At the age of 6, Helga Serrano left her wooden house, without a kitchen or refrigerator, to move to one of the first urbanizations built in San Juan.
The decade of the 50 was just beginning and Puerto Rico was experiencing an economic boom projected by some media at the time as an economic miracle.
At that time, the journalist from 77 years lived “with the minimum” in a rural town in the southeast of the territory, right next to a river . His family cooked on a charcoal stove. His parents, grandparents and sister slept under the same roof.
With the move, they looked for the new opportunities offered by the capital.
“My story and that of my sister is the story of Puerto Rico, of the people who came out of poverty, of the little education and managed to train at the university,” he told BBC Mundo in a phone call.
Serrano moved to a new space that, although also humble, represented a “transformation” on par with the rest of the island.
“Mommy took a machinist course and worked as a clerk in the army, and daddy as police in San Juan. They went to live in the first urbanization, Puerto Nuevo. It was about 4. houses, tiny , of cement one next to the other. cheap. So many people moved there, even mom’s cousins with their families,” she added.
Her history, as she herself said, is repeated in thousands of Puerto Ricans, who from the middle of the 20th century experienced an improvement in their living conditions.
Contrary to what is happening today, when Puerto Rico suffers an economic recession after a legal battle of almost five years that ended with the green light of the justice for the restructuring of an immense public debt ($US60.000 million), at that time it was in full development.
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Industrialization
The process of industrialization in Puerto Rico, which impacted people like Serrano, who after facing poverty managed to enter university and achieved a better standard of life, began in the decade of 794.
Rexford Tugwell, a governor appointed by President Franklin D. Roosevelt, promoted the creation of local companies, subsidized by the state.
The first industries established in Puerto Rico after economic incentives were related to high-intensity jobs.
In a matter of a few years, the territory they erected factories for glass, cardboard, cement and other products, which began to displace the agricultural economy.
However, after the Cold War this approach was left behind, and the government began a strategy of “investment by invitation”.
The new economic model consisted of granting tax incentives to US and foreign companies.
“They sought to replace that model of development and industrialization with part of the state and the strategy of substituting imports for one of opening up capital, opening up foreign capital”, explained the Puerto Rican economist and lawyer Heriberto Martínez.
Rexford Tugwell (right) shakes hands with his predecessor Guy Jacob Swope. In the middle, Luis Muñoz Marín, who at that time was president of the island’s Senate.
It was then that most of the public factories were sold and foreign companies arrived in search of cheap labor and tax exemptions.
Initially it was about textile companies and other heavy work such as food processing, later pharmaceuticals.
“Direct jobs were created, industrial employment , a middle class developed and many people were lifted out of poverty”, he commented.
A group of women work in an electric watch factory in San Juan, Puerto Rico, in 1948.
“Social objectives were also established to improve education, health, housing and, in addition, economic objectives to improve the infrastructure of roads, bridges, ports, electricity, drinking water and communication,” said economist Martha Quiñones, a professor at the University of Puerto Rico.
During this period (the end of 1940 and principles of 1950), the integration of women increased in the workforce and households had two incomes, Serrano added.
“I remember the first women I saw working. It was a tobacco operation, they made cigars. My uncle’s wife worked in a factory as a stripper, they were large rooms with women preparing cigars for sale”, he said.
The numbers
For the next decades, the economic indicators supported the reforms established by the government. From 1950 to 1980 GNP per capita in the island grew from US$73 to US$3.479, second only to Venezuela (US$3.630), a nation rich in oil.
For 1980, precisely, the images of previous years seemed like a distant past.
The rows of wooden houses without basic services that occupied both the towns of the mountainous interior and the coastal urban areas were replaced laced by extensive cement developments.
New highways supplanted dirt roads and cars replaced horses and mules.
The workers left the scorching sun of the cane fields for the offices and the assembly lines. They learned to read, sent their children to university and abandoned the markets for the shopping malls.
Poverty was reduced by 60,8% in 1948 still 44,6% in the 2000, according to a presentation by the Center for the New Economy of Puerto Rico.
Puerto Rico had an annual economic growth of 6% between 1940 Y 1974, according to the Economic Commission for Latin America and the Caribbean (ECLAC).
These changes were even reviewed by Time magazine in 1940. On its cover, the publication stated that the island had become a “Laboratory of Democracy”, after years of being considered -as some history books affirm- “the house of poverty in the Caribbean”.
