Borincano
17th April 2003, 08:42
Nationalization in Puerto Rico
by Luis Orlando Gallardo Rivera
nutslapper.com (http://nosupport1.giantwebspace.com/~reddpr/)
January 25, 2002
http://nosupport1.giantwebspace.com/~reddpr/articles/nationalization_in_puerto_rico.gif
Puerto Rico’s last administration stepped into office with a fresh new plan to privatize dozens of government agencies and services in a move that further intertwined our economy into that of the United States and dismantled Puerto Rico’s age-old quasi-socialist public corporations. Since privatization, the Puerto Rican Telephone Company (PRT) has over-charged many of its customers, sucked a few million from our economy with their area-code implementation program, neglected low-populated rural areas, and have started charging for services what were once free. Voters quickly got tired of these privatization tactics and have elected in a new administration that put a stop to this process. Private companies will have their hands off of the public’s assets – or at least for now.
Failures of privatization are not only limited to the PRT, but just about every other field that was touched by the hands of the private market. Privatized pineapple farms quickly fell apart when handed over to the powers of the free market – greatly decreasing the performance quality of the industry. Industries and assets that were privatized were sold for way under market value. One example of this was when former PNP Senator Luis Felipe Navas de León authored a resolution that contained numerous “falsehoods” that led to the selling of some public land in Caguas for much less than its appraised value. We all saw how privatized hospitals fell into the hands of the public investor friends of the politicians who authorized their sales. Former minority leader of the House, Edison Misla Aldarondo, allegedly was paid a large sum from some personal friends who purchased a government hospital in Arecibo, and is currently awaiting trail on federal charges.
This is not the first time that Puerto Rico has been screwed over by the private market. Large businesses have always contributed heavily to Puerto Rican political parties and commonly pay off politicians to sign away public contracts for private services. A computer company, Global Management and Consultants, Inc., for example, has recently faced federal charges in relations to a $1.9 million public contract. The owner, Angel Luis Ocasio Ramos paid former Retirement Systems Administrator Andrés Barbeito $50,000 for his influence in awarding a contract. In another more recent case, Milestone Communications, a publicity agency and contributor to the PPD, has been receiving large public contracts from the current administration in an alleged move to “benefit political friends.” Hormigueros Mayor Francisco Javier Rivera Toro purportedly received a $100,000 payment from Somos Todos, a business owned by a friend of his, in exchange for a $3.6 million municipal contract. In response to another corruption scandal that took place between Education Department officials and businessmen, Senator Roberto Prats started that “This was an act in which private sector individuals were protagonists in a scheme to take from the government…”
Various foreign factories and investors have packed up their bags and departed from Puerto Rico within the last few years. Ranger Manufacturing, a laboratory uniform maker formerly owned by Eagle Work Clothes Inc., has recently decided to leave the island. Chevron Phillips Chemical Co. LP (CPChem) has also announced that it will be permanently shutting down two of its four manufacturing operations in Puerto Rico. Producing $400 million a year worth of industrial chemicals, including cyclohexane, which is used for making nylon, CPChem is laying off its workers even though the company has made $3.4 billion last year alone. Sera Lee, parent company of Hanes underwear and Playtex will be cutting thousands of jobs from five plants in Puerto Rico despite the fact that they pulled in about almost $18 billion in 2001.
With the recent merges and planned purchases of various domestic companies by foreign industries, such as formerly Puerto Rican-based Atlantic Southern Insurance Co. and super market chain Supermercados Amigos by stateside giant Wal-Mart, the private market is exceeding in extracting even more from our net domestic income. Currently about 90% of our generated net domestic income and about 60% of our purchasing power is suckled up into the U.S. economy. This number is expected to rise throughout the coming years – a fact that is underlined by the U.S. purchase of various Puerto Rican private and public assets.
