that the situation could be solved without reducing public employment. Against all odds the strategists of the new administration continued the policy course hopeful that with the combination of ARRA, the Fiscal Stabilization Fund (debt issuance), the Local Stimulus Program (SGP) and the APP liberalization of licenses (construction mainly) the country's economy overpower contraction and by 2010 is growing. Bet that more counter-cyclical measures that offset pro-cyclical measures taken and failed.
The lack of understanding of national and international economic dynamics led to serious errors in the design and timing of economic policy by the administration Fortuño. Experiences with the ephemeral and weak effects on economic growth over $ 1.600 billion injected by FEMA in the wake of Georges (9 / 1998) and $ 1.200 million injected by the program of fiscal stimulus of Bush during the summer of 2008, should have counted for something to factor the contribution to the growth of ARRA, of which a significant portion were transfers to persons. Similarly the government of Puerto Rico with the accelerated payment of $ 750 million in outstanding accounts and the allocation of the $ 500 million from the PEC, has injected $ 1.250 billion to the private sector of the economy without that this could stop the contraction.
impartial analysis of the origin of the crisis in the construction industry, real estate and banking, and the inclusion in the analysis of the fall in income and wealth caused by the crisis could used to anticipate the failure of the new law permits such as construction and stimulating economic activity in general. In Puerto Rico also had a housing bubble like many other countries in the world and foreclosures continued at a level about which very little is to be disclosed. The severity of the global crisis, which by its financial dimension more prolonged and difficult recovery, may have served to advance the relative dry of capital for long-term foreign investment and the questionable viability of APP.
True, at this time the economy experienced a contraction level lower growth forecast, but still contraction and there is strong evidence to suggest the possibility that after a brief respite, continue falling or stagnant if not radically change course. These "flashes" are not sustainable recovery. The availability of funds ARRA is expiring. On the other hand, borrowing money to balance budget, pay accounts payable, repay debt and mitigate rapidly extraconstitutional havoc adjustment policies is both contraindicated, which has limits, prohibited by the draft parliamentary majority become the Tax Reform Act of 2006 (Law No. 103 of May 25, 2006) which stated: "It prohibits the use of debt loans or funding mechanism to cover operating expenses and to balance the General Budget of the Government of the Commonwealth of Puerto Rico "and was one of the first laws repealed by the administration temporarily from 2009.
Intensive use the funding mechanism provided by COFINA has led to service the debt issued by this entity primarily absorb more than 50% of the sales tax revenues and continues to grow automatically at a rate of 4%. The amount of debt and turned guaranteed by the revenues of UTI COFINA increased from $ 6.306 million in December 2008 to $ 14,000 million at the end of fiscal 2010. The total increase about $ 600 million from the issuance will be done to balance the budget by 2012. Although it ended the extraconstitutional debt, gross public debt continues to rise and June 2010, reached a total of $ 58.8 billion, an increase of $ 3.843 million over the previous fiscal year in which the ratio of gross government debt to national product GDP increased from 84.4% to 89% in one year (Brown 2011) The house is in order but the shoe continues to weaken.
Given this situation and the shrinking window of opportunity that the early onset of the political campaign for the 2012 elections is leaving, the commitments to the retirement system agreed government and Moody's, and led to slightly improve the perspective of central government general obligations, are looking increasingly less viable. Fortuño administration, for the forthcoming 2012 election cycle, is between a rock and a hard place in the trap created by its own policy of quack remedies and achievements, and schemes deliberately made to implode the system of public administration and the main benefits working arrangements achieved during the postwar period.
To better understand this strategy of implosion and neoliberal restructuring exercise should quickly examine the consolidated budget for FY 2012. This rests on assumptions of questionable viability as increases in its main lines: 11.4% in federal funds, 3.2% in own revenues of public corporations, 6.3% for the General Fund. The increase in the last line depends on the success of measures such as the 4% tax on sales of foreign companies, the Lotus IVU and tax amnesty. Although during the first month of life of the special tax on CFC raised $ 108 million for 4%, net revenue to the General Fund for the first seven months of fiscal year 2011 (July 2010-January 2011) go $ 176 million below the level for the same period of last fiscal year (Treasury 2011). Is logical expected before the admission during the current fiscal year's economic downturn continues. Another consideration is on the budget as regards the means of rum produced in Puerto Rico and exported to the United States, which accounted for $ 352 million General Fund revenue for fiscal year 2010. Captain Morgan's flight to St. Thomas is a loss about $ 100 million in this game. Law 178 of December 1, 2010, passed in response to competition from U.S. Virgin Islands in the production of rum, allows allocation of up to 46% of the taxes returned by the federal government as subsidies to distilleries in Puerto Rico. Between drain Captain Morgan and the new law promises to be a potential reduction of $ 215 million in this game that feeds the General Fund and the central government budget.
