DONDEQUIERA

Banco Popular still in decline

2009-06-10T07:46:00.004-04:30

In many ways, Banco Popular is the perfect poster child for these dying capitalistic/socialistic/greed run amuck/corporations that perpetuate themselves at the expense of everything else. Yesterday, Moody's downgraded ratings of Banco Popular de Puerto Rico and its parent, Popular Inc., a day after the company suspended preferred dividends and announced an exchange offer to raise common equity. Amidst this turmoil, shares of Popular dropped Tuesday afternoon, falling 19 cents, or 7.4 percent, to $2.36.

Shares of BPOP were at $7.54 when I asked Why is Dick Carrion still CEO and President?. Now, nine months later, the stock is down another 68.7%. With their bonds quickly dropping towards junk and their stock bearing down on delisting, I ask again, why is Dick Carrion still CEO and President of Banco Popular Maybe it is more accurate to ask, why hasn't the Board of Directors of BPOP demanded his resignation?

The void

Here's what most of us don't get. What, we of the middle and lower classes, are witnessing is an elitist band of "good o'le boys" that are willing to do anything to sustain their luxurious lifestyles. While the line staff at their companies are laid off and increasingly asked to pay for their own health care and retirements, the golden parachutes are rapidly deploying around them. In addition, the true owners of these companies, have witnessed the elimination of such vast amounts of wealth, that they are literally speechless.

What I was told as a small boy was that when you screwed things up, you got punished. I was also admonished to take good care of my reputation, because it would follow me and impact my future. Now as an adult I witness the exact opposite. According to 2008 figures, here is the compensation for 4 executives from Banco Popular:

Richard Carrion - $1,395,622
David Chafey - $2,162,303
Brunilda De Alvarez - $747,925
Jorge Junquera - $801,232.

My worry from this situation comes from trying to teach my children well. What lessons do I use? What guidelines can I give them? Some have exploded over the possibility of President Obama getting involved in executive pay. I say, for the sake of our country, for the sake of capitalism, someone should. We've allowed a corrupt system to become cemented into common practice where executives are paid independently from their performance. This MUST stop! Executive pay must become predominantly based on merit. For executives of public companies, this means the price of their companies stock. Stock goes up, executives party. Stock goes down 70%, executives sell the yacht and the second beach house at Palmas. Seems fair to me.

The sales confusion paradigm

2009-05-13T11:46:00.007-04:30

Consulting recently with a client has revealed to me, yet another obstacle explaining why Puerto Rico is unable to use information technology strategically. The scenario is simple.

Imagine a person in charge of information technology for a small to medium sized business. The business is growing and now needs to improve their information technology capability. The company already has several companies they use or have used in the past to meet their IT needs. With a general understanding of what is needed, the IT person calls his sources and asks for help, or more simply, a proposal to meet the new need. The IT provider gladly receives the new lead and generates a proposal that will solve the company's problem.

Now here's where the situation gets complex and confusing. The IT person doesn't really have decision authority, he (and it is predominantly a he) can only recommend a solution. The owner of the company is where the buck stops, he (and it is predominantly a he) asks the IT guy to get some competitive proposals. So the IT guy diligently gets the proposals, but in all honesty, doesn't really understand the solutions being proposed. When the owner asks for a recommendation, the only advice he can give is to go with the sales pitch that seems to make most sense.

Honesty disclaimer

Now for purposes of simplicity, I want you to assume that all of the proposals are on the up and up. Let's not be naive and accept that sometimes a decision is made based on the kickback offered to the IT guy. However, that is not the case in this scenario, or at least I hope not.

Enter the sales confusion paradigm

Enter a third party. Unsatisfied with the IT guy's explanation of the needs, proposals, and justifications, the owner asks a friend to evaluate the situation and help him make a decision. Don Dees to the rescue!

After struggling through the proposals and sitting through a few meetings. It finally dawns on our hero that what he's stepped into the middle of, is a case sales confusion. On one side of this nasty equation is a sales team that wants to sell as much as possible. If we examine, only briefly, it is easy to understand their motivation. They are compensated (motivated) by sales. The more they sell, the more they make.

On the other side of the equation we have the unprepared IT guy. He's a good guy who understands enough to solve his company's IT needs, but really doesn't understand WHY the solutions he owns work their magic. Of course he can't really admit to his boss that he doesn't REALLY dominate the situation. On the other hand, if he claims ignorance to the sales team, it's like giving them a blank check and asking them to "do what's best" for his company. Yes, I'm implying that sales people do not always operate in the best interest of their client's pocketbook.

The problem

It's really an unfair battle when you pit a well informed and motivated sales team against an adequate, but ill-prepared IT guy. Hopefully the solution being proposed is actually going to solve the company's problem, but let's just say that sometimes all a client really needs is an aspirin to get rid of a headache and the sales team is pushing Morphine. If the solution requires software development or implementation, then let's also hope that the IT provider actually has the talent necessary to complete the job. Unfortunately for us, those hopes were ripped apart in a long history of unsuccessful IT-related projects.

A battlefield of Roman proportion

I'm ashamed to admit it, but the IT landscape in Puerto Rico is filled with the dead and rotting carcasses of the sales confusion paradigm. Over the last twenty years, unsuspecting IT Guys have been asking their "trusted" IT providers for help. What has been the result? Instead of these two parties developing a mutually beneficial, long term relationship based upon trust, the IT providers have been throwing their clients to the lions. Surrounded by an environment where truth, honesty, and a criminal mentality, our IT industry is composed of predators and victims.

Now consider for a moment when a small company doesn't even have an IT guy. Imagine what happens when a predatory IT provider is pitted against the technology guy in the office who seems to know the most about computers. Unfortunately, it is like trying to fight a hungry lion with your hands and feet.

By the way, do you think we live in violent times? Now imagine people paying to watch the unwitting IT Guys being devoured by IT provider lions! Getch'yer peanuts and beer folks, it looks like we're up for an exciting afternoon of torture and suffering.

Flickr Creative Commons Contributor: David Paul Ohmer

Why we care so much about the economy

2009-05-07T16:36:00.007-04:30

You probably already know this, but there is a reason why the economy has been such an overwhelming news story. It might seem obvious to some, but it wasn't for me. So maybe there are some other lost souls out there who haven't yet connected the dots.

The economic downturn has been such a long standing news topic because money is what most people care about most. No, really I mean it. Stop laughing in my face, I think I'm on to something here.

I can hear what you're saying, no shit Sherlock, the economy is such a big news topic because it impacts so many people, right? Everybody has a family to feed and take care of, am I right? It's inescapable, Money impacts nearly every aspect of our life, so of course when it gets harder to come by, well that's important.

Still, I think there's something more subtle going on here. We as a society say many things are important to us, the environment, education, our families, equality, liberty, freedom, yada, yada, yada. But if these things are important, and if they are failing us, or if those ideals are under attack, or eroding away, wouldn't those topics be in the news more?

Let's take education as an example. I submit that, like money, education touches us all as well. We're fortunate enough to live in a place where, if we want an education, it is available to us. It's difficult to believe, but there ARE places were that opportunity does not exist. Therefore, let's assume that we've either attended school or our children are attending school now. Now let's assume that the quality of our educational system is bad and that it has been for a very long time. Then why don't we constantly see news about education? We have a long-standing crisis with our educational system, but we rarely hear about it, talk about, or do anything about it. Why is that?

If we examine our society, we will find system after system is in a state of crisis. Many of these crises are in the very areas we say are important to us, but our leaders, our politicians, nor our media want to talk about it. Are the problems just too complex? Are the solutions so few? Or is the problem that money, the pursuit of money, the love of money, mass consumerism, and a hyper-materialistic drive have all silently snuck-in and replaced everything else we say we care about?

I've come to believe in one common trait in all human beings. What we say and what we do are usually two different things. So if you want to know what is important to someone, examine what they do, not what they say. It should be obvious then, that since we are doing a lot of different things to try and stimulate the economy, then we must think that money is important. So it must follow that if we're not doing much to improve education, eliminate our dependence on foreign oil, reduce solid waste, safe guard our freedoms, yada, yada, yada, then they must not be as important as money.

Why Puerto RIco is a Socialist State

2009-04-30T21:55:00.003-04:30

Today marks a historic moment. Today, May 1st, with the multiple work stoppages, boycotts, and demonstrations against the Governor's plans to lay-off 30,000 government employees, we are officially declaring Puerto Rico to be Socialist state.

Why else would so many same people reject reducing a government that is so large it's size is only dwarfed by that of California. Now let's consider this for a moment. California is estimated to have 36,756,666 residents. According to a recent article in the Dia, they have 394,000 government employees, or about 1.07% of all citizens. Puerto Rico on the other hand has an estimated population of 3,927,776 and has 300,000 government employees, or about 7.6%. What about other states?

Texas = 282,000/23,904,380 or 1.17%
New York = 249,000/19,297,729 or 1.29%
Florida = 191,000/18,251,243 or 1.04%.

See a trend here? In the four largest states, the government's size as a percentage of population is around 1% (about an average of 1.26%). So if we reverse that, then Puerto Rico's government should be around 50,000. 50,000 people, 50,000. And yet, all of the government worker's unions and probably a significant portion of the population of Puerto Rico would deny that our government is grossly too big.

Disclaimer: I am not immune to the hardship caused by eliminating government jobs, but the fact of the matter is that if we do not DRASTICALLY REDUCE the size of our government, no amount of stimulus spending or economic development can ever rescue us from a catacylismic destruction of wealth in Puerto Rico.