To combat the ailments mentioned above, the Puerto Rican government is looking to attract more foreign investors to replace the ones that leave, and has put a halt to the privatization that was initiated by the previous administration. In my opinion just ceasing the process of privatization is not enough - I think we need to reverse this route and renationalize a number of Puerto Rican industries. I support the concept of direct government-sponsored investment, which worked so well for the early ELA days, and even the nationalization of industries which have never before been government controlled. In the middle of the 20th century when private and foreign investors were nowhere to be found, the Commonwealth government took the initiative to directly invest public funding and resources into a large number of public corporations and nationalized industries. According to the former assistant secretary of state for Latin America in the Kennedy administration, Professor Morales Carrión states “This modest postwar development program led Puerto Rico into the industrial era.”
The Puerto Rican government cannot go crazy nationalizing industry left and right, so a simple seven-point plan should be considered when choosing nationalizable industries:
Crucial industries that influence domestic security, stability, and public well-being. This includes various economically influential assets and in times of need or if required, sensitive industries necessary for public safety.
Natural resources
Property and assets of departing or downsizing investors and businesses
Businesses that break the law, attempt to influence local politics, and evade taxes or regulations.
Companies that would surrender further capital to foreign markets through merges or buy-outs.
Private industries that are on standstill or on the verge of bankruptcy or a shutdown that would result in a negative economic inpact
Industries that depend on or receive large sums of government money
Basically, this means that mostly large and foreign corporations would be the main targets of government nationalization, while lawful medium-sized foreign investors and domestic small and medium private markets in Puerto Rico would pretty much remain untouched. Large and foreign corporations could be acquired while the small and medium businesses could be deregulated, thus pleasing local businessmen and creating a harmonious existence between two economic models. Industries should be paid for and compensated and should not be subject to government purchase shall they not meet any of the seven previously mentioned conditions.
Do not think for a moment that the ownership and maintenance of these industries would in anyway put a hole in the pocket of the government’s budget. Many of these industries pull in huge profits each year thus providing the government surplus. Even industries that require investment, expansion, or bailouts could tap into the excess profits generated from other newly nationalized industries. A picture of how much revenue could be generated by these industries along with suggestions of a number of possible enterprises that could be nationalized follows:
(1) Crucial industries include water, electricity, and housing providers. Water and sewer treatment services, power plants, and other similar facilities could be nationalized. Many of these types of amenities tend to depend on huge government contracts (which also classifies these industries for nationalization under number seven of my suggested seven-point plan.) The suggested industries are crucial in the sense that any alteration or halting of their services due to whatever reason would result in horrific consequences. Placing them under public control would not only provide the needed security for their continuation of service, but would also allow them to operate more intoned to public, instead of private interests.
Insurance businesses, whether they deal in auto, health or home insurance should also fall under public control. Health insurance, a $4.5-5 billion-a-year industry, which falls under point seven of my suggested plan, is also a key candidate. We are all well aware of the “battles” against insurance providers carried out by family and friends who have been screwed over by companies that wish not to cough up claims. Insurance enterprises can function more “fairly” in public hands. The government, as the owner of the home insurance market would have the ability to kick-start a national program to acquire home and property insurance to counter our dependency on foreign disaster aids. This is only one of the many wonders that could occur if the insurance industries were nationalized.
“Economically influential assets” include various financial and banking industries. The Credit Card market (a $2 billion-a-year industry) along with banks (most of which are foreign owned) are only a few suggestions. The top 6 foreign banks’ Puerto Rican branches hold close to $35 billion (out of $55.7 billion including all foreign and domestic banks) of our domestic savings. With so much at stake, such financial institutions should come under the wing of public control. Flexing more voice in the domestic banking industry would assist greatly in the government’s overcoming of national economic speed bumps, credit lines available to citizens (which has been dropping), and the battle against inflation. One possible action that could be taken once banks are acquired would be to match the amount of interest one would receive with the rate of inflation, thus balancing out the two. One cannot do such things when banks are in private hands.