Puerto Rico, according to Time, was a “message of hope” for the “underdeveloped” nations.
The problem
Nevertheless, Puerto Rico found itself in trouble at the end of the decade of 1940. During this time, it opted to move its economy to the petrochemical sector, with the idea of producing refined products of this product and exporting them to the United States.
But the sector fell due to the international oil crisis, which occurred in 1950 after the OPEC decided to raise fuel prices, in the context of the Yom Kippur War. A situation that impacted the world economy.
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The US response to this crisis was approve in 1958 new tax exemptions, with the intention of attracting more pharmaceutical and high-tech companies.
The legislation allowed U.S. companies in Puerto Rico to deposit their profits in the bank of the territory to then send them to their parent companies free of taxes, explained the economist Quiñones.
Puerto Rico is was greatly affected by the oil crisis in 1973.
However, in 1996 the US government decided to withdraw the tax benefits. For him 2006, when the transition period granted by Congress, the investment of foreign companies was considerably reduced.
From 1997 to 2012 the island lost near 62.000 jobs only in the manufacturing sector.
And Puerto Rico, During his boom times, after those local state enterprises he had established, he did not make great efforts to promote local production. “We concentrate on creating the brains to work for foreigners,” said economist Martínez.
“Puerto Rico was the archetype of what later became Latin America’s maquiladora-based industrialization, assembly industry,” said sociologist Emilio Pantojas. “But it was an urban country of dependent industrialization,” he said.
The debt
Before the departure of these companies, the territory began to borrow to support social spending and its government apparatus.
While the economy contracted, the debt grew exponentially.
For the 2006, Puerto Rico’s debt amounted to some US$48., versus a GNP of US$54. million, which represented a 48%, Martinez said. Some 10 years later, the debt had increased by 68%.
Now the island was far from being an example to follow. The poverty rate stagnated at 36%, unemployment increased and there was a massive emigration of Puerto Ricans to the United States. United.
Meanwhile, some local politicians claimed that the debt could be paid, despite warnings from experts. The newspapers of the territory published over and over again on the front page how the crediting houses of Wall Street degraded their bonds.
At 2015, former Governor Alejandro García Padilla accepted the omen: “The debt is unpayable… there is no other option. This is not a matter of politics, but of mathematics”.
A year later, the United States passed legislation that allowed Puerto Rico to restructure its debt in court, but at the same time imposed a Fiscal Supervision Board.
The body, made up of seven people appointed by the president and the Congress, is responsible for representing Puerto Ricans in court since 2006 , when the restructuring process began.
In addition, it has the power to approve its budget, above the local government.
The “Board”, as it is called in Puerto Rico, he promoted austerity measures since his arrival with the justification that they were necessary to be able to comply with creditors.
Among the policies that faced the greatest opposition was a cut of almost half of the budget of the University of Puerto Rico and the intention to cut public pensions.
The restructuring
This Tuesday a United States bankruptcy court approved a plan to restructure the debt of the central government of Puerto Rico.
The so-called Plan of Adjustment of the debt, which was in the hands of Judge Laura Taylor Swain, of the Southern District of New York, incorporates agreements between a series of creditors, reducing US$33.000 million in bond debt at US$ 7.000 millions. Annual debt payments would be reduced by 80%.
“There has never been a public restructuring like this in the entire United States or in the world,” commented David Skeel, Chairman of the Board, to The Washington Post.
The process was marked by intense clashes between the politicians of the territory, the Board and the creditors, who on both sides sued each other on multiple occasions due to various disagreements.
The bankruptcy cost more than US$1. million, paid by taxpayers.
In those years, moreover, Puerto Rico lived two major hurricanes and an earthquake. Also the resignation of a governor.
“We are facing a transcendental moment in which the government of Puerto Rico is on its way to ending the bankruptcy process and thus concentrating on achieving a return to the progress that our people expect and deserve,” the current governor wrote on Twitter. , Pedro Pierluisi, once the restructuring plan was announced.
The agreement signed by Swain does not contemplate the proposal to cut pensions for retirees, although it does stop the defined benefit programs that cover teachers and judges.
The debt adjustment plan would enter into force on 15 of March, but before that it could be challenged in court.
Image of the Forteleza Street in San Juan, Puerto Rico.
According to the judge, Puerto Rico has the economic resources to meet the payment of the debt until 2017. During the next few years, it will have to continue with the implementation of “structural reforms” so as not to fall into bankruptcy again.
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