Socialism Defined

Socialism is simply defined as a society where the government owns more than just manpower (the 300,000 workers). Staying with that simple definition here are the reasons why Puerto Rico is a Socialist society:

The government is the biggest employer (by far)
They own the water and sewer company
They own the power company
And they still own 10% of the telephone company.

I submit, as I have done in the past, that the reason our government is so big is that previous "economic development" advisers made the case that there were simply not enough jobs to keep up with the population explosion Puerto Rico was experiencing. Their solution was to rapidly expand the government to absorb the excess employees and keep the economy growing. Propped up upon a generous influx of greenbacks from Tio Sam and a huge cash-based economy, prosperity reigned.

Who's in the bubble now?

It is estimated that only about 29% of all eligible workers file a planilla. In general numbers, 4 million residents equals about 2 million eligible workers, equals about 580,000 planillas. If 300,000 are from the government employees themselves, then really you have a mere 280,000 workers funding the government. Of course we need to add in business tax income and the IVU.

With a contraction of the global economy on the heels of the elimination of generous tax benefits, bona-fide businesses and jobs are disappearing from Puerto Rico at such an alarming and consistent rate that our economy is in chaos. In the past three years alone it is estimated that the tax collections have missed their target by more than $2.7 billion, with another 800 million (it'll be more) deficit expected for 2009.

And yet, I've not heard any journalist, nor any politician, come forward and state the grotesque truth. We are socialists and are incapable of facing the "facts" that our government is 6 times the size it should be.

Let's say that anyone who doesn't recognize this is John Travolta. They should be VERY AFRAID that their bubble is about to burst. Someone with authority needs to step forward and lay out the facts. No matter how disgusting, nor matter the wailing and gnashing of teeth, if we don't dramatically reduce our government, the credit agencies will eventually downgrade our government bonds to junk, and then the proverbial fecal matter will really hit the fan.

Really? Miss USA? Really?

2009-04-25T15:32:00.006-04:30

Really folks, this is starting to go WAY beyond schizophrenic. Really, really? In a recent announcement, Art McMaster, President and CEO of the Miss America Organization, announced that, for the first time since 1961, Puerto Rico will participate in the Miss America beauty pageant.

Ok, so let me get this straight, and try to stay with me. Even though we already participate in the Miss Universe pageant as Puerto Rico, we are now going to also participate in the Miss America pageant as the Commonwealth of Puerto Rico. Don't we also select a Miss Puerto Rico Mundo beauty queen as well?

Still with me? While the Miss Universe contestant is selected by the Miss Universe Puerto Rico beauty pageant, I'm guessing that we'll have ANOTHER pageant for Miss Puerto Rico. Ok, so now there will be the possibility that Miss Puerto Rico will win Miss America and compete against Miss Puerto Rico Universe for the title of Miss Universe.

According to the press release,

Similar to the states, District of Columbia and the U.S. Virgin Islands, the Miss Puerto Rico Scholarship Program will provide scholarship awards to program participants and will hold an annual competition, the winner of which will proceed to the national competition as Miss Puerto Rico. The Miss Puerto Rico Competition will be held in Caguas, Puerto Rico with the winner being crowned on Saturday night, July 18 by Miss America 2009 Katie Stam.

Yes, I know. If you ask anyone who knows me, that I've always said that we need to find a way to capitalize on our most valuable natural resource, our beautiful women, but, I BELIEVE that this goes just a little bit too far.

While we say that one of the reasons we want our independence is to have our own candidate for Miss Universe, we now want to represent the country that most of us want to separate from (and some even despise). Is there no limit to how low we'll stoop for fame or money?

Flickr Creative Commons Contributor: cattias.photos

Criminal definition = our demise

2009-04-23T19:28:00.005-04:30

I've ranted on this before, but it's always worth the time to provide concrete examples to justify my opinions. Briefly, a criminal is anyone guilty of a crime. It's a pretty simple definiti9on which probably lumps nearly everyone together. We're all criminals, some get caught, some don't, some get punished, some don't.

But for most of us, if we commit a crime or whether we get punished it's really not really news. I contend, that it does make a difference, if we do or don't, but I'm getting ahead of my story.

Now let's imagine that you are a highly recognizable public figure. If you commit a crime and get punished, well, it's just what we would expect. That's news. So knowing that you are a public figure, it should be pretty clear. If you step out of line, you'll see your indiscretions plastered all over the news. Should that impact your behavior? Apparently not.

Recently the President of the Popular Democratic Party, Héctor Ferrer, was caught illegally using the emergency lane, for which he was fined $250. When asked about the infraction, Ferrer commented, "Me dieron un boleto y se acabó." Loosely translated, he said, "Hey I broke the law. I'm a criminal, and so what?"

Well I'll tell you so what. Right or wrong, like it or not, when you are one of the leading political figures on the island and you express absolutely no remorse for committing a crime, it speaks volumes about you and the society that you live in. What is says, is that breaking the law is something to be taken lightly.

What that says about our culture is that we live within a criminal state. Crime is diminished and accepted, until someone innocent gets hurt. Then we ask, "How could two cars of fugitives have a shoot-out on one of the busiest streets in all of Puerto Rico?" Answer: It's easy! When the lines between what is accepted behavior and what is unacceptable are blurred by commoners up through leading publicly elected officials, it becomes increasingly difficult for some to tell the difference.

Just to clarify, this isn't about morality and right or wrong. This is about consciously and unconsciously making decisions that shape our society, our future, and, from my perspective, our demise.

Flickr Creative Commons Contributor: JustUptown

Step 1: Generating Puerto Rico Internet Marketing

2009-04-02T08:37:00.007-04:30

It should be no surprise after my last post, but until local marketing professionals "get-it," they will never be able to really reap the full potential of the Internet for communicating with consumers. Did you notice that I used "with" instead of "to?"

I'm not here to try and convince anyone that the Internet is the be all, to end all, of marketing media options. It isn't. However, it MUST be an integral, if not dominant piece of any marketing campaign.

So even though we all talk about how wonderful the Internet is and we expound upon it's wonders, advertising on the Internet in Puerto Rico still remains nearly non-existent. Why is that?

A simple root cause

I think it essentially starts with simple misunderstanding. From my experience, you don't trust what you don't understand. Simply, advertisers and marketers don't use the Internet more because they don't really understand how it works. They also don't understand how master marketers use the Internet successfully.

Why do I think this is the root cause? Three reasons:

Probably most importantly, in general, most companies (executives) don't believe that technology is a strategic asset. Frankly, how is a marketer going to understand the Internet, when most of them think that computers are magical? Again, same root cause, you don't trust (technology) what you don't understand.

There is a related observation that may also contribute to this. In general, most local executives will throw manpower at a problem long before they will use technology. I'd say this proves my fundamental theory. Executives understand people, and while wages have been rising in Puerto Rico over the past 20 years, it is still probably "cheaper" to throw low cost workers at a problem then any other possible solution.
As I recently mentioned, due to a zero-sum mentality, most Puerto Rican Internet users resist participating on the Internet. So, it is an easy extrapolation to conclude, if marketing professionals don't participate on the Web, then they won't include it within their campaigns. Go with what you know, right? Nevermind that few consistently "measure" the effectiveness of advertising, if my competitor is advertising in the Dia, so will I.
Finally, most people don't like to admit they don't understand something. It makes them feel like they look bad. So many executives will uh-hum, and yes their way through a presentation and never ask a question that might actually expose themselves as not understanding what is being said.When smart people resist asking questions to save face, it is really bad for business.

The cure?

I'm afraid that there is not a magic bullet to kill these three contributing reasons why Internet advertising hasn't exploded in Puerto Rico. However, eliminating the lack of technology use in companies and having viability and profitability over-power an executive's self-perception, are out of my league. There are just too many hidden cultural barriers to expect rapid (any?) change in these trends.

The bottom line about Internet marketing is obvious. In order to understand the Internet and Web 2.0, you HAVE TO PARTICIPATE. There is just no other way for someone to learn this stuff except from first hand experience.

If your company is struggling with marketing on the Internet, fire all of your senior executives and replace them with teenagers. No, okay then, all of your senior executives must spend a lot of time online to experience the Internets for themselves. (It might also help if they changed their frame of reference and approached it like a young child, you know curious, inquisitive, innocent; then they might make some progress.) Only then will they understand that it is just not a bunch of tubes that you shove stuff through.

Luckily, Mark Redgrave has written a great article ("Marketers Need To Understand Discussion Before Joining It") explaining how to get started. A couple of real kickers in the article include:

...engage the user with highly relevant, targeted advertising...
Understanding [that] the conversation is not about identifying keywords...

Bonus: If you understand what this excerpt is really saying, then you know where advertising on the Internet will evolve:
"If someone is talking enthusiastically about going skiing in Utah in March, they will react positively to skiing advertising and specific ski travel offers that fit their timing. If, however, they are talking about how they hate the cold weather and just don't understand why their friends spend money on skiing and winter holidays, those same skiing ads will have the opposite effect. This creates an experience that is bad for the user and bad for the advertiser. That's why the technology used to understand the conversation and to serve the ad must be sophisticated enough to understand the nuance in language. Just latching onto the keyword "skiing" is not sufficient. This is why current efforts are falling short."

Flickr Creative Commons Contributor: DucDigital

Web 2.0 meets Puerto Rico

2009-03-20T12:00:00.005-04:30

A friend of Dondequiera asked recently how the Internet could emerge as a valid marketing channel. My immediate reaction was good luck with that, but on second thought I said to myself, "That is a legitimate question! What would it take?"

