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PUERTO RICO REPORT
Emulating (The Worst Of) The United States
by Lance Oliver
December 3, 1999
Copyright © 1999 THE PUERTO RICO HERALD. All Rights Reserved.
If your idea of a perfect Thanksgiving Day evening consists
of a good night's sleep, well fed and properly thankful for the
gifts life has provided, then consider the woman in Puerto Rico
who set out at 11 p.m. that night to camp in front of the doors
to a toy store to ensure she was first in line in the morning
to go shopping.
She may have slept on a sidewalk, but she was far from alone.
Crowds massed at stores at abnormal opening hours such as 6 a.m.
to take advantage of post-Thanksgiving Day sales.
Some shopping malls reported sales that were 10 percent above
those recorded last year during the post-Thanksgiving weekend.
That increase was larger than what was generally reported in the
United States, where record low unemployment, a rising stock market
and flush times have consumers feeling very confident indeed.
What is going on in Puerto Rico? Consumerism copied from the
world's undisputed champion consumers, the people of the United
States.
One of the strengths Puerto Rico has extracted from its five
centuries of foreign control is that it has sometimes borrowed
the best from other cultures. It retains the family-centered
social fabric that other Latin American countries also developed
from their Spanish and Catholic origins, but also has the strong
commitment to democracy and economic freedom it picked up from
the United States.
But the flip side is that sometimes Puerto Rico takes the worst
of both worlds, picking up such traits as the Latin America machismo
that leads to discrimination against women and domestic violence,
along with the materialistic consumerism of the United States.
The Christmas and Three Kings season brings out the latter.
Like the United States, unemployment is low in Puerto Rico,
but it is still nearly three times the stateside rate. Incomes
are still half that of the poorest state. But many Puerto Ricans
are doing their best to spend like the wealthier folks to the
north. When they evaluate their standards of living, they do
not compare themselves to Mexicans or Costa Ricans, but to Americans.
By any measurement, however, the wealth is not there to support
this level of spending. Unemployment is higher, wages are lower,
inflation is higher. To live like an American, the average person
in Puerto Rico must spend not just tomorrow's wages, but next
year's wages, today. To drive a gas-guzzling monster-sized sport-utility
vehicle completely unsuited to a small, crowded island, and nearly
impossible to park in a normal San Juan parking space, they spend
their childrens' inheritance.
Business people in Puerto Rico cry for the need for a local
capital market, but there is no local capital reserve. There
are no local savings. With few exceptions, the savings rate in
Puerto Rico has been negative for decades.
One sad result of all this is the number of bankruptcies.
No longer is bankruptcy seen as a stain on one's reputation, as
it once was, but as just another financial maneuver.
"There has been a change in values. People are less reluctant
to file for bankruptcy," said U.S. Bankruptcy Court Judge
W. H. Beckeley. Of course he made those comments about what he
saw as a growing problem in 1981, when about 850 bankruptcies
were filed.
This year, an estimated 18,000 will be filed in courts in Puerto
Rico.
The statistics are worse, in some ways, than they at first
appear. In 1991, for example, commercial bankruptcies accounted
for about 10 percent of all cases filed. Today, they amount to
less than 1 percent.
Virtually each and every one of those 18,000 bankruptcies this
year means not a business that failed, but a family that failed.
What future does this paint? Just like the United States,
Puerto Rico is undergoing a demographic shift as the baby boomer
generation moves into middle age and edges into retirement. Yet
what kind of retirement can be expected for people who have almost
no savings and are in debt? If they live off their children,
their sheer numbers will make it a heavy burden.
How long can Puerto Rico keep spending itself into hock? We
will probably learn the answer the hard way, beginning the moment
the U.S. economy finally ends its unprecedented peacetime expansion
and enters a recession that will burst Puerto Rico's very fragile
bubble.
In one of his recent syndicated columns, William Safire wrote
about how shopping has become entertainment in the United States.
Each bargain found becomes a triumph, another win in the game.
Writing after a visit to a popular outlet mall, Safire concluded
that this is, increasingly, what Americans do for fun.
In Puerto Rico, people do the same, but on smaller incomes.
Such an attitude may make for a Merry Christmas, a Happy New
Year and a lavish Three Kings Day, but the February bills will
be somber indeed. Sooner or later, the bills always come due.
Lance Oliver writes The Puerto Rico Report weekly
for The Puerto Rico Herald. He can be reached by email
at: loliver@caribe.net.
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