By: John Marino, Caribbean Business (March 26, 2011)
Puerto Rico is a sick society that needs radical changes to its economic, social and political structures if it is to return to progress.
That was the word from the Center for the New Economy 2011 Economic Conference, which brought together economists, social researchers, academics, business leaders, members of nonprofit institutions and students for the annual gathering that took place at the Caribe Hilton.
“Puerto Rico is a sick society. Our economic, social and political institutions are rotten and falling apart,” said CNE Public Policy Director Sergio Marxuach. “Our socioeconomic system is visibly reaching its end; everyone knows it, but no one is saying anything.”
Marxuach argued that before things can be improved, the island must develop new tools to measure progress because measuring the performance of the gross domestic product, or GDP, as a barometer of progress has failed.
For example, while per capita GDP growth grew to more than $15,800 in 2009 from just above $6,000 in 1960, other statistics, such as the crime rate, income distribution, skyrocketing debt and the obesity rate tell another story. For example, the murder rate hit 26.3 per 100,000 residents in 2010 versus 7.1 in 1970.
The CNE suggests using a series of broad indicators to measure social progress in Puerto Rico, based on the work being undertaken by the Organization for Economic Cooperation & Development (OECD). The OECD has spent the past several years developing sets of key economic, social and environmental indicators to provide a comprehensive picture of the well-being of a society.
“We need to measure correctly the gap between the society in which we live and the society we all want,” Marxuach said. “The analysis will foment a more informed public debate about where we are, where we want to go, and the decisions we have to take to get there.”
Dr. Harold Toro, CNE research director, presented findings showing the financial insecurity of island households. Much of this information was gathered through a detailed Survey of Consumer Finances developed from in-depth interviews with household members across the island.
University of Puerto Rico professors Jorge Duany, Luz León López and Orlando Sotomayor took part in a panel discussion on the population loss and its impact on Puerto Rico’s social and economic well-being.
Keynote speaker Dr. Peter Blair Henry, dean of New York University’s Leonard N. Stern School of Business, spoke about the importance of policy as central to a country’s progress, pointing to the divergent paths taken by Barbados and Jamaica, two Caribbean islands with similar characteristics which won independence from Britain in the 1960s.
Barbados is today much wealthier because of its policies focused on developing the private sector, and reaching an agreement early on between its business, labor, government and academic communities on a path to prosperity, he said. Jamaica, meanwhile, opted for a centralized economy and large government social experimentation.
“Puerto Rico has the opportunity to be more like Barbados rather than Jamaica,” Henry said. “Policy matters a great deal for economic outcomes. This is relevant to Puerto Rico because it has some very difficult decisions to make down the road.”