Other “emergency” industries include cargo transportation and food outlets (which pulls in about $5 billion yearly). These industries are very sensitive and their stability is crucial to maintain national security during times of crisis and disaster. If complete nationalization is rejected, then temporary nationalization or possibly price freezes could be enacted with similar, but not as effective results.
(2) Even though Puerto Rico lacks what many consider “national resources”, tourism, in my opinion, is the best resource that we have. A $4 billion industry, much of that money falls into the hands of hotels, car rental companies, cruise ship lines (a $300 million industry), and airlines – the majority of which are privately and foreign owned. What good does a multi-billion dollar industry do to Puerto Rico if most of that money will be funneled out and pumped back into the home countries of those tourists? It is in my opinion that if protectionist policies are not enacted to assist domestic hotels, car rental companies, and transportation lines, that they should be nationalized (or maybe a mix of both). Only then will Puerto Rico be able to tap into its own beauty.
Other national resources include the cement industry, sensitive national rain forests or crucial eco-systems, and in some cases agriculture. While agriculture tends to function better when in the hands of small groups of farmers, some industries require special upgrading, reform, or the implementation of new methods that modern farmers are not interested in carrying out. Some corporate or orthodox farms, known for causing erosion and massive soil loss, continues to carry out their current policies due to the fact that its farmers do not wish to change their methods. In such cases certain agricultural industries should be the focus of nationalization.
(3) Sara Lee’s local properties and production lines, arts and crafts chain store Michaels ($9.5 million in local revenues), CPChem’s abandoned manufacturing operations, Ranger Manufacturing’s plants, electric circuit board manufacturer Viasystems Technology Group, Intel, and voice and date communications producer Communications Systems Inc. are only a few of the many companies that have recently or are currently downsizing or leaving Puerto Rico.
The nationalization of these manufacturing industries and retail outlets could greatly benefit domestic business. Currently, many of these companies import many of their materials or products from foreign nations for less than what it would cost to buy them locally. Even though they would still be able to pull in profits by buying domestically, the private interest nature of these companies would rather maintain higher profits by importing cheap materials. Under public control, these new assets could be reformed from the inside to utilize more domestic and inter-government materials. Imagine the local and private Avant Technologies developing their computers with public Intel and Viasystems processors and circuit boards that were built using local materials from the private Plom Electric. Jobs would be saved, we would become less dependent on imported materials, and our economy would be strong and stable.
(4) The previously mentioned Global Management and Consultants, Inc., Milestone Communications, and Somos Todos are a few examples of law-breaking and politically influencial firms that deserve to be attained. Personally I do not feel that companies that fall under point four of the seven-point plan should not be compensated, for nationalization of these companies in itself is a form of social justice. Tax evaders, those who are not in compliance with regulations, and those who cannot meet regulations, are included in this act. You cannot place a business entity in jail and large corporations guilty of crimes usually pay for fines without strain. No longer should we see companies get away with misdeeds only to continue pulling in millions and billions of dollars a year.
(5) Previously I mentioned how the stateside buy-out of companies such as Supermercados Amigos ($15 million a year) and Atlantic Southern Insurance Co. and their impact on our economy. The Puerto Rican economy cannot continue handing itself over to stateside entities, especially before our final political status is not settled. Currently we might be committing ourselves to economic practices that cannot be taken back after a drastic status change. Putting so much of our assets (including crucial industries, I might add) in the hands of the U.S. economy is quite dangerous if our relationship with the U.S. would ever happen to be cut off.
Sunoco Inc. has recently finalized the sell of its Yabucoa refinery to Shell Chemical after it decided to shutter itself and downsize its workforce. Falling under both points three and five of my nationalization plan, the Yabucoa refinery, which produces gasoline, diesel, jet, and residual fuel, should be nationalized. Proposed mergers and buyouts should be studied by the Commonwealth of Puerto Rico, and should take the place of the buying party if such a merger would result in downgrading or negative impacts on the domestic economy.