Launching a tax reform that promises $ 1.200 million in relief annually for six years, when the consolidated budget of 2011 contains $ 2 billion, between ARRA and the Fiscal Stabilization Fund, which are recurrent and to balance the budget by the Fund FY 2012 General must resort to issuing debt is irresponsible and reckless behavior. The condition is aggravated now looming clouds of fiscal discipline in Washington, so any increase in revenues must first be allocated to a fund emergency ("Rainy Day Fund") Furthermore, given the urgent needs in areas like health, education, communities, environment, energy, transport, urban and rural restoration, retirement systems and others, this reform is, at best, a socially insensitive behavior and an example of utilitarian hedonism end to emphasize the supreme value of "dollar in their pocket." It also represents quite possibly the waste of an opportunity like few others to engage in a higher order (Smith 2010) as the provision of social welfare investment by far exceeds the expected benefits of indiscriminate increase in consumption have more disposable income .
Changing the tax terms to foreign companies (CFC), through the legislative process secret, and a populist symbolic reasoning is juggling a high level. Especially now that the pharmaceutical industry through a difficult time like no other in the last forty years. Appears to be made as soon as many subsidiaries of multinationals benefiting from section 936, to change the rules for political motivations of status and not by a well-defined industrial policy. And if many of the subsidiaries of multinationals affected by the discretion not close, various maneuvers undertaken to effectively avoid the additional burden naturally expected in our country with weak governance and subservient to big business. The bonanza "pay" bit last. Maybe give some electoral performance. The tax reform which looks Trojan Horse, automatic mechanism which, by the fall in revenues, will continue the task of public sector implosion without the need for another law 7, after 2012. Fortuño
The Plan has not yielded the expected results. On the contrary, has deteriorated and further weakened the ailing economy facing a situation in the global economy increasingly complicated and uncertain. So far, the bet has clearly lost. In terms of economic growth, the second decade XXI century starts on the same or worse than the last. Economic growth is not forthcoming, the continued contraction and projections beyond fiscal year 2011, predict minimum rates of growth with highly uncertain assumptions. Gross domestic investment of fixed capital (IIBKF) important variable for economic growth, has collapsed as a result of the crisis in the private construction industry, the fiscal crisis that restricts public investment and the difficulty of attracting foreign direct investment as a result of the loss of competitiveness and the Great Crash of 2008. The reason for the IIBKF to GNP has fallen from 29% in 2000 to 14% in 2010. Concerning employment
depression, which began in 2006, destroyed 132.200 nonfarm wage employment during his five-year (BLS 2011). With the implementation of pro-cyclical policies Fortuño Plan from 2009, just when the crisis touched the deepest point in the United States, job losses intensified. During the first 33 months of the crisis, from April 2006 to December 2008, the country lost 41,000 employees, for an average of 1,242 jobs lost per month. From December 2008 to March 2011 were lost 91.200 jobs for a monthly average of 3.378, more than doubling the monthly average during the first phase of the crisis. The situation with the level of employment seemed to have bottomed out in September 2010. From then until February 2011 were created 6.500 new jobs. However, preliminary data suggest that during the month of March turned downward trend in the economy lost 1,700 jobs, 26% of the total created during the short-lived rebound. Between January and March 2011 the unemployment rate increased from 15.9% to 16.9%. The labor participation rate and employment rate for the first eight months of fiscal 2011 decreased to 40.6% and 34.1% respectively (BLS & BGF 2011) bankruptcies for the first quarter of 2011 exceeded the number of cases, number of creditors and accumulated debt levels for the first quarter of 2010. The balance of mortgage loans referred for enforcement increased from $ 3.912 million in 2009 to $ 5, 362 million in 2010, an increase of 37%.
