[News] Puerto Ricans are suffering from intense exploitation and a lack of democratic control over the island’s wealth
Anti-Imperialist News
news at freedomarchives.org
Tue Sep 13 12:33:28 EDT 2016
https://www.jacobinmag.com/2016/09/puerto-rico-debt-promesa-oversight-obama-crisis/
Puerto Rico’s One-Sided Class War
by Hugo J. Delgado-Martí
<https://www.jacobinmag.com/author/hugo-j-delgado-marti/> - September
13, 2016
Puerto Ricans are suffering from intense exploitation and a lack
of democratic control over the island’s wealth
Puerto Rico — a group of islands in the center of the Caribbean and a
colony of the United States since 1898 — has recently come to the
attention of the United States Congress due to its inability to pay over
$72 billion dollars in public debt
<https://www.jacobinmag.com/2015/06/puerto-rico-garcia-padilla-debt-austerity/>.
The passage of the Puerto Rico Oversight, Management, and Economic
Stability Act (PROMESA) in June — which established a seven-member
federal oversight board
<http://www.theatlantic.com/business/archive/2016/07/puerto-rico-promesa-debt/489797/>
to supervise the island government — did more than just demonstrate
Puerto Rico’s lack of sovereignty. It also opened the door to the
imposition of extreme austerity measures on a territory already hard-hit
by a decade-long recession.
The oversight board has one priority — to ensure that Puerto Rico makes
good on its obligations to its creditors, many of whom are private
American investors.
The Investors’ Colony
Of course, the oversight board won’t do or say much about the social
effects of the crisis — like the disappearance of nearly three hundred
thousand jobs, the steep loss of population due to emigration, and the
ongoing foreclosure crisis
<http://money.cnn.com/2016/02/21/investing/puerto-rico-foreclosure-crisis/>
that affects thousands of ordinary Puerto Ricans. Nor will it accurately
diagnose the problem — what’s really going on in Puerto Rico is an
intensification of the level of exploitation, both of the workforce and
of natural resources.
This intensified exploitation has taken many forms — layoffs; the
expansion of low-wage part-time work; the privatization of social
services; and the dismantling of the welfare state, to name a few.
Political elites justify austerity by appealing to the government
financial crisis and the public debt default, and cutbacks are enforced
by the receivership of public authorities and the destruction
<http://www.cnbc.com/2016/05/01/puerto-rico-says-will-default-on-government-development-bank-debt-monday.html>
of the Puerto Rico Development Bank. But the beginnings of Puerto Rico’s
predicament go way beyond the current crisis.
The financial crisis of the central government is, at its root, the most
recent and evident symptom of hundreds of years of colonialism.
Nowadays, talk about the colonial status of Puerto Rico is commonplace.
But in some ways, the word “colony” has been deprived of its meaning.
The commonplace definition of the term defines a colony as a territory
that does not hold sovereign power over itself — instead, it is
accountable to decisions made elsewhere, generally in imperial centers.
But this definition of the term puts a heavy emphasis on the legal and
formal aspects of the colonial relationship.
Based on this definition, statehood
<http://www.theatlantic.com/notes/2016/03/the-state-of-puerto-rican-statehood/472599/>
can be interpreted as a solution to the colonial problem. As members of
the fifty-first state, Puerto Ricans would participate in the selection
of the president, enjoy congressional representation, and participate
fully in the political charade of Washington DC.
But while the lack of sovereignty is one aspect of colonialism, it is
not the only one. Although many on the island want to achieve statehood,
becoming a state might only entrench and tighten the colonial
relationship even further.
Colonialism in Puerto Rico has always had a concrete economic meaning
<https://www.jacobinmag.com/2015/08/puerto-rico-debt-crisis-imf/> —
enormous amounts of wealth have been produced in the colony over the
last 118 years, but that wealth has vacated the island as quickly as it
has been produced. That pattern continues today.
Where’s the Money?
Net capital investments in fixed assets in Puerto Rico averaged $11
billion per year between 2000 and 2014, amounting to a total of $176
trillion. That investment returned well over $1.1 trillion during the
same time period — but less than $410 billion went toward employee
compensation. The rest was profit.
The profit rate in the manufacturing sector is even more revealing: out
of the $538 billion generated by manufacturing in those fourteen years,
only $40 billion were paid to employees.
In other words, workers earned less than 8 percent of the wealth
generated. While the manufacturing sector has increased its profits by a
huge percentage since the 1990s, worker salaries have invariably fallen
or remained the same.
To make matters worse, corporations paid under $30 billion dollars in
taxes to the so-called “commonwealth” during that 2000-2014 time span.