However like anything I've ever done, before I can answer that question I need to obsess over, err I mean define, the background, context, and boundaries of what a possible answer might exist within. So in a series of posts, I'm going to answer, "What it would take for local marketers to embrace the Internet?"

The Web 2.0 experience in Puerto Rico

For me, a good place to start is to assume that the Internet is a wonderful marketing tool that helps many companies create powerful relationships with consumers. Recently this tool has transmorgified into being synonymous with Web 2.0. So by transference, let's assume in an overly generalized way, that successful Internet marketing relies upon Web 2.0. So a great question to answer is how has the Puerto Rican Internet community reacted to the Web 2.0 trend?

So, right there, IMHO, we've hit our head with a hammer. In general, again IMHO, the Puerto Rican Internet community has, with the exception of watching YouTube, Facebook, and MySpace, wholly ignored the Web 2.0 trend. There are pockets of participation, and you know who you are, but they are the extreme minority. So why is that? I think I've deduced the answer.

Unfortunately, it always seems to come back to this, but I believe that a zero-sum mentality prevents participation by the Puerto Rican Internet community. For those of you who haven't already read my rants about zero-sum theory. In game and economic theory, zero-sum describes a situation in which a participant's gain or loss is exactly balanced by the losses or gains of the other participant(s). The metaphor that is used to illustrate this theory is the pie. Imagine that everything we do can be symbolized by a pie. A pie that has already been divided up into pieces, and someone owns each of the pieces. There is no pie left over for new participants.

One of the characteristis of the Web 2.0 trend is the free creation of user generated content. Whether that content is photographs, videos, web pages, blogs, comments, etc., they all must be freely provided by the creator (user). The motivations for providing these free contributions vary, but some of the more compelling are recognition, creating realtionships, status, and self expression.

Let's examine some of these motivating factors. First, we must exclude creating relationships, because Puerto Rico is a face-to-face socially dominated culture. Hence one of the biggest culture shocks I've had since I got here. When discussing the trend for people to pay bills in person, I was told, "You don't get it. For Americans going to the bank is a transaction, but for a Puerto Rican it's a social opportunity." In some ways, this also explains why we should exclude self-expression, because that is done through conversations conducted in person (or more likely, on the cellular phone).

So we are left with status and recognition. In many social circles these characteristics are considered as important, if not more important, as money. As an example, IMHO, there is nothing more important in Puerto Rico than the perception that you are wealthy or important, or that you are closely related to someone that is. So if we can assume that status and recognition are as closely guarded as money and power, than it is clear why we don't participate in the Web 2.0 culture.

By contributing my content to your website for free, I'm essentially giving away my pie for free. Then, not only will I have less pie, the owner of the website will have more pie. As a dominate characteristic of our local business culture, we must therefore extrapolate that a zero-sum mentality exists when Puerto Ricans meet the Web 2.0.

Flickr Creative Commons Contributor: Vita Arina

Gran Depresión de Puerto Rico

2009-03-18T05:53:00.004-04:30

I ran into an old co-worker over the weekend. Nice guy, kids, and a beautiful wife. Back when I knew him, he was a talented and charismatic salesmen. He climbed the corporate ladder with me, and I saw him demonstrate professional and responsible management of various parts of our company's sales function and eventually became manager of all of our retail stores.

When we both "downsized," I lost track of him. About a couple of years ago I was surprised and pleased to see that he had been selected to run a new retail store that was opening on the island. As bad luck would have it, he wouldn't last very long in that position because the company went into bankruptcy and recently shuttered its' doors.

So as we talked I was thinking to myself, "Damn what a bad time to be on the street looking for a job," especially a senior level sales or store management position. As are most of us, anyone who still has a "decent" job is holding onto it for dear life. Surprisingly, none of this seemed to phase my friend. He was actually pretty upbeat.

He explained that he had been doing some research and was going to open a "carrito" to sell tripletas. He said based on his research, some successful owners of roadside stands were pulling down around $2,000 a day. (That jives with a napkin calculation my wife and I did on a highly successful nightime hambaurger stand near our house. We calcuated that before expenses he was probably making $8,000 a week. His week was Wednesday night through Saturday night, four days).

He said he already had all the permissions and was now conducting a secret shopper exercise to determine the right price for his menu. His opinion, and who could blame him, was basically "pa' carajo," it's not worth risking your livelihood on a "real" job anymore. After so many let downs, he was going to be the Mr. Mom during the week and run the carrito on the weekends. If he can gross $1,200, no let's be conservative, $1,000 a day for Thursday through Saturday, he would be pulling down, tax free, $3,000 a week. That's $156,000 a year, tax free. His family gets their health care from his wife's job, so really, almost all of that is net profit.

Conclusion

I say more power to him, right? I mean he's been dicked around by the corporate world so much that, if I were him, I'd be pretty disillusioned about working for anyone else, ever again. Then again, depending upon your point of view, his move into the underground economy could be considered a great tragedy.

When highly talented, charismatic, and successful professionals decide to become street-side hotdog vendors, the end is nigh. I'm still not sure when, but if your keeping score at home, then you'll have to give this round to Puerto Rico's very own "Gran Depresión." For not only are we losing talent to the U.S in droves, we are now losing it to the underground economy. Either way it means one less planilla, one less contributor to Hacienda's income stream. Looking at my scorecard, I'd say that Puerto Rico's economy and government (and therefore any chance of economic recovery) is losing and the "Gran Depresión de Puerto Rico" has us on the ropes. The knockout blow should be coming any time now.

Is ignorance bliss? A visit to the pulguero.

2009-03-10T06:02:00.007-04:30

Last weekend, my oldest daughter asked if we could stop at Walmart to buy her friends a few birthday gifts. I suggested stopping at a "pulguero" (flea market)*. I was curious about them, since I'd never been to one here in Puerto Rico. Plus, I thought that she might be able to pick up a few deals. I'm also a firm believer in voting with money. What's that you say? No I don't mean what our ex-governor is accused of participating in, no I mean choosing where to spend my money.

Believe it or not, every time we buy at Walmart, we are saying I want more cheap products made in China, available in a store like this. At the same time, we are saying I want less of any other type of store. Yes it is nationalistic, but we do have a choice! Whenever I can, I choose to give my business to the local pharmacy, the local tire shop, the small road side fruits and vegetables stand. I think you should too.

A visit to the pulguero

Anyway, I digress. So we're walking through the pulguero, taking it all in. I found the whole experience, very interesting, and quite impressive. While some of the vendors were just displaying their goods on tables, some had power. The vendors with power were located in old trailers (like goods transportation trailers), which had been modified. The modifications included the addition of power, telephone, and the means to store and lock merchandise into individual compartments.

What kind of merchandise was on sale? Well it ranged from jewelry, clothing, accessories, electronics, toys, shoes, and even kiosks for snacks. The most popular shops were those with jewelry and clothing. Hmm, does that mean that women are more frequent visitors to flea markets?

Ok, so here it comes. While some of the merchandise was either second hand or self-produced (homemade), a lot of the merchandise was name brand products. Where do these merchants get their products? While some were clearly knock-offs (cheaply produced products which are made to look like the real thing) some of the merchandise included Apple iPod Nanos. So, it is difficult to know whether the merchandise was a forgery or stolen.

Bottomline, the production of copy-cat products, which contain the unauthorized use of the trademark of a company, is a crime. To my knowledge, it is not a crime to buy them. However, it is a crime to purchase or accept property that you know or believe was obtained through theft. So the possibility that laws were broken, or are being broken at flea markets is high; especially the guys selling recordable CD's with popular artist's music and recordable DVDs with popular movie titles printed upon them. Those guys were clearly selling music and movies without the permission of the copyright holders, which everyone knows is a federal offense. We must also ALL acknowledge that ALL of these "businesses" are cash-based and therefore pay no income tax on the production and sales of goods, which is also a crime.

Conclusion and Dillema

As I have said, one of the challenges to our society and economy is the high level of crime. From littering to speeding, from running red lights to embezzling, from corruption to robbery and murder; we are surrounded by criminals. Just like voting with our money, I believe we also vote with our behavior. When someone we know breaks a crime and, in some way, we accept that action, then we are saying that breaking the rules (laws) is acceptable.

We can accept the crime by not saying anything to anyone about the crime, continuing a relationship with a criminal (yep, that's what you call someone who breaks the law, a criminal), or in general doing nothing. But we can also accept crime by benefiting from it. In this case buying forged or stolen goods. We also accept crime when we support a "business" that does not file a planilla.

In these desperate economic times, what do we do when asked to decide between accepting criminality and saving money? And if we choose to accept a crime, how clear will it be for our children and friends to make, let's say, the choice between stealing and buying something they want?

I know for most people, this debate never happens. Most of us see a bargain and ignore everything else. In these tough times, it's hard to blame them. However, what outrages me is when these very same people are surprised, shocked, and indignant when our headlines are dominated by domestic violence, murder, and political corruption.

In this gray soup of morality, we all struggle through. Hoping to "do good," praying that we are going up to heaven, while looking for a little rest, recreation, and relaxation. Most of us try to "do our best", profess our faith in Jesus Christ and his teachings or __________________(substitute your deity of choice here), while struggling with our humanity. A humanity which causes us to fail, contradict ourselves, lie, act vane, envy, and become selfish. And don't even get me started on the debate over acting moraly or ethically. I guess, for most people, they are ignorant to all these machinations.

