In the process of repaying the debt, the working class who are also known as the poor, are those who are most affected. It is being restructured. As per the decapitalization logic, the question is how to recapitalize.
Dr. Nelson Colon, President, Puerto Rico Community Foundation
According to the above quotation, disinvestment has been the principal economic driver of Puerto Rico’s economy in recent years. It is true that reversing the “decapitalization logic” is exceedingly difficult. However, the National Public BKHQ has observed that community and nonprofit involvement has surged throughout a lot of crises. A governor’s activities during the previous three years have even prompted him to resign.
What can you do to revitalize your business? To address this question and many more, I met with Professor. Nelson Colon, president of the Puerto Rico Community Foundation ( Fundacion de la Comunidad de Puerto Rico or FCPR). In our conversation, Colon was clear-eyed about the challenges that approximately 3.26 million people living in Puerto Rico face. But, Colon presented an inspirational idea of rebuilding that centers on equity and the multi-capital model that goes beyond the concept of cents and dollars, focusing on the establishment of the community’s ownership as well as sustainable environmental sustainability over the long run.
What is the reason for the depletion Colon attempts to stop happening in the beginning?
Understanding the Causes of the Economic Crisis in Puerto Rico
A report published in 2013 on the island of Puerto Rico by the Center for a NewEconomy offered an in-depth description of the situation called Sergio. Marxuach called”the PuertoRican economy’s ” threefold problem.” Marxuach specifically referred to COVID19, as well as Hurricane Maria as well as the economic crisis that has hit the island. The COVID-19 outbreak is of course all over the world. However, it is important to note that 120,000 out of 87,000 Puerto Ricans employed were laid off during March in the aftermath of the economic shutdown in March of 2020. The employment market was able to take approximately 2years to recover. The effects of Hurricane Maria affecting Puerto Rico were even more than the amount. The hurricane of Cat 4 strength posed an extremely dangerous to the island October in 2017 and resulted in devastating consequences that included the death of nearly 3000 individuals. A large number of people were without power for over a year. The entire reconstruction is several years away.
The economic slump is the last but not least. Puerto Rico’s government said in 2015 that it would be unable to pay its obligations. In the next calendar year, Congress adopted PROMESA, also called the PuertoRico Oversight, Management, and EconomicStabilityAct, which allowed the Commonwealth to undergo bankruptcy procedures in order to help it restructure its debt. It will also be supervised by a board of control that is appointed by Washington.
In May 2017, Puerto Rico announced that it has declared bankruptcy. Puerto Rico emerged from bankruptcy last month. However, the bankruptcy procedure is still ongoing. It’s not just that some parts are due, such as the $9 billion obligations owed by the island’s electrical company, which have yet to be renegotiated, as The Associated Press’s author Danico Coto explains. The fiscal control board “is expected to remain in existence until Puerto Rico has four consecutive balanced budgets, as well as the island’s financial limits, and public investment is unlikely to commence until at least 2026.” The repercussions of colonialism might be observed in an international “control board” procedure, but colonialism has also contributed directly to the financial crisis, with Puerto Rico being a US colony since 1898. Puerto Rican residents elect representatives to handle local issues as members of the “commonwealth,” but they remain under the authority of the US federal government and are in charge of a variety of important areas, including citizenship and military transportation, currency communications, trade, and transportation. Furthermore, legislation such as the Jones Act, which mandates the passage of products through the US mainland, which covers everything that does not originate directly in the US mainland by air, is possible. It also permits commodities to be transported by vessels operated, owned, and owned by Americans, raising the cost of shipping for items arriving from mainland countries and then passing the cost on to consumers. Furthermore, because Puerto Rico is a territory, it has no vote in Congress; nevertheless, if it were a state, it would have five representatives in the US House of Representatives and two senators. This is all crucial to comprehending how Puerto Rico ended up in bankruptcy. When you hear the word “bankruptcy,” you automatically think of debt. In truth, Coto speaks of “decades of corruption, incompetence, and excessive borrowing.” While the Puerto Rican government was not without flaws, it is not the whole tale, or at least not the whole picture. “Looking at the long-term history of Puerto Rico’s debt and what created it indicates that the federal government in reality shares much of the culpability for the issue,” Michael Kranz stated in a Business Insider piece in 2017. “First and foremost,” Kranz explains, “the federal government became the first to grant subsidies for US companies’ investments in Puerto Rico by enacting a tax law in 1976 (known as Section 936) that exempted companies from federal tax on profits made by their subsidiaries operating on the island, lowering the costs of production for US corporations and their affiliates.” They also assisted in the diversion of capital and skill from localized Puerto Rican firms to the easy money given by US corporations. “Puerto Rico rapidly found itself caught with the ‘financial curse,’ which occurs when a country’s political and economic institutions become more oriented toward and co-opted by affluent foreign elites to the disadvantage of its people,” according to Citizens for Tax Justice. The provisions of the tax bill helped pharmaceutical industries in particular. Due to earlier years of inadequate investment, the Puerto Rican sector was not able to make the essential reforms when tax-free subsidies were removed from 1996 to 2006. As a result, the amount of money given to Puerto Rican government officials decreased. Wall Street hedge firms were able to create a flow of cash for a long time to cover the large revenue shortfall. It was a cost that finally led to Puerto Rico’s bankruptcy, from which it is still recuperating.
A Rebuilding Strategy Based on Community Capital
Puerto Rico is confronting significant problems. Colon believes that the best hope for rehabilitation is to harness the creative energy that lies at the heart of Puerto Rican communities. “The core idea is that these societies are affluent internally,” Colon adds, “because they have structures, people, traditions, and coherence.”