“Democracy, according to the Greeks, is the political doctrine that favors an intervention of its people in the government and the bettering of the conditions of a society”
Democracy and economic development are two concepts that are closely related to each other. Economic literature is comprehensive regarding the good performance of public institutions, citizen participation, transparency and the individual liberty are all essential basics for the optimum performance of the economy.
There exists a close correlation between democratic systems that are extremely functional and stable and prosperous economies. By examining the ten most competitive economies in the world one can see this relationship.
During the past months, the word “democracy” has been heard with regularity in the day-to-day of many Puerto Ricans. As the implementation of the Federal Oversight Board (FOB) gets closer, some sectors use the argument that this new organism will take many of the powers delegated to the Government of Puerto Rico by Congress. With indignation, many believe that the FOB is antidemocratic because it establishes a type of government that has absolute powers over the officials elected by the people. The principal argument is that democracy as we have known it from 1952 to the present, would stop working.
All of these arguments would have much validity if the people who debate them would have done a good job regarding the political and economic instruments that were provided after the establishment of the current model of self-government in 1952. It is true that, during this time, there were multiple administrations that governed Puerto Rico well, but, more recently, the two main political parties have distanced themselves from what is a good government.
If we look at the evolution of the economy during the first two decades of the birth of the self-government model, it is clear that there was a healthy economic growth, with rates that reached 6%. The institutional framework of Puerto Rico was almost so perfect that it was called “the showcase of democracy” and the United States used us as an example for other developing economies.
At the height of the industrial-economic takeoff, the country was able to construct a technocracy that would be vital for the development of a good culture in the public administration. Everything was going well and the democratic experiment contrived in 1952, even with its limitations, gave ample space to local politicians and the rest of society, to construct what would be one of the most stable and prosperous economies in its hemisphere. In two decades, Puerto Rico achieved an industrial transformation that has taken other economies decades. Even after the start of the partisan alternation starting in 1968, both main parties looked like they respected the most essential fundamentals of the economic and political model. The attachment to governance looked to be of important value, at least until the end of the decade of 1980.
Stagnation
At some point at the end of the decade of 1990 and the beginning of the new millennium, the democratic experiment and the economic project began to fail. The first hit to the stability came when the only instrument of economic development in Puerto Rico that was actually moving the economy, Section 936, was let to die because of ideological reasons.
Independent to its defects and the dependency that created the economy into an instrument that was out of control for the local government, it was irresponsible to not protect this mechanism, and even worse, to not construct a new program of economic development once it was eliminated. After the moment that the capacity to attract new investments and retain the existent, the economy entered the stagnation phase that it still finds itself in today.
Gradually, Puerto Rico distanced itself from the good government concept, to submerge itself in a continuous partisan war with the only purpose of achieving power no matter the cost. The energy of the political parties started to be utilized solely to obtain control of the government, and less for the development and execution of economic and governmental programs.
After the start of the economic depression in 2006, while the contraction of the contributive base gained speed, as the economy contracted itself, the fiscal policies started to turn to increase the public debt and crucify the people with more tributes such as the consumption tax, the national patent and the tax on petroleum derivatives.
The same types of governments that fall in one same class, to which I call bi-partisan dictatorship, decided to save the government even if that implied sinking the private economy. After a decade, this exploded in the faces of the same that created it, and from there to one step away of the imposition of an external mechanism called the Fiscal Oversight Board.
The democracy stopped working the day that the parties stopped governing for the well-being of the people, and instead chose bad fiscal decisions to preserve their power, that have sunk the country even more during its economic crisis.
Like Judge Steven Rhodes explained, in charge of the bankruptcy of Detroit: “To solve the fiscal crisis of the city, we had to diminish the democracy a little, and then we gave it back to the elected officials, and told them to put it back to work again”.
That is the same reflection that we have still not done in Puerto Rico.