It is true, ignorance IS bliss. If so, then I have to conclude that truth is grief, misery, sorrow, and unhappiness. Ask yourself! Which you would choose? Now tell me! Are you sure we don't live within an illusion? Tell me we do not prefer the illusion. Tell me we are not Cypher in the Matrix:

"You know, I know this steak doesn't exist. I know that when I put it in my mouth, the Matrix is telling my brain that it is juicy and delicious. After nine years, you know what I realize?"

[Takes a bite of steak]

Cypher: "Ignorance is bliss."

* I originally included the location of the flea market, but I dropped it to protect the guilty. Which is what this whole post was all about. It's very uncomfortable to encounter a crime in progress. It is even more uncomfortable to decide what to do about it.

Flickr Creative Commons Contributor: wsilver

When lies no longer achieve their purpose 2

2009-03-04T09:32:00.004-04:30

In continuation of our ongoing coverage of the Puerto Rico economic depression, oh you haven't heard? Yes, local economists have officially declared that Puerto Rico's economy is in depression. According to Wikipedia, a depression is a drop in gross domestic product of 10 percent or more before a recession would be referred to as a depression. It can also be defined as a recession lasting 3 or more years. So in both respects, we are guilty.

In day to day terms, a depression is characterized by abnormal increases in unemployment, restriction of credit, shrinking output and investment, numerous bankruptcies, reduced amounts of trade and commerce, as well as highly volatile relative currency value fluctuations, mostly devaluations. and a population that is forced to dispose of tangible assets to fund every day living.

But I digress from our story. So when we left our heroes they were confident in their ability to convince investment bankers that Puerto Rico's economy was on the way to recovery. Let's catch up with our heroes, "Yes over here. we're reporting from Dondequiera, thanks. What did investment bankers say to your pitch?"

"They called our bluff. We thought our dog and pony show was going to be enough to stay out of trouble. But the called us out, and then it got ugly. Essentially, they said that we were full of shit."

"Ow, that's got to hurt! Did they say what would be enough to stay out of trouble?"

"Yes, they did. They said we needed to provide concrete actions on the part of the Puerto Rican Government to:

reduce costs (government's budget);
or, increase revenues (taxes)."

"Sounds like they are playing tough with you. What will happen if they don't see these concrete actions?"

"They said if they didn't see what they were looking for by June 30th, then they would be forced to downgrade the credit rating for Puerto Rico."*

* We'll see this date pop back up real soon in this series, and then you'll realize it's importance"

Analysis

Ok, so the investment bankers called the government's bluff. Now what? Ok, well if you might remember, the investment bankers lowered Puerto Rico's credit rating a few years ago. Our current credit status is one step above what is called junk bond status.

A quick little financce lesson, whenever a company, state, or country wants to raise some money that they are NOT receiving from their revenue strem (in our case taxes), well the country sells bonds. A bond is a financial instrument which is a guarantee between the issuer of the bond and the purchaser of the bond. That promise is, hey give me some dough, and I'll pay it back to you at some pre-established time in the future with some intrest thrown in to sweeten the deal. From the purchasers perspective, a bond is an investment. Think about bonds like a savings account or a certificate of deposit (CD). Currently Puerto Rico has some $55,000 million dollars of bonds or debt if you prefer.

What the hell does all of this have to do with me?

So, in short, in my humble untrained economist opinion (IMHUEO), the credit rating of Puerto Rico's bonds is THE most critical factor for our economy. If the Puerto Rican government is unable to satisfy the investment bankers and they downgrade our bonds, well bring out Jennifer Gonzalez, because this here game is over.

Two things can happen, or maybe both:

Any existing bonds which have clauses (insurance), that as the credit rating goes down the Puerto Rican government will have to pay higher interest rates. These clauses may also state that we have to pay the debt back earlier than specified. So not only will our debt be called in early, but we'll have to pay more than the $55 billion big ones we already owe.
Puerto Rico will have difficulty selling any future bonds, because our credit rating is so low. Since the bonds will be of little interest, the only way Puerto Rico can raise money is to offer higher interest rates until they are attractive to high risk investors. Since the rate of return is so high, they are willing to take the risk.

Then the shoe falls...

If this scenario should happen all sorts of wailing and gnashing of teeth will begin. According to investment bankers, without doubt, the consequences of meeting their expectation will not be as serious as the consequences of having our credit lowered.

How bad are we talking about? According to Carlos Garcia, President of the BFG, if our credit rating takes a hit you can expect unempoyment to double. And good old Milhouse said that he would have to fire around 110,000** employees from the government ranks if our credit gets bitch slapped. Not only that, the government retirement fund would lose 50% of it's value. Yeah, holy shit indeed.

** Hmm, that sounds familiar, now where did I hear a similar number before?

Recognizing when lies no longer achieve their purpose

2009-03-02T05:59:00.005-04:30

A week or so ago, the Puerto Rico government's economic development team faced their first, and perhaps, most fierce challenge. In a leading business article in the El Nuevo Dia, these leaders explained how they were going to convince investment leaders that Puerto Rico was on the path to recuperation.

Having just made the claim that nothing was possible to save our economy, I found this strategy typical; typical of a status quo which is unwilling to recognize the severity of our situation. As Gil mentioned in this biting assessment of this situation, all of our leaders are terrified to tell everyone the emporer has no clothes on, thus sticking their neck out over the chopping block of public opinion.

In "What the Bleep Do We Know," the metaphysical in-bred cousin of "The Secret," they claim that when Columbus and other explorers landed on our island and many other lands just like us, the native population couldn't even see the new travelers. The movie claims that because the natives had no context in which to understand what they were seeing their minds merely ignored what they were seeing. Or as stated in the Wikipedia article about the film, the film discusses:

"Beliefs about who one is and what is real, form oneself and one's realities."

So in the article from the El Nuevo Dia, Carlos Garcia, President of the Govermental Development Bank, states that he is going to present a case that Puerto Rico's economy is ready to grow at a consistent basis, starting right now in 2009. However, in the very same article he is quoted as confessing that, the government's overestimation of the economy and the tax revenues that it would collect, are, in part, the cause of our current crisis.

Yes, I know I'm just a picky whiner who reads the lines, then reads between the lines, and then unfairly compares those lines, but let me get this right. Our economic development leaders are saying, that while they've overestimated the strength of our economy in the past, they are confident that are NOW on the road to recovery. Hello, cognitive dissonance anyone? Sounds to me like we are staring straight at the invading ships of economic doom, but reject their presence.

The spiral begins (strenghtens?)...

Starting with this post, I'm going to follow these events and layout how we are moving into the beginning, of the end; the end of the life styles most have come to expect, demand, flaunt, and, yes, even kill for. As I watched this event play out, and saw the El Nuevo Dia report on the results of the investment banking meeting, it became clear to me how the reality I see, will suddenly become very real for many other people. Like being poked in the forehead, our intractable problems will instantly pop out, in broad contrast, to the illusion our leaders wish to sustain, and the masses willingly consume.

Why $5 billion isn't enough

2009-02-19T06:33:00.004-04:30

I know what you're saying. You're saying, "Hey Mr. Dees, didn't you hear about the $5 billion Puerto Rico is getting from Tio Obama in the economic stimulus bill just approved?" So I'll beat you to the punch, I say, "So what? Come on, sure there is going to be an immediate stimulus. It is called a stimulus package, right? Then what? When the $5 billion has been spent or stolen, then what? Will those $5 billion have done anything to establish a new foundation for our economy to grow? Will it solve any of the 10 (oops, I mean 17) reasons why our economy will continue to decline?" Well let's take a look. According to a breakdown of the proposed plan to use the money, published in El Nuevo Dia, here's a scorecard of the plan's impact on our core problems:

There are more people than there are jobs.

Yes in the short term, especially in construction and road maintenance. However, in the long term, no. There is very little money allocated to tasks that might actually create jobs lasting after the money is spent.
To accommodate the overflow of workers, the government hired a lot them, then bloated to become the islands largest employer.

NO, double NO. NO. NO. The receipt of additional money for Education, Health, HUD, Transportation, and Commerce will only prolong the necessary massive reductions required in the government.
Our most talented graduates leave the island for more lucrative and exciting opportunities.

No, while the projected $1.4 billion will hopefully result in some long term improvement of the quality of our graduates, there is nothing in the plan to stimulate the creation of high-tech jobs necessary to keep our most talented resources from leaving the island.
Little research and development in our universities and basically none in our leading companies.

Again, no, as far as I can tell the plan doesn't identify any R&D. No R&D means no innovation. No innovation means no new products or services. No new products and services means, at best, our employment levels will remain the same. But that's wishful thinking. We'll lose our brightest to better opportunities (4) and as the economy continues to decline there will be more people out of work. Less people working means less income tax revenues. Less taxes means more programs and people will need to be cut from the government (2).
A stubborn focus on Puerto Rico as the market for our products and services.

There is nothing in the plan to change this. If anything it reinforces our focus within Puerto Rico.
The three doomsday horseman of the apocalypse: corruption, lawlessness, and mass consumerism.

If history teaches us anything is that it will almost certainly repeat itself. Giving nearly $5 billion to our government is like giving money to a crack addict and expecting them to rehabilitate themselves. The potential for corruption is high. So, no this won't help.
An unhealthy belief that tourists can be bought through advertising instead of being influenced through exceptional experiences and word of mouth marketing.