(6) The Marin Bay Resort in Vieques is a beautiful vacation resort that has been sitting around for the last few months with nobody around to operate it. Supposedly, the private investors who constructed it do not have the resources to open it up. All of this was done in vain, especially since they borrowed $37 million for the project from our government’s Government Bank of Promotion (BGF) and the Tourism Development Fund (a subsidiary of the BGF). Hotels, factories, or any other properties that are lying around unused, should be acquisitioned by the government and put to use in the name of national economic development.
“Green Isle Partners Ltd. S.E., owner of the Ritz-Carlton Spa & Casino in Isla Verde, filed for protection under Chapter 11 of the U.S. bankruptcy code” reads a recent issue of The San Juan Star. To date, the people of Puerto Rico have picked up the tab for $11.4 million in bond payments on the hotel’s $85 million Afica bond issue.” Now please tell me, why are we attempting to attract foreign investors like Green Isle Partners if we are going to have to bail them out ourselves!? We spend public money through public corporations like PRIDCO to attract private business, only to have them file bankruptcy and force us to pick up the tab. It isn’t “investment”, it’s economic “rape”. Any such company, foreign or domestic, should not be subject to government bailouts, but government nationalization.
Due to their recent filing for bankruptcy, if K-mart decided to partake in some downsizing and layoffs of their own (point three), its local branches should also be purchased. Currently K-mart buys about $200 million a year worth of locally produced items. If K-mart were to withdrawal from Puerto Rico, this would have negative impacts on our local producers. Their withdrawal could be countered and much like mentioned previously, would have profound and positive influences on the domestic market and other government corporations. Picture Sara Lee’s newly nationalized production lines using nylon made by CPChem’s chemicals for sale in the government K-mart outlets.
(7) I have made numerous references to government agencies handing out contracts to various computer-related firms and services. Commonly the government will hire private networkers and computer technicians to maintain or upgrade computer systems in government offices, schools, or services. Personally I find this to be a waste of public resource; for example, if a contract for $1 million is awarded to a company for the upgrade of computer networks in a public office, about half of that will go towards paying for the actual job (wages, materials, labor, etc.) while the rest of that will be excess earnings and will probably be tapped into by a few key CEOs and company investors. This excess charge could be eliminated if firms of the sort were nationalized. The “middle men” and the real reapers of the fruits of public contracts would be eliminated. If the government needs a computer upgrade in one of its offices, it could save public funding and accomplish it directly.
Another industry – construction – is heavily dependent on government contracts ($1.3 billion a year) for infrastructure projects (and we know how Puerto Rico has many of those). There are commonly contract disputes, bidding processes that are not in compliance to laws and regulation, and alleged accounts of constructors using lower-grade building materials for roads. These are only a few reasons why the Commonwealth’s building projects take so long to complete. Usually, as the time is stretched out, so is the spending. With all of the money spent on so many construction projects throughout the years, the Puerto Rican government could have already bought out the construction industry a number of times over (and that’s exactly what they should do).
The best benefit that the nationalization of these industries is the amount of money that it would put into the public government’s pocket. These funds should not be wasted on lame government welfare and development programs, but should be used to decrease our dependency on U.S. aid programs. Even though I do not support the PAN federal nutritional assistance program, it could be domestically funded by the nationalization of the Credit Card industry. Tax cuts could also be implemented, since just the complete nationalization of the nation’s health insurance market, the cruise ship industry, and a few idle and foreign hotels could wipe out the need for domestic tax collection (which pulls in a little more than $6 billion a year). Funding to finish off the Tren Urbano and the countless other construction projects that are on stand still would be instantly available, and the dependency on U.S. federal programs could be totally eliminated.
