Just in case, so what?

Last piece of pie!As I feared, it looks like this crisis is continuing to gain energy. With supposed death threats against the governor and the truckers unions threatening a general work stoppage as well, this looks like a bad situation which continues to get worse. As I explained in a comment yesterday, it looks like the prime objective in these protests is to create as much chaos as is humanely possible.

However, bad this gets. Here's a small little prediction. It occurred to me that the protests against the proposed government layoffs are based on a weak premise. That weak premise will eventually limit the effectiveness of the protests and at best will only end up in a situation where the layoffs happen, the protesters get bored, go home, and everything goes back to "normal" with both sides claiming victory.

Let me explain. When Puerto Rico decided to protest against the bombing in Vieques, we were on the moral high ground. We were making a stand FOR something; something which defended our right to not have our island be used as a bombing practice range. The civil disobedience conducted then was effective because it brought into the light, the injustice being conducted by the U.S. Navy.

However, take as an example the general work stoppage and protests that occurred when then Governer Anibal Acevedo Vila proposed a shutdown of the government. In my opinion, those protests were ineffective. While they did get Acevedo Vila to end the shutdown (mostly because he had no backbone), in the end nothing was GAINED. What was being protested was the continuation of the status quo.

We have the same situation again with the proposed layoffs. There is no moral high ground. If anything the government, may have the moral high ground because the cuts are aimed at improving the future of Puerto Rico. All of the current protests are aimed at keeping things the same. Historically, any protest against change has lost or at best resulted in a tie, where the issue is merely buried for a few years only to rear its' ugly head again (Hey! That's just like our budget crisis!).

So what?

Another way to see the weakness of the protests is to examine the situation by assuming the protesters achieve their goal. All layoffs are canceled or reversed and the 17,000 stay or return to work. Essentially, that would be like saying to the credit agencies, we don't have a solution to our budget crisis and the people have spoken. They want everything to stay the same. Then what happens?

Ok, so if we say "screw you El Cuco, you can take your credit rating and go to the lookout basket in the top mast of a Spanish galleon (look it up...). This will most likely result in Moodys and Standards and Poor lowering our bonds to junk status.

Well here's one possible scenario if "El Cuco" drops our bonds to junk status. Since we don't have enough money to pay the extraordinarily high interest rates junk bonds require, then we won't be able to borrow any money to pay the $3.5 Billion we owe.

Since we have outstanding bills and no money, our government will have to do what most families do (remember my analogy...). If that's the case, then our old friend zero-sum theory raises its ugly head again, but in a slightly different manner this time. In this scenario we have too little pie. Still only one pie, but in this case we have too many people asking for pie. Well the government must then decide who doesn't get any pie. After you account for essential services like public health, public security (police, fireman, civil defense), and public education, oh and don't forget the politicians large slice of the pie, my guess is that there won't be much pie left.

Well then, the government will be forced to lay off all non-essential personnel (either temporarily or permanently. And the layoffs will not be 15,000, or 30,000, but probably more like 100,000 employees. It's either that or everyone within the government decides to take like a 30% pay cut. What do you think will happen then. Yep, we'll be back to the exact same place we are right now, which is exactly like it was in 2006.

The sad moral of this story is that there is no way to defend the status quo. Change must come, our government must drastically decrease in size and increase its efficiency. The complex problem which took 50 years to create, is not sustainable. There too few people and companies paying taxes to support the size of government that we have. It's a simple numbers game. We don't have enough money flowing into the government to pay all of the expenses (or debts) that they have. If this were a company it would have to declare bankruptcy, most likely to reorganize itself so that it can lower its expenses.

There is one other conclusion we could make. We could make more pie. The government could drastically raise existing taxes and impose new taxes so as to bring income in line with expenses. Nah, never mind, I was just kidding. Really, please put down the torches and pitchforks.

Flickr Creative Commons Contributor: thomwatson

5 comments:

GCD

9 de octubre de 2009, 11:59
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dijo...

I am not in complete disagreement with your statements. The problem I have with the whole situation is that, using your own words, they are trying to solve a problem that took 50 years to create in 3 months. I agree the government has to become smaller and more efficient I'm just not sure that summarily laying off 20,000 people without any apparent plan after that, is the most efficient way to go about it. I read somewhere that someone said in two years you will see it was the right thing... who can wait two years?

On the other hand, and trying to be fair here, when a private company needs to re-organize they just lay people off by the hundreds, or even thousands, without anybody even lifting a finger. I don't know about 20,000 but still the situation is pretty similar.

I guess I sound like I'm contradicting myself, but maybe the bigger problem is that we are used to the government solving our problems and have not developed the ability to think for ourselves and find alternatives on our own.

When you really think about it is not as black and white as some want us to think.

MC Don Dees

9 de octubre de 2009, 21:28
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dijo...

GCD, thanks once again for your thought provoking comments and your patronage.

It's true I haven't really thought about what's next for the Puerto Rico government. Nor have I heard much about any plans to continue to decrease costs.

I'm inclined to reply that desperate times often require desperate action (or reactions as the case may be). So it's kind of hard seeing past this crisis because it is so intense and complex.

I wholeheartedly concur with you about most citizens having become accustomed to the government solving our problems. You can hear quite clearly when they place the "blame" on the government, in a real "us" versus "them" mentality. However, we must all remember the immortal words of Abraham Lincoln, our's is government "of the people, by the people, for the people."

Scylas

13 de octubre de 2009, 13:04
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dijo...

Layoffs are a necessary evil, however the governor and Puerto Ricans in general are paying the price of electing/appointing morons to run the state agencies.

You can lay off 20,000 people, but you need a specific criteria to decide who gets laid off. You cant lay off both the father and mother off a family from the same company... that's just heartless (and is a extreme example of how this has been handled).

All in all Puerto Rico needs a smaller government... Fortuño is just fixing up what Acevelo failed to even address.

MC Don Dees

13 de octubre de 2009, 13:52
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dijo...

You have to wonder the level of ineptitude necessary to layoff both the father and mother of a family. Is it possible, they didn't even know?

Scylas, thanks for sharing.

Scylas

21 de octubre de 2009, 17:19
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dijo...

They did not know because they did not due their due diligence. Corruption runs rampant...

I think the governor is doing a decent job, but 90%* of people in positions of power in Puerto Rico are just inept.

* I totally made up this number.. but I would put money on it.