Surprisingly, there doesn't seem to be anything which directly benefits the tourism industry.
The other three horsemen of the apocalypse, anti-small business culture, a zero-sum mentality, and a belief in life-style businesses.

Yeah right, and winged monkeys will fly out of my rump. Although there is some $55 million which isn't specified in the business category. Maybe we can use that to reinvent our business licensing and creation process. Yeah I know, more monkeys.
Little or no immigration of new citizens seeking a better life.

Nada.
A complete taboo against recognizing our problems as problems and encouraging discussion and mobilization to address those problems.

Nada. I'm afraid that "Qué nos pasa Puerto Rico" isn't going to get us out of this mindset.
Great disparity in the distribution of wealth, capital, resources, information, and opportunity.

Yes, there are actually quite a few projects aimed at helping to balance out this disparity, but I'm afraid this social problem requires a little more creativity than just throwing money at it.
A massive unregulated, off-the-books, cash-based, pay your fair share underground economy.

Since this is not a major problem in most of the U.S. of A, then it follows that there is nothing to address this problem. As our economy continues to decline, if anything this (as well as crime) will continue to get worse. So no help here.
Denial tending towards mass hypnosis, acceptance of the status quo, and reticence.

Hello.
Is there anybody in there?
Just nod if you can hear me.
Is there anyone home? (*)
A failing infrastructure (transportation, power, sewage, solid-waste disposal) that can not withstand significant increases in demand.

The stimulus package does actually contain many projects that will address our decaying infrastructure. However, the projects seem to be like repairing your old and failing automobile, instead of buying a new car. While this means it might not get any worse, it doesn't mean that we are adding infrastructure capacity. Which is critical to growing our economy.
A collection of self-serving, self-preserving political, governmental, and social non-profit systems.

Hello.
Is there anybody in there?
Just nod if you can hear me.
Is there anyone home? (*)
An educational system which under serves students and perpetuates the status quo.

Can $1.4 billion improve our education system? Just a question? If you paint your 50 year old car, will it go faster? There are a few projects that should help: $23.5 for new technology; $3.8 million for better teachers; $2.8 million for innovation. Roughly 2% of the allocated funds are dedicated to working on our engine of wealth creation, and 98% towards more paint. So no, in the end this will not have any effect.
An economy directly connected to the availability of low cost foreign oil.

The wildcard in this deal is the mysterous $80.2 allocation to energy. If that were used to covert some of our power plants to clean and resuable power, then yes. But the $105 million aimed at improving our roads and bridges seems to imply more dependence on our cars. So I wouldn't hold my breath on this one, but of course we'll probably have to if we keep polluting our air.

Well, let's see how we did. I'll say that we'll get help on 1, 11, and 14. I'll give us 16, and 17, for hope's sake. That's 5 of 17. If we use this percentage as our probability of improving our economy, I give us a 29% chance of any significant long term economic growth.

Let's get something straight here. The objective of economic growth is wealth creation. Yet, while there a few who are creating new wealth, the vast majority of our citizens are losing wealth. In fact, as a whole we are destroying wealth.

After writing my post yesterday, I was troubled. Was our situation even worse than I previously thought? And depending on how you look at this, I have to confess that I thing I might have underestimated our decline. So if you want things to magically improve, then I'm sorry for the doom and gloom. However, if you're cheering for us to hit bottom, so we can finally see things start to improve, then I've got some good news for you. It might be even closer than I thought. Yeah us!

* Lyrics from Pink Floyd's Comfortably Numb, The Wall. Somehow eriely fitting.

Top 10 reasons Puerto Rico's economy will continue to decline

2009-02-18T06:22:00.007-04:30

There's a lot of things on my mind, that I want to share, but I have to get this out. It serves as the basis for my conclusion that nothing can be done to "fix" our economy. Only massive failure and subsequent crisis will provide any type of empowering motivation for change.

There are more people than there are jobs.
To accommodate the overflow of workers, the government hired a lot them, then bloated to become the islands largest employer.
Our most talented graduates leave the island for more lucrative and exciting opportunities. (see Gil's latest post about this...)
Little research and development in our universities and basically none in our leading companies.
A stubborn focus on Puerto Rico as the market for our products and services.
The three doomsday horseman of the apocalypse: corruption, lawlessness, and mass consumerism.
An unhealthy belief that tourists can be bought through advertising instead of being influenced through exceptional experiences and word of mouth marketing.
The other three horsemen of the apocalypse, anti-small business culture, a zero-sum mentality, and a belief in life-style businesses.
Little or no immigration of new citizens seeking a better life.
A complete taboo against recognizing our problems as problems and encouraging discussion and mobilization to address those problems.
Great disparity in the distribution of wealth, capital, resources, information, and opportunity.
A massive unregulated, off-the-books, cash-based, pay your fair share underground economy.
Denial tending towards mass hypnosis, acceptance of the status quo, and reticence.
A failing infrastructure (transportation, power, sewage, solid-waste disposal) that can not withstand significant increases in demand.
A collection of self-serving, self-preserving political, governmental, and social non-profit systems.
An educational system which under serves students and perpetuates the status quo.
An economy directly connected to the availability of low cost foreign oil.

In my opinion these are the core reasons that working with what we have will only result in what we already have. Without addressing these core issues, anything we do will be temporary and short lived.

Two sides of the same coin: Puerto Rico empowers a criminal culture

2009-02-06T07:52:00.004-04:30

When I read of the horrific events that lead to the kidnap, rape, and murder of Sara Kuszak, I was shocked and stunned. How could a human be so evil? But that was before I read the statements of psychologist Salvador Santiago, Dean of Students, School of Medicine. But to hear the true voice of evil, well that would be left up to Clarisa Jiménez, President of the Hotel and Tourism Association.

You know I was ready to lay out how the demonic tragedy of Sarah, so recent after the tragic loss of Emily Villanueva Caballero were two sides of the same coin. I was going to say that while these were acute examples of being in the wrong place at the wrong time, they were still perfect examples of the criminal culture which haunts Puerto Rico. But know I don't need to, because Dr. Santiago and Ms. Jiménez have clearly illustrated that for me. In my opinion, both of their comments demand that they be removed from the elite positions which they now occupy. THey are a both a disgrace to humankind.

First, while Dr Santiago is right that our "machista" culture tends to objectify women, treat them as property, and thus diminish their equality with men, I believe he is missing the larger issue. According to Dr. Santiago, "La magnitud de este problema no es tan grande aquí. La moraleja debe ser preguntarnos qué estamos haciendo para disminuir la cantidad de hombres que todavía piensan que las mujeres pueden ser ultrajadas, violadas o que no son iguales a ellos." Roughly translated with a little emphasis he says, "This isn't a big problem here in Puerto Rico. (Really? Tell that to Sarah's family and loved ones. I submit to you that any society which looks at the tragic end to this poor woman's life and rationalizes its' significance away is destined for an existence of misery, tragedy, and ultimate downfall. I say that that the only frequency that is acceptable is zero. No one should have to experience what she did.) The moral of this event is to ask ourselves what are we doing to reduce the number of men that still think women can be abducted, violated, or that they are not equal to men. (How about, what are we doing as a society to eliminate the number of people that believe that they can violate the essential rights of any human being and break, with total impunity, laws which are supposed to protect its citizens?)

But it's Ms. Jiménez's statement that really nails the collective thinking about crime in Puerto Rico. In a shameful excuse, she describes Sarah's death as having serious implications, “por tratarse de una mujer joven sin pasado criminal." Translated she is saying that there are serious implications for the treatment and death of a young woman without a criminal record. No Ma'am, there are serious implications when an "upstanding citizen" such as your self believes it is acceptable for this to happen TO ANYONE. Just because someone has a criminal past doesn't mean that they're not human anymore.

What we as a society have not realized is that we can not draw lines around crime and say these crimes are acceptable, but when it happens to someone like Sarah or Emily they are unacceptable. Crime should be unacceptable in all of its' forms and disguises. The level of denial someone has to have to believe that permitting a culture of crime within the poor and the drug addicted will not spill over to touch ever part of our society is bordering on psychotic. It is now clear to me that Dr. Martin Luther King Jr. knew that the poor and drug afflicted of our society would become the new blacks, the new slaves to be treated as inhuman, unequal, and therefore in no need of our compassion or protection.

Oh and by the way, I think that it is incredibly disrespectful and even bordering on negligent for the new Director of Tourism, Jaime López Díaz, to state that his office needed to implement the Public Relations Crisis Plan, "para llevar el mensaje a nivel internacional de que esto es un caso sin precedentes en la Isla y que Puerto Rico continúa siendo un destino seguro y de excelencia.” What he is saying is that that are going to broadcast at the international level that this is an unprecedented case in the island and that Puerto Rico continues to be a safe and excellent destination. Yes it is so safe that it's elite citizens want to live in walled communities surrounded by 24 hour security. Yes, it is so safe that those that don't live in a secure community must place bars over every possible entrance to their houses. Yes it is so safe that the ex-Director of the power company needed 3 full-time body guards. Yes, it is such an excellent place that most of the bathrooms in our public beaches are either broken or locked. Yes our beaches are so excellent that they look like trash dumps.

With my deepest sympathies to the families of Sarah Kuszak and Emily Villanueva Caballero, I am only left with hope. As Puerto Rico continues its' rapid descent to the bottom in every possible aspect of civilization, we are one step closer to things getting better. We will finally wake up. This is not the Matrix, we will eventually have our eyes wrenched open to see the disaster, suffering, and insanity that we have created.