But taxes collected from individuals during that time period sum $38
billion, not including an additional $28 billion in excise taxes and
another $5 billion since 2007 as sales tax.
These taxes all tend to hit the poor the hardest by increasing the cost
of goods and therefore reducing the purchasing power of the labor force.
At the same time, Sila Maria Calderón
<https://www.britannica.com/biography/Sila-Maria-Calderon>, the first
female governor of the island, actually /reduced/ the corporate tax
burden in the early 2000s by lowering tax rates on profit returned to
the mainland United States.
In effect, working people pay to maintain the state, while foreign
corporations profit from Puerto Rico’s human and natural resources.
Puerto Rico’s dismal employment record
<http://247wallst.com/economy/2015/06/30/puerto-rico-unemployment-at-12-6-poverty-at-41/>
paints an even bleaker picture of economic prospects on the island. In
2000, less than one million people had jobs, out of a working-age
population of 2.8 million.
Employment peaked in 2007 — 1.2 million employed out of a working-age
population of 2.9 million. Since then, the population of eligible
workers has been estimated to be decreasing at a rate of six thousand
persons per year. And unemployment has increased in recent years as the
economic depression has worsened.
In 2014 only 995,000 Puerto Rican workers were employed
<http://www.bls.gov/eag/eag.pr.htm>. That’s a net loss of 269,000 jobs
in seven years — and if we take into account that low-wage workers often
hold multiple jobs (and so may be counted twice, or even three times)
the situation could be even worse. Circumstances are especially dire for
women workers — the only population group with a majority employed are
middle-aged male workers.
Work in manufacturing has especially taken a major hit. Manufacturing
jobs peaked at 172,000 jobs in 1995 — when Section 936, a tax credit for
American businesses with operations in Puerto Rico, was being dismantled
by Congress.
That number fell to 86,000 in 2014, a net loss of half the total
manufacturing jobs. The trend continues — in March of this year, there
were only 72,000 manufacturing jobs in Puerto Rico.
An Exploiter’s Paradise
But even during extreme recessions, some still accumulate wealth. The
question is — who?
In Puerto Rico, personal financial assets
<http://www.wsj.com/articles/puerto-ricos-pensions-2-billion-in-assets-45-billion-in-liabilities-1472156434>
more than doubled between 2000 and 2014. But personal debt has also
increased from $17 billion to $23 billion in those fourteen years, and
bankruptcy filings doubled between 2006 and 2014.
The banking sector has consolidated at an extreme rate. In 1996 there
were twenty banking institutions in Puerto Rico, but today all capital
is concentrated in just six banks.
So although total assets in banks fell from $96 billion in 2005 to $55
billion ten years later, we shouldn’t fall for the crocodile tears
flooding /la milla de oro/ — Puerto Rico’s financial district. In that
same ten-year time-span, Banco Popular
<http://www.thecerbatgem.com/2016/08/22/popular-inc-bpop-plans-quarterly-dividend-of-0-15.html>
went from $13 billion in assets to $22 billion, and became the island’s
leading financial institution.
And in the past year, Citibank surpassed Popular as the leading
institution when its assets increased from $11 billion to $26 billion —
likely thanks to the tax-haven laws the current governor enacted for the
benefit of billionaires.
Combined with massive job loss, declining wages, and the debt crisis of
the state, all this suggests that Puerto Rico is suffering the
consequences of an international crisis of capitalism.
The state has an important function
<https://www.jacobinmag.com/2015/12/bill-gates-ted-talk-renewable-energy-research-development-government/>
within contemporary capitalist society — to guarantee the necessary
conditions for the reproduction of capital. The state accomplishes this
by building and maintaining the physical infrastructure companies need
to operate. The state also provides the resources to maintain the
workforce by working to ensure health care, education, and housing.
The current situation is like a never-ending slide — the economy keeps
sinking with no end in sight. A smaller, less productive workforce makes
for a smaller base of tax revenue for the state, while the increases in
the cost of living put high stress on the government to fulfill its
obligations.
A state — particularly a colonial state — has to maintain social order
and political stability to provide a welcoming environment to foreign
corporations. Food stamps, public health insurance, and even forced
emigration become pressure release mechanisms that — when combined with
police repression and property protection — turn the island into an
exploiter’s paradise.
This is not the first time Puerto Rico has seen a situation like this.
In the past, only massive capital investments from the US government and
multinational corporations could save the day — but of course these
investments also drove new tides of colonial exploitation.
Faced with the current conditions, Puerto Rico had to mortgage itself.