Many people claim that it is impossible for Puerto Rico to maintain its quality of life without federal funding. I disagree, for it is clearly visible that with the nationalization of a few key industries could improve our quality of life.
by Luis Orlando Gallardo Rivera
nutslapper.com (http://nosupport1.giantwebspace.com/~reddpr/)
January 25, 2002
http://nosupport1.giantwebspace.com/~reddpr/articles/nationalization_in_puerto_rico.gif
Puerto Rico’s last administration stepped into office with a fresh new plan to privatize dozens of government agencies and services in a move that further intertwined our economy into that of the United States and dismantled Puerto Rico’s age-old quasi-socialist public corporations. Since privatization, the Puerto Rican Telephone Company (PRT) has over-charged many of its customers, sucked a few million from our economy with their area-code implementation program, neglected low-populated rural areas, and have started charging for services what were once free. Voters quickly got tired of these privatization tactics and have elected in a new administration that put a stop to this process. Private companies will have their hands off of the public’s assets – or at least for now.
Failures of privatization are not only limited to the PRT, but just about every other field that was touched by the hands of the private market. Privatized pineapple farms quickly fell apart when handed over to the powers of the free market – greatly decreasing the performance quality of the industry. Industries and assets that were privatized were sold for way under market value. One example of this was when former PNP Senator Luis Felipe Navas de León authored a resolution that contained numerous “falsehoods” that led to the selling of some public land in Caguas for much less than its appraised value. We all saw how privatized hospitals fell into the hands of the public investor friends of the politicians who authorized their sales. Former minority leader of the House, Edison Misla Aldarondo, allegedly was paid a large sum from some personal friends who purchased a government hospital in Arecibo, and is currently awaiting trail on federal charges.
This is not the first time that Puerto Rico has been screwed over by the private market. Large businesses have always contributed heavily to Puerto Rican political parties and commonly pay off politicians to sign away public contracts for private services. A computer company, Global Management and Consultants, Inc., for example, has recently faced federal charges in relations to a $1.9 million public contract. The owner, Angel Luis Ocasio Ramos paid former Retirement Systems Administrator Andrés Barbeito $50,000 for his influence in awarding a contract. In another more recent case, Milestone Communications, a publicity agency and contributor to the PPD, has been receiving large public contracts from the current administration in an alleged move to “benefit political friends.” Hormigueros Mayor Francisco Javier Rivera Toro purportedly received a $100,000 payment from Somos Todos, a business owned by a friend of his, in exchange for a $3.6 million municipal contract. In response to another corruption scandal that took place between Education Department officials and businessmen, Senator Roberto Prats started that “This was an act in which private sector individuals were protagonists in a scheme to take from the government…”
Various foreign factories and investors have packed up their bags and departed from Puerto Rico within the last few years. Ranger Manufacturing, a laboratory uniform maker formerly owned by Eagle Work Clothes Inc., has recently decided to leave the island. Chevron Phillips Chemical Co. LP (CPChem) has also announced that it will be permanently shutting down two of its four manufacturing operations in Puerto Rico. Producing $400 million a year worth of industrial chemicals, including cyclohexane, which is used for making nylon, CPChem is laying off its workers even though the company has made $3.4 billion last year alone. Sera Lee, parent company of Hanes underwear and Playtex will be cutting thousands of jobs from five plants in Puerto Rico despite the fact that they pulled in about almost $18 billion in 2001.
With the recent merges and planned purchases of various domestic companies by foreign industries, such as formerly Puerto Rican-based Atlantic Southern Insurance Co. and super market chain Supermercados Amigos by stateside giant Wal-Mart, the private market is exceeding in extracting even more from our net domestic income. Currently about 90% of our generated net domestic income and about 60% of our purchasing power is suckled up into the U.S. economy. This number is expected to rise throughout the coming years – a fact that is underlined by the U.S. purchase of various Puerto Rican private and public assets.
