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Puerto Rico as a Socio-Economic Laboratory

From the Center for a New Economy.

Almost a year after Hurricane Maria, there are still no clear signs that the island's reconstruction will be completed any time soon. Despite the recent announcement of the approval of the Plan of Action submitted to the Department of Housing and Urban Development that would set in motion programs and projects valued at $1.5 billion, federal authorities have still not turned on the faucet, and the torrent of much-needed funds has not materialized. Even more importantly, we are still awaiting tens of billions of dollars more that the U.S. Congress has already approved for financing work and services related to the post-disaster recovery.

Naturally, disbursement of these funds requires that painstaking rules and procedures be followed in order to ensure that the public money is used appropriately. But it's no secret that more is being demanded of the government of Puerto Rico than is strictly warranted. In addition to the 'internal controls' and documents normally required by the federal government, Congress has required that the island submit an 'Economic and Disaster Recovery Plan' that would, among other things, define the priorities, goals, and results expected from the recovery efforts. At first glance, this requirement does not seem unreasonable. As a planner, I think it's only fair, and in fact necessary, that a coordinated and inclusive exercise be undertaken to define how the island's reconstruction will be carried out. But Congress's intention is not based on a penchant for participatory planning; rather, it responds to a popular narrative that paints Puerto Ricans as technically incompetent and incapable of managing a cascade of funds pouring down from the north without wasting them or allowing the big development companies to have their way with us.

Of course we mustn't delude ourselves. The reputation of our public authorities couldn't be lower, due to the terrible financial history written by successive administrations. The burden of our public debt doesn't help much, either. But beyond our obvious failings, it's clear that our limitations also have a great deal to do with a number of decisions made in Congress, especially the governance experiments it has inflicted on the island.

As Judge Juan Torruellas explains in his essay in the Harvard Law Review Forum, the United States government has carried out four grand governance experiments on the island, using a number of legal mechanisms: the Foraker Act in the early twentieth century; the Jones Act in 1917; the creation of the Commonwealth of Puerto Rico (the Estado Libre Asociado, for its Spanish translation) in 1952; and the adoption of the law known as PROMESA in 2016. Torruellas argues that these actions have served to perpetuate an asymmetrical colonial relationship that violates the human rights of the island's residents and is at least partly the cause our economic deterioration. That said, the most recent experiment, which is being carried out through PROMESA, is founded on a logic similar to that applied to Washington, D.C., during its financial crisis: Puerto Ricans cannot govern themselves, so the federal government has to come in and take over and appoint a small group of technocrats to put the house in order.

As we planners know, technical arguments and actions often serve to mask ideological positions and experimental desires. In a way very similar to the actions taken by Rexford G. Tugwell, who served as governor in the 1940s and tried to establish a 'social laboratory' in Puerto Rico by applying the technical tools of economic planning and rational public administration, some members of the Financial Oversight and Management Board (FOMB) are trying to test whether austerity measures under temporary dictatorships can undo the misfortunes of jurisdictions in financial straits. In some of his writings, David Skeel, a member of the Board and law professor at the University of Pennsylvania, has supported the idea that governments in bankruptcy, such as Puerto Rico's, should have to submit to anti-democratic regimes that impose the reforms needed to make those governments more responsible and--ironically--more democratic.

'[Planners and public officials] will have to design and implement reconstruction projects and processes quickly and accurately while, simultaneously, the institutional governmental scaffolding is being taken apart and reconfigured'.

But aside from their interest in testing the efficacy of 'dictatorships for democracy,' the Board and Congress have devised another grand experiment in Puerto Rico: the implementation of a regime of severe neoliberal austerity in parallel with a massive islandwide reconstruction effort. So far as I know, this has never before been attempted. And it is a combination that presents a number of challenges for planners and public officials, who will have to design and implement reconstruction projects and processes quickly and accurately while, simultaneously, the institutional governmental scaffolding is being taken apart and reconfigured. As many experts have argued, reconstruction efforts require detailed data, coordination at many levels, the mobilization of communities and grassroots organizations, and intensive planning exercises on a number of scales. It is highly improbable that the Board's policies to downsize the government and tighten its purse strings--including drastic cutbacks to the budget of the University of Puerto Rico--will allow the government to deal competently with the recovery efforts.

According to this scenario, it is quite likely that our reconstruction will take a market-focused path, in which all sorts of opportunities, incentives, and contracts will be offered to off-island companies who chase ambulances, figuratively--disasters, literally--for a living and who generally provide one-size-fits-all solutions that they apply indiscriminately anywhere they go. Given the progressive dismantling of the government, these companies will undoubtedly be called upon to fill the expertise and ability gaps created by the austerity policies in the public sector. The experience of New Orleans after Hurricane Katrina shows us that transferring key responsibilities to actors in the private sector is not a good idea, because it limits accountability and public supervision from the decision-making and implementation processes. Furthermore, we would be privatizing important lessons that could help us improve state capacity, make better decisions, and create better public assets in the future.

Reconstructions take time, and the processes involved are extremely complex, no matter where they take place. Here, on the island, we will have to deal with all the additional challenges associated with a decade and more of economic deterioration and the burden of an unpayable public debt. But even more difficult, we will have to transform the island while combatting the experiments conducted on us by Congress and the FOMB--experiments that promise to create the ideal conditions for a pratfall by us on the path forward and a consequent turnover, again, of the control of our own destiny.

*The author is Research Director, Center for a New Economy. Taken from the CNE blog.

Deepak Lamba (Archivo/NotiCel)