Now, public debt
<http://www.nytimes.com/interactive/2016/business/dealbook/puerto-rico-debt-crisis-explained.html>
has reached over $72 billion dollars — and if the government’s internal
debt is added to the balance sheet, this figure could triple.
Forty Years of Austerity
Austerity and the neoliberal agenda have been present in Puerto Rican
politics since the late 1970s, when Carlos Romero Barceló
<https://www.loc.gov/rr/hispanic/congress/romerobarcelo.html> of the New
Progressive Party <http://www.puertoricousa.com/english/pnp.htm> (PNP)
privatized the first set of public hospitals and enacted tuition hikes
in the University of Puerto Rico (UPR). Since then, Puerto Rico’s
working class has experienced a sustained attack on its rights and
working conditions.
After the worst years of Romero’s so-called “spider government” during
the 1980s, Rafael Hernández Colón
<https://www.britannica.com/biography/Rafael-Hernandez-Colon> was
elected. He continued the assault on public services by privatizing the
Puerto Rico Merchant Marine Authority (Navieras) and the international
calls branch of the Puerto Rico Telephone Company.
Next, Governor Pedro Roselló González upped the ante by attempting to
enact the neoliberal agenda in full — after his push to privatize public
schools was defeated by the teachers union, he privatized all the public
hospitals
<http://articles.chicagotribune.com/1998-07-17/news/9807170111_1_privatization-pedro-rosello-public-hospital>
on the island.
Nevertheless, a one-day teachers’ strike in 1993 marked a significant
victory for the anti-austerity movement, managing to force significant
amendments to the “community schools law” which attempted to create the
basis for charter schools. The amended law — which grants community
control over public schools — has been under constant attack since its
passage, and its most progressive aspects have never been fully implemented.
The twentieth century closed with the last great stand against
privatization in Puerto Rico — the strike against the sale
<https://www.washingtonpost.com/archive/politics/1998/07/08/puerto-rico-paralyzed-by-strike-over-phone-company-sale/f8dee1a1-84cb-46d7-87ba-8658b4a325ce/>
of the Puerto Rico Telephone Company. This “people’s strike” reached
beyond the immediately affected phone workers to unite many Puerto
Ricans behind common political demands. But in the end, the strike was
defeated. The Puerto Rico Telephone Company was privatized.
Soon after, state retaliation intensified. In 1999, Law 45
<http://www.lexjuris.com/lexlex/Leyes2013/lexl2013045.htm> granted
public sector workers the right to organize and bargain collectively,
but prohibited strikes. Far from strengthening Puerto Rican unions, the
law was used to tame union militancy.
Under the terms of the new law, almost any type of worker resistance
could be said to have an adverse effect on public services — which made
unions vulnerable to decertification by the state. Even picket lines
during lunch time were forbidden by some unions.
To make matters worse, in 2002 the government launched an attack on the
independent teachers’ union — the Puerto Rico Teachers Federation
<http://labornotes.org/2008/01/seiu-raid-union-representing-40000-teachers-puerto-rico>
(FMPR) — with the support of its longtime rival, the American Federation
of Teachers (AFT). The government dismantled the FMPR’s health plan,
citing an overdrawn balance sheet, lack of liquidity, and bad
administrative practices.
The next year, rank-and-file teachers responded by electing new, more
radical union leadership. But even with this new leadership, the FMPR
was unable to successfully resist the attacks from the AFT and the
colonial justice system.
Workers at the Puerto Rico Energy and Power Authority (PREPA) were the
next to come under fire, as the government began purchasing energy from
two private power-generating enterprises that had recently entered the
market.
Privatization had wide-ranging effects at PREPA
<http://blogs.wsj.com/bankruptcy/2014/10/07/the-examiners-prepa-restructuring-requires-time-liquidity/>
— full-time repair and construction workers were replaced by
subcontractors; administrative and commercial duties were assigned to
Banco Popular; and corrupt officials drove the authority even deeper
into debt.
Today, the Electrical Industry and Irrigation Workers Union (UTIER) —
once one of Puerto Rico’s most powerful and respected unions — suffers
from a diminished workforce and a demobilized rank and file. Years of
repeating “the best strike is the one that never comes” have destroyed
the union’s will to fight, and, in the absence of political
organization, class consciousness is almost nonexistent.
This assault on the working class intensified in 2004 with the election
of Governor Anibal Acevedo Vilá
<http://www.nytimes.com/2008/03/27/us/27cnd-puerto.html>, who attacked
unions and dismantled social protections in an attempt to protect those
who financed his campaign from the now-foreseeable collapse of
commonwealth finances.