To combat the ailments mentioned above, the Puerto Rican government is looking to attract more foreign investors to replace the ones that leave, and has put a halt to the privatization that was initiated by the previous administration. In my opinion just ceasing the process of privatization is not enough - I think we need to reverse this route and renationalize a number of Puerto Rican industries. I support the concept of direct government-sponsored investment, which worked so well for the early ELA days, and even the nationalization of industries which have never before been government controlled. In the middle of the 20th century when private and foreign investors were nowhere to be found, the Commonwealth government took the initiative to directly invest public funding and resources into a large number of public corporations and nationalized industries. According to the former assistant secretary of state for Latin America in the Kennedy administration, Professor Morales Carrión states “This modest postwar development program led Puerto Rico into the industrial era.”
The Puerto Rican government cannot go crazy nationalizing industry left and right, so a simple seven-point plan should be considered when choosing nationalizable industries:
Crucial industries that influence domestic security, stability, and public well-being. This includes various economically influential assets and in times of need or if required, sensitive industries necessary for public safety.
Natural resources
Property and assets of departing or downsizing investors and businesses
Businesses that break the law, attempt to influence local politics, and evade taxes or regulations.
Companies that would surrender further capital to foreign markets through merges or buy-outs.
Private industries that are on standstill or on the verge of bankruptcy or a shutdown that would result in a negative economic inpact
Industries that depend on or receive large sums of government money
Basically, this means that mostly large and foreign corporations would be the main targets of government nationalization, while lawful medium-sized foreign investors and domestic small and medium private markets in Puerto Rico would pretty much remain untouched. Large and foreign corporations could be acquired while the small and medium businesses could be deregulated, thus pleasing local businessmen and creating a harmonious existence between two economic models. Industries should be paid for and compensated and should not be subject to government purchase shall they not meet any of the seven previously mentioned conditions.
Do not think for a moment that the ownership and maintenance of these industries would in anyway put a hole in the pocket of the government’s budget. Many of these industries pull in huge profits each year thus providing the government surplus. Even industries that require investment, expansion, or bailouts could tap into the excess profits generated from other newly nationalized industries. A picture of how much revenue could be generated by these industries along with suggestions of a number of possible enterprises that could be nationalized follows:
(1) Crucial industries include water, electricity, and housing providers. Water and sewer treatment services, power plants, and other similar facilities could be nationalized. Many of these types of amenities tend to depend on huge government contracts (which also classifies these industries for nationalization under number seven of my suggested seven-point plan.) The suggested industries are crucial in the sense that any alteration or halting of their services due to whatever reason would result in horrific consequences. Placing them under public control would not only provide the needed security for their continuation of service, but would also allow them to operate more intoned to public, instead of private interests.
Insurance businesses, whether they deal in auto, health or home insurance should also fall under public control. Health insurance, a $4.5-5 billion-a-year industry, which falls under point seven of my suggested plan, is also a key candidate. We are all well aware of the “battles” against insurance providers carried out by family and friends who have been screwed over by companies that wish not to cough up claims. Insurance enterprises can function more “fairly” in public hands. The government, as the owner of the home insurance market would have the ability to kick-start a national program to acquire home and property insurance to counter our dependency on foreign disaster aids. This is only one of the many wonders that could occur if the insurance industries were nationalized.
“Economically influential assets” include various financial and banking industries. The Credit Card market (a $2 billion-a-year industry) along with banks (most of which are foreign owned) are only a few suggestions. The top 6 foreign banks’ Puerto Rican branches hold close to $35 billion (out of $55.7 billion including all foreign and domestic banks) of our domestic savings. With so much at stake, such financial institutions should come under the wing of public control. Flexing more voice in the domestic banking industry would assist greatly in the government’s overcoming of national economic speed bumps, credit lines available to citizens (which has been dropping), and the battle against inflation. One possible action that could be taken once banks are acquired would be to match the amount of interest one would receive with the rate of inflation, thus balancing out the two. One cannot do such things when banks are in private hands.