Flickr Creative Commons Contributor: Steve Rhodes

Moral outrage against inequality

2009-01-27T09:21:00.004-04:30

The day before the first black president of the United States was inaugurated, millions celebrated the birthday of Dr. Martin Luther King Jr. While Dr. King is widely known for his nonviolent protest against black inequality, towards the end of his short life he began to widen the scope of his protest to include the inequality between the rich and poor.

Recently the new Executive Director of the Autoridad de Energía Eléctrica (AEE), Miguel Cordero, defended his salary of $250,000. His basic excuse was that's what he had received previously for the same position and that it was the same as his predecessor. I can understand that logic. It's simple and self-centered, in short human. However, Mr. Cordero, it is a moral outrage for you (and all of your peers in and out of government) to make this defense while our citizens are slaughtered on our streets and parents struggle to feed their children.

I've pointed out before and I'll repeat it again. Why is it that staff employees salaries here in Puerto Rico must be lower than their counterparts in the United States, but Senior Executive pay is nearly equal? How can anyone morally justify that their salary should be 1,000 times more than the average median income of a Puerto Rican family? It is a cruelty against society to imagine that a public servant of our bloated government makes the same as 100 Puerto Rico families!

Of course the "Junta de Gobierno de la AEE" approved this salary and that of his subordinates and predecessors. I bet that the board is composed of the same executives which have benefited from this misuse of the public's trust and confidence. I wonder how many staff employees, which are not on the board of the directors of the many unions working for the AEE, are on the "Junta de Gobierno de la AEE?"

James Lawson was a peer of Dr Kings and worked by his side to accomplish the removal of the oppressive treatment of blacks in the United States. When asked about the inauguration of President Barack Obama, he said,

"...if you do not deal with the socioeconomic, political forces that inhibit people to torture and cruelty, you can't make progress towards King's understanding of this society as one of liberty, equality, and justice for all."

Unfortunately, we the people of Puerto Rico are guilty for allowing this travesty, this inequality to continue. Since we do not see it as "oppression," the treatment of the middle and lower class by the "elite" leadership of our country, then do not band together to change this status quo. Doing nothing about this inequality is acceptance of that status quo. We are blinded by the illusion that we can gain entry into this "elite" inner circle. However, we are grossly mistaken! When the "best" candidate to receive these top salaries are the same people that have already retired from those very same positions, we need no further evidence that the rich take care of the rich.

I once read that history is a cycle of the rich sharing just enough with the poor to keep them complacent, until the poor rise and demand, through revolution, a fairer share. If Dr. King were alive today, I'm sure that he would warn us that we are teetering on the brink of another revolution. The poor of our island, of the United States, and the world are nearing a breaking point. Most of the crime, strife, and war are fueled by this inequality. How much more can we take?

If I were Dr. King, or Mahatma Ghandi, I would call for a protest against the AEE. I would cry out for houses all across the island to non-violently protest against this travesty. I'd call for them to write letters, stop paying their bills, stop using all inessential power, and even picket in front of the Forteleza, the Capital, and the headquarters of the AEE in Santurce. I'd call on us to commit ourselves to these ends until the leadership bends to the greater majority.

The saddest part of all of this, is that our society has allowed a minority, "the elite," to establish the "rules." We've forgotten the power of the majority, who, united together can seek liberty, equality, and justice. Imagine if we dedicated ourself to this goal? Imagine if we accepted all of the punishment the leadership of our island could inflict? Imagine what the world would think of this "new royality," when their cruelty and inhumanity is exposed for the entire world to see?

Yes, I do have a dream. I dream of a time when we can take the bars off our houses. When we can grow with the full knowledge that the ideals of hard work, honesty, courage, fair play, tolerance, and loyality, guarantee us that inequality such as we see witness by Mr. Cordero (and the leadership of our government and businesses) shall never be permitted again.

A judgement of leadership

2009-01-23T05:37:00.005-04:30

As I observe President Barrack Obama from afar, I'm struck with the stark contrast between his immediate action to implement unpopular decisions, and the surrender of Governor Luis Fortuño when faced with opposition.

From the Attorney for the case against Governor Luis Fortunño's leadership:

"Ladies and gentlemen of the jury I submit that when Governor Fortuño backed away from implementing the recommendations of the Consejo Asesor de Reconstrucción Económica y Fiscalto (CAREF), he was quite clearly retreating from a swelling tide of opposition. He surrendered and retracted the proposal rather then implement unpopular decisions and fight a potentially long campaign to get the recommendations approved.

I also submit that politics is not for the weak. It is a complex game of negotiation, compromise, and consensus building. All of these actions require political capital. Politics is like poker, you never show your hand before your opponent calls. And most importantly, when you are caught bluffing, you quickly lose respect, power, and political capital.

So when the Fortuño camp claimed that they were merely testing the political waters with the announcement of the CAREF's proposals, they were merely attempting to save face (read spin) for having been caught bluffing. By making the recommendations of the committee publicly known it was his full intention to follow through with those recommendations. There was clearly time and opportunity to vet these proposals with special interests (in private) and build consensus before their announcement."

From the Judge in the case against Governor Luis Fortunño's leadership:

"Ladies and gentlemen of the jury, your services are no longer required. Never before have I heard such a clear cut case. I'm ready to render my decision. On Wednesday January 14th of 2009, the Governorship of Puerto Rico by Luis Fortuño was over. In what will be seen as the shortest span as Governor of Puerto Rico, he became the third straight "lame duck" Governor. Much like the well accepted strategy of never negotiating with terrorists, Gov. Fortuño has exposed himself as weak and yielding. He empowered all of the gridlocked special interests, thus sowing the seeds of strong opposition to any future attempts for change. After only 12 days in office Gov. Fortuño sentenced Puerto Rico to four more years of stagnation and economic recession.

In contrast, on only his second day in office, President Obama signed three executive orders, without regard to their opposition and potential unpopularity. In these simple actions he demonstrated that he was going to comply with his campaign promises. But, more importantly, he was going to make decisions not based on popularity or repercussion, but upon his belief in what is in the best interest of the country which he now leads."

Oh how we need a leader in Puerto Rico who has the conviction, charisma, and internal fortitude to make and implement tough decisions. Where is our "savior" in our time of need?

Political and Social Grid Lock

2009-01-11T07:50:00.004-04:30

As sure as stink follows your neighbor's dog taking a dump in your front yard, as soon as Governor Fortuño announced the plans, formulated by the Consejo Asesor de Reconstrucción Económica y Fiscalto, to help the Puerto Rican economy, everyone began to protest.

I've got two simple observations. Oh and in case you weren't aware of it, the CAREF is chaired by Dick Carrion, Banco Popular Chairman of the Board, President and Chief Executive Officer of the Corporation and the Bank. I remember hearing of someone calling for his resignation recently, but I can't recall who,....oh yeah, I remember, that was me.

First, now I'm not sure why CAREF has included some of the items in their proposals, but I can assure you with 100% certainty that there is nothing they could propose that some special interest wouldn't find objectionable. This demonstrates to me, what I like to call social (or political, if you prefer) gridlock.

The term gridlock describes an inability to move on a transport network. The term originates from a situation possible in a grid network where intersections are blocked, prohibiting vehicles from moving through the intersection or backing up to an upstream intersection. In layman's terms, it is situation were no one can move (backward or forward) because a car is blocking them in both directions, or essentially what happens in every Puerto Rican intersection when a stoplight loses power.

Applied to our socio-political system what I mean is that no one is willing to give up a slice of their pie (zero-sum theory), in order to invest in the future of Puerto Rico. A simple example is the proposal's of CAREF and the reaction of the Frente Amplio de Solidaridad y Lucha . The CAREF suggests reducing the government by 11,000 people. Now any economist you ask would state that we need to cut the size of our government. When you have a fiscal deficit, you have only two alternatives, reduce costs or increase taxes. That's it.

According to one estimate I heard, 80% of our government's annual budget goes towards payroll, which is typically the largest expense in ANY organization. So in order to address one of the fundamental weaknesses in our economy, we HAVE TO reduce the size of the government. So as sure as you stepping in the "present" your neighbor's dog left in your yard, some organization will protest any elimination of governmental jobs. Their logic is simple, creating more unemployment will not help the economy. I can't really argue with that, in the short term.

But I ask, if we can't cut the payroll, and according to Senator Thomas, "I'm so power hungry and deluded that I actually think I'm going to become Governor" Rivera Schatz, there shall be no new taxes. Just what kind of voodoo are we going to use to balance the budget? And by the way, not making a decision on either cost cutting or increased revenues, our government will remain in a deficit and an anchor around the economic neck of Puerto Rico.

Second, I agree witht the CAREF that we should increase taxes on every consumable that the black market economy of Puerto Rico touches. That's the only logic I can find in increasing the taxes on gas, cell phones, alcohol, and cigarettes. As everyone knows, one of the reasons for the orginal implementation of the IVU was to attempt to gain some additional revenues from the criminals who conduct business without paying income tax. Yes, they are criminals. It is illegal to conduct business and "earn" money without paying income tax on those gains.

While some have said that the IVU has only increased the size of the black economy and that this is really just trying to legislate a change in social behavior, we as a sociey have few tools to impact this criminal culture. It's not like any public service campaign will be effective in telling all of the people involved in the black market, "Hey! Pay your fair share!" I'm sure that would work just about as good as "Que nos pasa Puerto Rico!" So what to do?