Within days of his taking office, Acevedo hiked tuition at the public
university, a move that was met with resistance from the small but
highly politicized student movement. But Acevedo’s Popular Democratic
Party <http://ppdpr.net/> (PDP) was able to successfully forge an
alliance with ruling-class nationalists and independence advocates,
putting the party on good footing to absorb or defeat any groundswell of
working-class struggle that might emerge.
One-Sided Class War
Increases in the cost of water, power, and basic consumer goods were
followed by the establishment of a sales tax in 2007, in order to create
the Puerto Rico Urgent Interest Fund Corporation
<http://www.gdb-pur.com/investors_resources/cofina.html> (COFINA) — a
new fund set up to issue investment bonds as a way to refinance the
public debt.
Many were opposed to the new tax, which would hit poor Puerto Ricans the
hardest. Still, a popular movement in favor of the Sales and Services
Tax emerged. But the movement — known as “el pueblo grita
<http://noticias.terra.com/noticias/marcha_puerto_rico_grita_convoca_a_decenas_de_miles_de_boricuas/act394150>,”
or “the people shout” — was really organized by the media and a few of
the AFL-CIO unions — or, as we like to call them in Puerto Rico,
“chupacuotas” (“quota-suckers”).
So the governor — facing a hostile Congress but determined to pass the
new tax — used public workers as the cue ball in a game of political
pool. He closed the Department of Education for two weeks, citing
concern about the public debt.
The FMPR didn’t have the strength to respond — unable to protest, many
teachers ran to the unemployment offices and began collecting food
stamps. Still, a small group of teachers and students fought back by
organizing civil disobedience and street resistance. In the end, schools
reopened and teachers were paid, but the governor was able to
successfully push the unpopular sales tax through congress.
That process laid the groundwork for the 2008 teachers’ strike
<http://labornotes.org/2008/03/teachers-strike-stops-classes-puerto-rico>.
The FMPR had begun negotiating their new collective bargaining agreement
in 2005. But the negotiations stalled when the union ran up against the
government agenda — to privatize schools and reduce the size of the
Department of Education.
In response, The FMPR began preparing to strike, working to build
widespread support for the union among ordinary Puerto Ricans. Support
for the teachers grew with each passing moment. But then the union was
decertified in January 2008, two months before the strike was scheduled
to begin.
Today the FMPR is fighting for survival — once the largest working-class
force <https://www.solidarity-us.org/node/2104> in Puerto Rico, after
years of attrition it now represents only two thousand of Puerto Rico’s
thirty thousand teachers. Although the FMPR strike was defeated, the
example set by the teachers continues to inspire resistance as students
and workers find new ways to push back against the neoliberal assault on
their living standards.
Anti-Austerity, Anticolonial
Everyday life in Puerto Rico has become increasingly political. The
day-to-day discussion in the media is about the economy, bonds,
unemployment, and the distribution of wealth. And although the media is
highly biased towards colonial capitalist ideology, there remain some
dissident voices to be heard.
The Puerto Rican Independence Party <http://www.independencia.net/>
(PIP) and the Working People Party <http://www.pueblotrabajador.com/>
(PPT) will each go into November’s gubernatorial election with an
anti-austerity agenda. But neither can offer a perfect solution to
Puerto Rico’s ongoing crisis. And since PROMESA established a federal
oversight board to supervise the actions of the elected government,
neither party can even guarantee that they’ll actually be able to
fulfill their platform promises.
Of the two, the PIP presents the situation a bit better — their position
holds that colonialism is the root cause of Puerto Rico’s crisis, and
only in independence can we seek to solve the problems that haunt us.
The PPT, on the other hand, aims to rebuild the benefactor state with
neo-Keynesian economic reforms, but evades the so-called “commonwealth
question” by advocating a popular referendum on independence, but
declining to take a firm position.
The PPT’s view is full of contradictions, since opposing colonialism
without presenting an alternative other than a referendum or a
constituent assembly fails to answer the question of how to solve the
crisis definitively.
Still, independence is not enough. A radical democratic state —
committed to finding collective solutions and placing real power in the
hands of the working -class majority — is the best way to solve not only
the colonial crisis, but all the problems afflicting Puerto Rico.
Nonetheless, principled anticolonialism is extremely relevant to the
anti-austerity struggle, and mounting a meaningful challenge to
austerity often means also confronting Washington’s colonial influence
over San Juan.
For example, even in a situation as specific as public school
administration
<http://www.progressive.org/news/2015/11/188428/puerto-ricos-school-crisis>,
the outsized influence of United States policy — and the inability of
local authorities to influence or circumvent it — poses severe problems
for reformers. It is no secret that Puerto Rican public schools have
lost the little prestige they had during the last sixteen years.