Other “emergency” industries include cargo transportation and food outlets (which pulls in about $5 billion yearly). These industries are very sensitive and their stability is crucial to maintain national security during times of crisis and disaster. If complete nationalization is rejected, then temporary nationalization or possibly price freezes could be enacted with similar, but not as effective results.
(2) Even though Puerto Rico lacks what many consider “national resources”, tourism, in my opinion, is the best resource that we have. A $4 billion industry, much of that money falls into the hands of hotels, car rental companies, cruise ship lines (a $300 million industry), and airlines – the majority of which are privately and foreign owned. What good does a multi-billion dollar industry do to Puerto Rico if most of that money will be funneled out and pumped back into the home countries of those tourists? It is in my opinion that if protectionist policies are not enacted to assist domestic hotels, car rental companies, and transportation lines, that they should be nationalized (or maybe a mix of both). Only then will Puerto Rico be able to tap into its own beauty.
Other national resources include the cement industry, sensitive national rain forests or crucial eco-systems, and in some cases agriculture. While agriculture tends to function better when in the hands of small groups of farmers, some industries require special upgrading, reform, or the implementation of new methods that modern farmers are not interested in carrying out. Some corporate or orthodox farms, known for causing erosion and massive soil loss, continues to carry out their current policies due to the fact that its farmers do not wish to change their methods. In such cases certain agricultural industries should be the focus of nationalization.
(3) Sara Lee’s local properties and production lines, arts and crafts chain store Michaels ($9.5 million in local revenues), CPChem’s abandoned manufacturing operations, Ranger Manufacturing’s plants, electric circuit board manufacturer Viasystems Technology Group, Intel, and voice and date communications producer Communications Systems Inc. are only a few of the many companies that have recently or are currently downsizing or leaving Puerto Rico.
The nationalization of these manufacturing industries and retail outlets could greatly benefit domestic business. Currently, many of these companies import many of their materials or products from foreign nations for less than what it would cost to buy them locally. Even though they would still be able to pull in profits by buying domestically, the private interest nature of these companies would rather maintain higher profits by importing cheap materials. Under public control, these new assets could be reformed from the inside to utilize more domestic and inter-government materials. Imagine the local and private Avant Technologies developing their computers with public Intel and Viasystems processors and circuit boards that were built using local materials from the private Plom Electric. Jobs would be saved, we would become less dependent on imported materials, and our economy would be strong and stable.
(4) The previously mentioned Global Management and Consultants, Inc., Milestone Communications, and Somos Todos are a few examples of law-breaking and politically influencial firms that deserve to be attained. Personally I do not feel that companies that fall under point four of the seven-point plan should not be compensated, for nationalization of these companies in itself is a form of social justice. Tax evaders, those who are not in compliance with regulations, and those who cannot meet regulations, are included in this act. You cannot place a business entity in jail and large corporations guilty of crimes usually pay for fines without strain. No longer should we see companies get away with misdeeds only to continue pulling in millions and billions of dollars a year.
(5) Previously I mentioned how the stateside buy-out of companies such as Supermercados Amigos ($15 million a year) and Atlantic Southern Insurance Co. and their impact on our economy. The Puerto Rican economy cannot continue handing itself over to stateside entities, especially before our final political status is not settled. Currently we might be committing ourselves to economic practices that cannot be taken back after a drastic status change. Putting so much of our assets (including crucial industries, I might add) in the hands of the U.S. economy is quite dangerous if our relationship with the U.S. would ever happen to be cut off.
Sunoco Inc. has recently finalized the sell of its Yabucoa refinery to Shell Chemical after it decided to shutter itself and downsize its workforce. Falling under both points three and five of my nationalization plan, the Yabucoa refinery, which produces gasoline, diesel, jet, and residual fuel, should be nationalized. Proposed mergers and buyouts should be studied by the Commonwealth of Puerto Rico, and should take the place of the buying party if such a merger would result in downgrading or negative impacts on the domestic economy.