The error in the CAREF proposal and the original IVU implementation is while it may actually affect the black market financially it "punishes" those citizens that actually do pay their fair share through corporate or individual income tax. For each tax levied upon a consumable, there needs to be an equal and off-setting deduction for everyone that files a planilla.

Concluding, I'm not insensitive to the potential impact these proposals might mean to struggling families, but I refuse to agree with any logic that refutes all potential solutions because it will impact someone, or of more concern, your own pocketbook. In my opinion, by each special interest rejecting every proposal it basically says. I like our fucked up economy just like it is, and am willing to ride this pony until it drops dead. What is missing is a new perspective that we must ALL share in the recovery of our economy. It is our childern, and their children's grave we are digging. So unless we are so morally bankrupt as to not give a damn that we are sentencing future generations to increased suffering and unhappiness, we must all band together and not create proposals where we can all shoulder our fair share of the burden to make our children's future brighter than our own.

Flickr Creative Commons Contributor: hanssolo.

How to Save Puerto Rico

2009-01-08T06:46:00.004-04:30

As I mentioned in my long forgotten last post, I'm going to take a little sample from Dave Pollard's "how to save the world" biography page (with a few substitutions):

"I believe [Puerto Rico (as we know it)] is in its last century. While we have a responsibility to do the best we can to make [Puerto Rico] a better place while we're here, and to help our descendants cope with the mess we are leaving them, it is really too late for [Puerto Rico] to be 'saved'."

Now I most certainly don't want to come off as a doom sayer, which I kind of tend to be, but if you'll bear with me, I'd just like to pull back the veil a little bit and show you what I see.

Before giving you a peek, I'd like to acknowledge that I understand that despite these obstacles and structural flaws, we must continue to do the best we can. By working around these issues, we will certainly gain some hope and make it seem like we're making "progress." Who knows, we may even be able to achieve 3% GDP growth at some point in our future, but I feel that it will short lived and illusory. I've been called an idealist, but I guess that's where the rub is. If we can't solve these fundamental issues, than anything we create will be blown away. Yes, just like the story of the three little pigs.

So just what are these fundamental issues that ultimately prevent Puerto Rico from being saved? For your co-miseration (it's cool to make up new words):

A government that is too large, with no feasible way to reduce it.

If there are, let's say 1 million people working "on the books" in Puerto Rico and 30% work for the government, that's 300K employees. If the government is reduced by half, where do those 150K employees find employment? (See number 2) If each worker is associated with a spouse and 2.3 children, how do those 650K people find something to eat?
Insufficient "real" employment for existing population.

Call it over-population, or whatever, there is just not enough jobs to support a middle class which is rapidly being displaced to a lower class.
An "invisibly" (and forbideen to talk about) distinct separation of the classes.

Why aren't our "leaders" horrified by the climbing murder rate, or for that matter a murder rate which has never really slacked off for the last 30 years? How many murders must there be until our "leaders" say enough is enough? Or how many of the "elite" must be affected by our criminal culture before they get "serious." Let's get real here, as long as the upper 5% is not affected by the vicious cycle of drugs and crime, those that are, are considered disposable, non-humans.
Puerto Rico is a Kleptocracy or more plainly, a criminal state.

What do you call someone who disobeys a law? (This is not a joke) They are a criminal. I bet, that if the next time you see someone run through a red light, you say to yourself, there goes a criminal, you'll immediately have a new perspective on how acceptable that action is. What is the difference between disregarding a traffic law and disregarding the murder laws? What! You say, those aren't anything alike, I mean for God's sake one is a victimless crime while the other ends a life.

Now, just for a moment, place yourself in the shoes of a kid living in the projects who is surrounded by drugs, crime, and prostituation. Consider also that his parents, schools, government, and soceity have failed him and shown him he is expendable. Do you think he gives a damn about the distinction of the severity of a crime? For him, his lawless environment gives him no way to see any difference. And if he isn't gunned down, then by some miracle of police effectiveness, we'll just add one more to our exploding prison system.
It's everyman and everywoman for themselves here.

Call it zero-sum theory, or protecting what's yours. Consistently through all of the classes of society there is no sense of "we," as in "we are in this together" or "we are part of a global economy."

Even the very organizations we create to "help" each other (unions, non-profits, chamber of commerce, detallistas, etc.), eventually decay into a self-fulfilling organism which is mostly interested in perpetuating itself, instead of actually providing any benefit to anyone other than the leadership of that organism.

Where are the grass-roots organizations which create charters that limit the size of leadership size, limit the benefits of their leaders, and open themselves up for public scrutiny? Where are the user-groups which band together to share knowledge and advance their members? Name me one technology support group that still exists and regularly provides valuable and useful assistance to its' members. Where are the social entrepreneurs who recognize that our "government" is powerless to address many of Puerto Rico's core issues and devise a business to help? Or for that matter, why aren't there more organizations that are forming to combat our problems?
Our inability to make a decision regarding status.
In the end you have to ask yourself, "What is it called when the same status has been around for more than 50 years?" You call it a decision. If we wanted our status to be something else than we would have changed it. Making no choice is still a decision. While I believe that deep down, as demonstrated in the pride in our anthem, our folk songs, our celebration of any achievement, most Puerto Ricans want Puerto Rico to be independent. Even in people who say they are PNP, you hear them say I'm Puerto Rican first, then I'm an American citizen. Translation, I am and will always prefer to be an independent entity. But damn if my BMW, beach house, closed community, cigars, Dom Perignon, vacation in Tahoe or Disney, and mass consumption fine.
We don't "own" any of these problems.

By relegating the solution (and the underlying responsibility) to the government, our schools, and the resolution of the status issue, we essentially rationalize away our part or participation in the creation, sustenance, and acceptance of these problems. Hey man, just don't ask me to sacrifice or invest anything to actually work on these issues, I'm too busy and comfortable to become involved.

In the end, you have to conclude, that as a society we have no conscience. What's that? It's the sense or consciousness of the moral goodness or blameworthiness of one's own conduct, intentions, or character together with a feeling of obligation to do right or be good. How else could you explain an island which has absolutely no strategy (or recognition as a problem) to manage it's solid waste? Where exactly are our children and grand-children supposed to dispose of their garbage when there's no place left to put it? Will they ship it to the Dominican Republic?

I know, wha wha wha. These are the problems that nearly every society faces. So why should Puerto Rico be any different? If other countries can't fix these problems, what gives us any hope that we can do better? Well I say, who gives a shit what any one else is doing in their country, I mean isn't that pretty much our attitude anyway? I'm just flipping that perspective on it's head and saying that if we don't care enough about our people, our culture, and our beautiful little island, then who will? We should only be concerned with how we are going to fix our problems.

Imagine that you're a doctor, and Puerto Rico is the patient. Can you hope to save the patient if we work around the fundamental cause of the patient's symptoms? Would that patient have any chance if we only treated their symptoms? Oh yes, I know it hurts, just tell them to drink these pain killers(alcohol, drugs, mass consumption) and it will go away. Never mind that they have Dengue Fever and will be dead in a week. At least they'll feel good on the way out! Then when they're dead, then I guess they're not your problem anymore, are they?

Flickr Creative Commons Contributor: Atomische.com

Intro: How to Save Puerto Rico

2008-12-12T07:01:00.003-04:30

Yesterday I ran across a quote, which seemed to appear to me as if on queue. In a recent conversation with Gil, of Jil the Geenus fame, about how he found the motivation to continue blogging. He shared a story concerning a project that he may become involved with that was based on an idea he previously shared on his blog. The quote, which I found on the fantastic resource IT Conversations (I'll tell you a little about them later), is attributed to Milton Friedman, who was an American economist, public intellectual, and recipient of the Nobel Prize in Economics. He said,

"Only a crisis, actual or perceived, produces real change. When that crisis occurs the actions taken will depend on the ideas lying around."

I had brought up the subject of motivation with Gil because I have to confess that I have been suffering from a serious challenge to my blogging motivation. I believe the single largest challenge we all face in Puerto Rico is the temptation to surrender to the status quo. There ARE some very talented people in Puerto Rico, let's call them heroes for even caring enough in the first place, to attempt to bring about change. However, when our hero confronts people, teams, or organizations which have slipped into the easy, soothing, comfort of mediocrity, the odds become stacked against them. Unless the idea, project, or initiative the hero is working on can win over the hearts and minds of the mediocre masses, quickly the passionate and motivated hero becomes frustrated, disappointed, and weakened. When that happens our hero becomes easy prey for the viciousness of the status quo, which quickly attacks and turns doubts into defeat.

So, from now on, I'll be writing about things I would change if I had the power to do so. I'll do so with the hope that someone, who does have that power, will find my ideas in their time of crisis and find them worthy of consideration. Much like leaving a warning for the survivors of annihilation, consider my future posts the guidelines to help rebuild (or build) our enchanted island into the paradise it can and should be.

If you've been thinking that no one seems to care, take solace in that they probably don't. But consider your motivation, sure we all want change, but we want it now (you know instant gratification and all that). There is another perspective to this. Check out Dave Pollard's "About the Author" essay. He concedes that, in his opinion, the world can not be saved. So why would someone who has concluded that the world can NOT be saved, write a blog about "How to Save the World." I'd say that it is exactly the concept stated by Mr. Friedman.

Plug: If you have never heard of IT Conversations, I'd highly recommend you do so. They've evolved beyond IT topics and cover a wide selection of topics, one in particular which could be beneficial for us is social innovation. One thing they do which I think is truly special is to record speeches from important conferences and make them available as podcasts. A few examples are SuperNova, O'Reilly Emerging Technology, Singularity Summit, and the Skoll World Forum. If you're looking for a way to catch up on what's current, there are few better resources than IT Conversations.