Teachers are demoralized, students don’t believe in their schools, and
parents have lost their faith.
In large part, this a legacy of the No Child Left Behind Act
<http://www.ed.gov/news/press-releases/obama-administration-approves-nclb-flexibility-request-puerto-rico>.
Since Washington imposed this destructive legislation on Puerto Rico,
corruption has increased while education has deteriorated and more and
more school services are privatized — and the island has no way of
amending or repealing the law.
Which Way From Here?
I don’t claim great powers of foresight. But some things are as
predictable as /telenovelas/.
Public-sector workers in Puerto Rico have been expecting a lockout for
some time, but so far the government has managed to delay taking that
step. Still, the government will run out of money at some point, and a
government lockout of public workers could become the basis for
intensifying social unrest.
The economic effects of such a lockout will be catastrophic. Emigration
<http://www.pewresearch.org/fact-tank/2015/10/14/puerto-ricans-leave-in-record-numbers-for-mainland-u-s/>
will increase even further, as will crimes against property — and that
will have an effect on investments, as a larger fraction of the island’s
scarce capital resources will be diverted to private security.
Organized labor has to recognize the political situation it is in: there
are no technical solutions that could separately guarantee the security
of each sector of the workforce. Only by developing a political
working-class movement with class demands can we stop — or at least slow
down — the attacks on our standard of living.
Frankly, people don’t care if it’s a foreign control board or a local
law that implements austerity — they care about the negative effects
austerity measures will have on their lives. Those negative effects are
what we should be fighting against.
What we need in Puerto Rico is a mass movement that goes beyond
organized labor. If the situation right now has shown itself clearly to
be a political one, the answer has to be political also. Technical
solutions only suggest imposing austerity on one or other branch of the
working class.
Unions and political organizations have to recognize the structural
changes in the working class and adapt to them. We need another peoples’
strike or mass movement — such as the struggle to remove the US Navy
base in Vieques
<http://nvdatabase.swarthmore.edu/content/puerto-ricans-protest-united-states-navy-presence-vieques-island-1977-1983>,
the 2010 student strike
<http://www.nytimes.com/2010/05/21/us/21students.html?_r=0>, or the 1999
Telephone Company strike
<http://www.nytimes.com/1998/06/19/us/plan-to-sell-puerto-rico-phone-company-leads-to-strike.html>.
We have to recognize those events for what they were: small, local
struggles that became the igniting sparks of much larger movements.
Today, there are at least two social groups with the potential to become
sparks that ignite larger movements in Puerto Rico. First, university
students have often been among the most militant participants in Puerto
Rican protest movements. And in the current moment — during which
college-educated young people must face the choice to either leave the
island or to accept precarity and underpayment at home — they are
natural opponents of austerity.
Second, teachers, though weakened by the defeats they’ve suffered, still
have a lot of political strength. And they haven’t received a single
salary increase in over eight years.
Of course, organizing a movement with its own specific demands that is
also conscious of the larger issues is not an easy task. Anti-austerity
forces in Puerto Rico must maintain a double focus. It’s not enough to
answer only the immediate questions — we must also think in the long
term, asking, what could solve the problems that persist in Puerto Rico?
As one first priority, we must fight to implement a minimal program that
can at least help us rebuild a politicized working-class movement.
Left political organizations have formed a small but relevant alliance
against the oversight board, choosing civil disobedience and direct
action as their means of struggle. Besides the obvious opposition to the
oversight board they have come up with some general demands against
austerity and colonialism — including steps towards effective
decolonization and radical democracy; a constitutional referendum to
vote on whether to pay the debt or default; a full audit of the debt;
and a tax on the rich, particularly on the corporate and banking sectors.
The Workers’ Socialist Movement
<http://frentesocialistapr.tripod.com/organizaciones/mst.htm> (MST) has
proposed a few other demands that may go even deeper into solving the
problem — an end to ongoing privatizations; the reversal of as many
privatizations as possible; an economic recovery program that emphasizes
diverse and technologically advanced agriculture; a universal health
care system and universal pension fund; income-adjusted tuition rates
at public universities; a moratorium on foreclosures; the seizure of any
excess housing inventory held by banks; and the protection of basic
goods produced on the island.
Many — if not all — of these demands may call into question the colonial
status of Puerto Rico. But that is precisely the point. Without a
fighting anti-austerity movement, Puerto Rico will continue to fall
victim to the one-sided class war waged by its creditors and the United
States government. And in Puerto Rico, especially since the passage of
PROMESA, an effective anti-austerity movement must also confront the
colonial roots of the debt crisis.
--
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