(6) The Marin Bay Resort in Vieques is a beautiful vacation resort that has been sitting around for the last few months with nobody around to operate it. Supposedly, the private investors who constructed it do not have the resources to open it up. All of this was done in vain, especially since they borrowed $37 million for the project from our government’s Government Bank of Promotion (BGF) and the Tourism Development Fund (a subsidiary of the BGF). Hotels, factories, or any other properties that are lying around unused, should be acquisitioned by the government and put to use in the name of national economic development.
“Green Isle Partners Ltd. S.E., owner of the Ritz-Carlton Spa & Casino in Isla Verde, filed for protection under Chapter 11 of the U.S. bankruptcy code” reads a recent issue of The San Juan Star. To date, the people of Puerto Rico have picked up the tab for $11.4 million in bond payments on the hotel’s $85 million Afica bond issue.” Now please tell me, why are we attempting to attract foreign investors like Green Isle Partners if we are going to have to bail them out ourselves!? We spend public money through public corporations like PRIDCO to attract private business, only to have them file bankruptcy and force us to pick up the tab. It isn’t “investment”, it’s economic “rape”. Any such company, foreign or domestic, should not be subject to government bailouts, but government nationalization.
Due to their recent filing for bankruptcy, if K-mart decided to partake in some downsizing and layoffs of their own (point three), its local branches should also be purchased. Currently K-mart buys about $200 million a year worth of locally produced items. If K-mart were to withdrawal from Puerto Rico, this would have negative impacts on our local producers. Their withdrawal could be countered and much like mentioned previously, would have profound and positive influences on the domestic market and other government corporations. Picture Sara Lee’s newly nationalized production lines using nylon made by CPChem’s chemicals for sale in the government K-mart outlets.
(7) I have made numerous references to government agencies handing out contracts to various computer-related firms and services. Commonly the government will hire private networkers and computer technicians to maintain or upgrade computer systems in government offices, schools, or services. Personally I find this to be a waste of public resource; for example, if a contract for $1 million is awarded to a company for the upgrade of computer networks in a public office, about half of that will go towards paying for the actual job (wages, materials, labor, etc.) while the rest of that will be excess earnings and will probably be tapped into by a few key CEOs and company investors. This excess charge could be eliminated if firms of the sort were nationalized. The “middle men” and the real reapers of the fruits of public contracts would be eliminated. If the government needs a computer upgrade in one of its offices, it could save public funding and accomplish it directly.
Another industry – construction – is heavily dependent on government contracts ($1.3 billion a year) for infrastructure projects (and we know how Puerto Rico has many of those). There are commonly contract disputes, bidding processes that are not in compliance to laws and regulation, and alleged accounts of constructors using lower-grade building materials for roads. These are only a few reasons why the Commonwealth’s building projects take so long to complete. Usually, as the time is stretched out, so is the spending. With all of the money spent on so many construction projects throughout the years, the Puerto Rican government could have already bought out the construction industry a number of times over (and that’s exactly what they should do).
The best benefit that the nationalization of these industries is the amount of money that it would put into the public government’s pocket. These funds should not be wasted on lame government welfare and development programs, but should be used to decrease our dependency on U.S. aid programs. Even though I do not support the PAN federal nutritional assistance program, it could be domestically funded by the nationalization of the Credit Card industry. Tax cuts could also be implemented, since just the complete nationalization of the nation’s health insurance market, the cruise ship industry, and a few idle and foreign hotels could wipe out the need for domestic tax collection (which pulls in a little more than $6 billion a year). Funding to finish off the Tren Urbano and the countless other construction projects that are on stand still would be instantly available, and the dependency on U.S. federal programs could be totally eliminated.
Many people claim that it is impossible for Puerto Rico to maintain its quality of life without federal funding. I disagree, for it is clearly visible that with the nationalization of a few key industries could improve our quality of life.