by Milton Rosado
The governor of Puerto Rico, Luis Fortuño, recently gave an example of what not to do when dealing with an economic crisis. In a move that mimics the neoliberal playbook of many Latin American countries dealing with economic crises, the governor recently adopted Public Law 7- his economic recovery plan for the island. But analyzing the proposals of this law, it is clear that in reality it is going to hurt the most vulnerable people of Puerto Rico and will not stimulate the recovery of the economy.
Public Law 7 follows the same austerity formula that other Latin American countries have followed, and some of the consequences are all too clear: It will increase the already high unemployment rate on the island as a result of laying off of thousands of public sector workers; It will weaken the role of unions since it suspends collective bargaining for contracts in the public sector and affects labor rights; It worsens the current economic crisis since it reduces the productivity of the public sector in a time when there is an increased need for public services; It pushes for more privatization and deregulation; Additionally, it has the potential to be unconstitutional since it violates the statute which prohibits the passage of laws that impair contracts.
The austere neoliberal formula does not work. Three decades of experimenting in Latin America and following these development guidelines suggested by the International Monetary Fund and the World Bank have had very clear results: poverty has continued or increased, the concentration of wealth has seen a drastic increase, public investment has decreased significantly, everything was privatized (creating private monopolies in many instances), and immigration has increased considerably.
The appropriate use of stimulus package (ARRA) funds to stimulate and stabilize the economy are critical, but Public Law 7, on the other hand, contradicts the goal of stabilization and recovery of the economy since it does not provide a vision for growth and shared prosperity. The central purpose of the stimulus package is the protection and creation of jobs, but the clearest contradiction of Public Law 7 to such plans is the fact that it eliminates approximately 30,000 family-wage public sector jobs.
A truly democratic society requires the ability to restore an adequate balance when the disproportional accumulation of power opens doors to excess. Unions have the capacity to restore this fair and healthy balance in the workplace and in society. Public Law 7, however, removes the ability of workers to bargaining for collective contracts, which translates into a direct attack against working families.
An economy built on a foundation of inequality will never succeed. A solid middle class is what defines developed nations and societies. Puerto Rico has two options to overcoming the economic crisis: one is to (mimic or implement) the broken neoliberal policies that many Latin American countries have followed to confront economic crises and clearly have not worked. The other is to follow common sense formulas that are used by developed countries and consist of a greater public investment and spending to encourage the creation of jobs and stimulate the economy. Unfortunately for the working class of Puerto Rico, Public Law 7 represents the opposite of this common sense formula. Hispanic Link.
(Milton Rosado is the National President of the Labor Council for Latin American Advancement)
