Political and Social Grid Lock

As sure as stink follows your neighbor's dog taking a dump in your front yard, as soon as Governor Fortuño announced the plans, formulated by the Consejo Asesor de Reconstrucción Económica y Fiscalto, to help the Puerto Rican economy, everyone began to protest.

I've got two simple observations. Oh and in case you weren't aware of it, the CAREF is chaired by Dick Carrion, Banco Popular Chairman of the Board, President and Chief Executive Officer of the Corporation and the Bank. I remember hearing of someone calling for his resignation recently, but I can't recall who,....oh yeah, I remember, that was me.

First, now I'm not sure why CAREF has included some of the items in their proposals, but I can assure you with 100% certainty that there is nothing they could propose that some special interest wouldn't find objectionable. This demonstrates to me, what I like to call social (or political, if you prefer) gridlock.

The term gridlock describes an inability to move on a transport network. The term originates from a situation possible in a grid network where intersections are blocked, prohibiting vehicles from moving through the intersection or backing up to an upstream intersection. In layman's terms, it is situation were no one can move (backward or forward) because a car is blocking them in both directions, or essentially what happens in every Puerto Rican intersection when a stoplight loses power.

Applied to our socio-political system what I mean is that no one is willing to give up a slice of their pie (zero-sum theory), in order to invest in the future of Puerto Rico. A simple example is the proposal's of CAREF and the reaction of the Frente Amplio de Solidaridad y Lucha . The CAREF suggests reducing the government by 11,000 people. Now any economist you ask would state that we need to cut the size of our government. When you have a fiscal deficit, you have only two alternatives, reduce costs or increase taxes. That's it.

According to one estimate I heard, 80% of our government's annual budget goes towards payroll, which is typically the largest expense in ANY organization. So in order to address one of the fundamental weaknesses in our economy, we HAVE TO reduce the size of the government. So as sure as you stepping in the "present" your neighbor's dog left in your yard, some organization will protest any elimination of governmental jobs. Their logic is simple, creating more unemployment will not help the economy. I can't really argue with that, in the short term.

But I ask, if we can't cut the payroll, and according to Senator Thomas, "I'm so power hungry and deluded that I actually think I'm going to become Governor" Rivera Schatz, there shall be no new taxes. Just what kind of voodoo are we going to use to balance the budget? And by the way, not making a decision on either cost cutting or increased revenues, our government will remain in a deficit and an anchor around the economic neck of Puerto Rico.

Second, I agree witht the CAREF that we should increase taxes on every consumable that the black market economy of Puerto Rico touches. That's the only logic I can find in increasing the taxes on gas, cell phones, alcohol, and cigarettes. As everyone knows, one of the reasons for the orginal implementation of the IVU was to attempt to gain some additional revenues from the criminals who conduct business without paying income tax. Yes, they are criminals. It is illegal to conduct business and "earn" money without paying income tax on those gains.

While some have said that the IVU has only increased the size of the black economy and that this is really just trying to legislate a change in social behavior, we as a sociey have few tools to impact this criminal culture. It's not like any public service campaign will be effective in telling all of the people involved in the black market, "Hey! Pay your fair share!" I'm sure that would work just about as good as "Que nos pasa Puerto Rico!" So what to do?

The error in the CAREF proposal and the original IVU implementation is while it may actually affect the black market financially it "punishes" those citizens that actually do pay their fair share through corporate or individual income tax. For each tax levied upon a consumable, there needs to be an equal and off-setting deduction for everyone that files a planilla.

Concluding, I'm not insensitive to the potential impact these proposals might mean to struggling families, but I refuse to agree with any logic that refutes all potential solutions because it will impact someone, or of more concern, your own pocketbook. In my opinion, by each special interest rejecting every proposal it basically says. I like our fucked up economy just like it is, and am willing to ride this pony until it drops dead. What is missing is a new perspective that we must ALL share in the recovery of our economy. It is our childern, and their children's grave we are digging. So unless we are so morally bankrupt as to not give a damn that we are sentencing future generations to increased suffering and unhappiness, we must all band together and not create proposals where we can all shoulder our fair share of the burden to make our children's future brighter than our own.

Flickr Creative Commons Contributor: hanssolo.