Despite all this, during the lost decade, GNP per capita of PR (now "Gross National Income") reflects a percentage increase greater than that of the EU should be noted that every indication that the phenomenon of migration flourished during the first decade of the new century. Preliminary estimates suggest that the net emigration balance is around 300.000 for the period. Which, if true, would make the decade 2000-2009 the second largest net emigration in the history of the country, only lower than in 1950-59. The phenomenon of migration requires attention to detail and reconceptualization. More than "safety valve" for unemployment, loss of human capital is as a result of stagnation, crisis and lack of opportunities in our economy, especially for young people, the main demographic that uses the exodus. Just when they reach the age to make their productive potential, developed in Puerto Rico, the U.S. economy which absorbs and enjoys a workforce with relatively high level of education and a lifetime ahead of production (Herrero 2010).
Emigration, federal transfers and economy informal are three variables that prevent the full adjustment imposed neoliberal new operating conditions and more intense accumulation, through the recreation of the industrial reserve army, creating a huge potential mass of workers who compete in the labor market, willing to work "in what is and what it is." However, they do not prevent progress of neoliberal policies depriving large sections of the population who remain in the country, polarizing social arrangement even more, discarding human talent, quickly devouring precious natural resources and imposing a neo-conservative social order. We headed toward a totalitarian regime with an economy towards industrial and working conditions of the times of the cane for the vast majority of employees. As evidence shows that the percentage share of labor compensation in the functional distribution of net income (excluding net payments to the rest of the world or profit repatriation) is very close to their relative level of late 1940. There should be no doubt that neoliberal adjustments have intensified labor exploitation in the country on the one hand, while on the other hand benefit those who receive income from property or capital.
Conclusion
If bitter medicine has been disastrous Fortuño Plan, as disastrous was the process by which developed and implemented the same. The magnitude of what is at stake goes beyond that to date there is economically, politically and socially. Discharge legislation, studies that nobody knows Readymade beyond the scope and public scrutiny, kidnapping of data and information, little or no willingness to listen to various sectors and to enter, except those CAREF cronies, in a clear example of so-called "crony capitalism" that was attributed to a large extent, the Southeast Asian crisis of 1997-98. You bet with the resources and economic security of a country and socially battered, deep in polarization, conflict-ridden, despair and violence. The policy implemented so far, and the remains to establish, as the so-called greenway and many others still remain in the arsenal of the great neoliberal adjustment scheme (Retirement System, Labor Reform, UPR to name just three) undermine the possibility of bringing to Puerto Rico by way of growth and sustainable development. It's time to stop the forced march of folly to which they subjected the country.
Quite rightly the New Day (Lama 17-24/4/2011) claims the need to implode the existing order as a way of doing things and affirms the need a peaceful revolution by the working class to transform the existing order and break the unjust economic and social dynamics that suffocation. However, this revolution will not be against the marginalized and dependent on federal transfers as suggested in the editorial piece. The functional distribution of income in current prices shows that during the years 1998-2007, ie during most of the lost decade and squarely in the second episode of fiscal crisis and prolonged contraction, the income received by the owners of capital in varied expressions, here and abroad, grew faster than the economy and workers' compensation (JP 2007).
The revolution can not be regressive and conservative. Quite the contrary. Be a process of progressive social change, peaceful, well structured and with clear objectives, aimed at all groups with vested interests that prevent the following actions and objectives: social partnership, equity and transparency, conservation and environmental restoration and the orderly use of land, establishment of a universal health system, based on prevention and equity in access to health services outside the control of the oligopoly of insurers, equal opportunities in access to education and personal development opportunities, the rapid development of energy sources renewable public transit, the security of people, the introduction of a wage policy that does justice, reward productivity and age well run, the recovery of more than $ 3.000 million tax debt which no one speaks, the review of more than 70 laws of tax exemptions that cost about $ 1.000 million annually to Treasury, the review of thousands of tax exemption decrees of those who do not know if the benefits contribute as agreed in the national economy, the attack to tax evasion caused by legal informal economy, focusing on groups of high income levels of society, representing more of $ 12.000 billion in annual revenues are not taxed, in order to misuse of public funds represents a loss, according to conservative estimates (Santiago, Rivera and Colón 2009) of 10% of government budget, the intelligent restructuring of government operations to promote effective and efficient processes in the economy, effectively regulate and ensure the rights of the many not the few, economic and social restructuring to end the culture of corporate keep on one side and the systematic marginalization of half the population by another, through solidarity and democratic processes. **************
Argeo
T. Quiñones Pérez is Professor, Department of Economics, Faculty of Social Sciences at the University of Puerto Rico, Río Piedras
http://www.rebelion.org/noticia.php?id=128306
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