Flickr Creative Commons Contributor: Michael Mistretta

A challenge: How to save an addict?

2008-12-09T06:00:00.004-04:30

First of all I want to commend Gil the Jenius for answering my questions. He didn't have to, but he did and the passion he put into his responses fills me with hope. As before, I don't necessarily agree with all of his answers, but, unlike most, Gil and I believe that differences are healthy, for they fuel the research, conversation, and debate necessary in evolving solutions which build consensus.

It may not come through, but I care deeply about Puerto Rico. Besides living here, I have children growing up here, so I care deeply about Puerto Rico and it's future. I tell everyone that I believe it is paradise, what I don't like is how this paradise is treated. It disappoints and frustrates me that this paradise is not cherised and protected, like you would anything you value highly.

I really appreciate the time Gil put into his answers. He has stimulated my thoughts and challenged some of my assumptions. For that, I thank you Gil, but know this. I'm not quite satisfied with some of your answers, so I'll be picking up those threads again. Especially about the topic of oppression (which was the word I should have used) and pride, which I have to confess didn't come out exactly how I wanted. I was impressed by Gil's list, but that left me with the sense of having asked the wrong question. Of course, there are many things and people Puerto Ricans should be proud of, but it should be more than a list. I have a hunch that if I can ask a better question, we can get closer to understanding how to initiate action.

The time for words and lofty speeches are gone. It should become increasingly clear, that the only way we can change our staus is if we unite. Only with unity and solidarity will we establish momentum towards resolving our status. However, as Gil pointed out, according to the United Nations, we've been charged with resolving our status for 55 years and have failed to do so.

Gil is right, we are an economic colony of the United States, but we are so by choice. Much like the cocaine addict is an economic colony of Columbia. Both offer escapism. One through drugs and the other through the illusions of television and consumption. But we are both still addicts.

Our challenge, is equal to that of a concerned family member to an addict. We feel powerless because we are unable to influence the perception and behavior which keeps our beloved locked into a cycle of addiction. However, I know. I believe. That there is a way to breakthrough the cycle of addiction. It may require that we must witness our society hit absolute rock bottom. But there is a bottom. And once we reach it, the only way to go is up. Hopefully a leader (a real leader) will be there to lead us to finally finish what was started 55 years ago. So, yes Virginia, there is hope.

Flickr Creative Commons Contributor: Kevin Labianco

10 observations for the future of media

2008-11-26T19:46:00.004-04:30

The Publishing 2.0 blog pointed to a recent article from an analyst at Screen Digest, which compares YouTube and Hulu. They also offer up, in no particular order, ten observations about the future of media:

Professional content still has A LOT more value than “user-generated content.”
Legal content still has A LOT more value than illegal content.
Professional content produced for analogue media is worth pennies on the dollar when distributed in the web’s commoditizing content marketplace.
It probably costs a lot more than $180 million to produce the content on Hulu, which means that it’s not a standalone business.
Ads inserted into online video are about 1,000 times more annoying than TV ads (I say this having watched many shows on Hulu) — losing control of your content is not a web-native experience. This suppresses advertising value.
TV/Video will likely follow the path of music and newspapers in suffering a dramatic decline in content value on the web.
Video is probably not a panacea for newspapers trying to reinvent their businesses on the web.
Most analogue media businesses, when fully transitioned to the web, will likely bear little resemblance to the original businesses.
Google isn’t doing any better than anyone else at solving the content commoditization problem on the web.
Six years after Google perfected search advertising, there has been no innovation in online advertising that even comes close to the same scale.

Ready for a few more questions?

2008-11-26T08:26:00.005-04:30

I'll jump into this more, but I gotta run right now. Here are some teaser questions:

What role and responsibilities does the education system have?
What role and responsibilities do parents have?
Are we our brothers keeper?
What role and responsibilities does the government have?
What is our role and responsibilities as private citizens?

Flickr Creative Commons Contributor: Oberazzi

Re: Referendum or Restitution?

2008-11-25T08:15:00.004-04:30

For many, maybe most Puerto Ricans, there is no more divisive, controversial, or infuriating topic than our status. Now, this is probably one of those topics I should just stay away from, because I'm not impartial, in fact, when most people see me, they see that I'm part of the problem (or at least represent the problem). Kind of like asking your only black friend what it is like being black (but that's another story).

So while all of the warning lights are flashing and alarms are sounding, Gil the Jenius, in his usual fashion has brought a fresh perspective to the status issue. However, that fresh perspective was the drop that over-flowed my glass, so I can;t resist to add my own perspectives. And if he opened a can of worms, I hope to open a can of snakes.

Now let me first acknowledge that since I'm from a sovereign country, the one most blame for preventing Puerto Rico from gaining it's own sovereignty, these observations are perhaps irrelevant, but I hope anyone who reads them will at least consider their merit regardless their source.

In the Socratic method, all I'd like to do is ask a few questions, I'll leave their answers and any subsequent conclusions to the reader.

When considering status, please consider the following questions (oh and by the way, this is not an argument for statehood, so I'm not going to be asking any direct questions about statehood)...

Why is it important for Puerto Rico to solve the status issue?
What are the injustices or needs or freedoms that would be solved (removed/added) by solving the status issue.
With the exception of the travesty in Vieques, has the US done anything to Puerto Rico like Russia recently did in Georgia?
If we don't pay taxes to the US, what is it that they are doing to us through their continued colonization of Puerto Rico?
If free trade is a potential reason for sovereignty, what is it that we have that is worth trading that would sustain our economy?
If Spain kept Puerto Rico as a colony for 400 years, why isn't there the same level of animosity towards Spaniards as there is towards Americans?
If we reject American culture because of it's colonization of Puerto Rico, why do we embrace our Spanish culture? Didn't they keep Puerto Rico enslaved for 4 times longer?
In today's globalized economy. aren't all economies so closely linked as to be considered tightly integrated into a world economy? Can Puerto Rico sustain itself as an independent economy?
Is the trend currently for countires (and companies) to join teogether, like has been illustrated by the union of many European nations, or is the trend for countries to ban together to unite?
Many people say that our colonial status, "perceived" lack of identity, or the unconcluded self determination of status are the reasons we suffer from the affects of drug trafficing, crime, poverty, and government corruption, why do most other independent Latin American countries suffer from the same issues?
What does it mean to be free? Free from what? Why is it so desirable to be a free country? Does freedom mean that we'll be safe?
Is the desire to be free idealogical or is it based on the motive of what's best for the majority of the people who live here?
If our motivation is idealogical would it be worth thrusting upon the majority of our citizens the hardships that becoming independent would most assuredly cause?
Recently, most Latin American countries have been experiencing economic growth between 6 and 10% annually. Isn't that because most were previously considered under-developed nations?
If we're considered (by our own government) to posess a first world infrastructure, where would our economic development come from if we've already risen from third world status?
If we are already proud to be Puerto Rican why do we abuse the island environmentally or abuse our fellow citizens?
What does it mean to be proud to be Puerto Rican? what exactly are we proud of? Sure there are achievements, I'm not speaking of that. If we are so concerned with what our families, neighbors, and friends think about where we live, what kind of car we drive, or what brand of clothes we wear, why doesn't that same concern for self-image expand to what other countries think of Puerto Rico when they visit or observe the island?

I know these are tough questions, inflammatory, and potentially in your face questions, but I think we've lost the meaning of why we want to resolve the status issue. To me it seems we'd rather rattle our sabres and claim nationalistic reasons, but we've lost the meaning of (or no longer want to stop and recall) what it means, in the first decade of the 21st century, to be a "nation." I think we suffer from wanting what we do not have. We live in paradise and really have the best of all situations. In the next post I'll offer my observation of why we can't make the best of that situation, and what we need to do.

Flickr Creative Commons Contributor: wallyg

Bidding for Wishes

2008-11-13T07:10:00.005-04:30

Just imagine the setting....It's evening and the only lights on are the candles on the dining room table. You're sitting across from your beautiful spouse and you've both dressed up for the occasion. On the menu? The best wish ever! A special "Morton’s The Steakhouse Dinner in Your Home.”

Morton’s The Steakhouse in San Juan is offering guests a larger-than-life reward for a great cause. Recently, Morton’s kicks off Bidding for Wishes: Your Bid Could Help Make Wishes Come True, a silent auction to benefit the Make-A-Wish Foundation®. Guests can bid for a really big reward: A rare limited edition 27-liter bottle of Charles Krug Cabernet Sauvignon plus a “Morton’s Dinner in Your Home” for eight donated by the restaurant. The silent auction concludes on Dec. 31.

Bidding for Wishes is the latest in a series of special Morton’s events to raise funds for the Make-A-Wish Foundation and celebrate the Morton’s 30th anniversary. Morton’s steakhouses nationwide have raised more than $150,000 this year for the Make-A-Wish Foundation. The goal of Morton’s “30 Wishes for 30 Years” national campaign is to help grant the wishes of at least 30 children with life-threatening medical conditions.

To learn more, call Morton’s The Steakhouse at (787) 977-6262 or visit the special web page for the promotion. Morton’s, located at Caribe Hilton Hotel, serves dinner nightly from 5:30 p.m. to 11 p.m. Monday through Saturday, and from 5:00 p.m. to 10:30 p.m. on Sundays. Valet parking is available at Caribe Hilton.

Flickr Creative Commons Contributor: tloweryphotography