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Experts: Puerto Rico’s problems rooted in gov’t inability to change

Economists José J. Villamil and Carlos Colón de Armas

Economists José J. Villamil and Carlos Colón de Armas

Puerto Rico’s current economic situation is deep-rooted in the government’s inability to understand the gravity of the problem and the outcome of doing the same things over and over again, while expecting different results.

“We continue to follow the same patterns, processes, governance and economic structure from 50 years ago, and if that doesn’t change, we won’t be able to find the solutions that we need,” said José Joaquín Villamil, one of two economists invited to speak before the Sales and Marketing Executives Association’s monthly luncheon Wednesday.

Villamil and his colleague Carlos Colón de Armas concurred Puerto Rico got to this point of economic unsustainability for several reasons, including: the government’s decision to substitute investment for consumption; allowing the government to overtake the economy; and ignoring the change in rules brought on by globalization.

“The world moved in one direction and we stayed firmly anchored in the 50s and 60s, which has led us to where we are,” Villamil said, mentioning the island’s burgeoning debt, high unemployment and low investment levels.

These issued are coupled with significant internal challenges such as: demographic changes that are leading to an aging, less productive population; an island with a seemingly unstoppable population drain; a reduction in the number of economically productive households; and an overwhelming level of public debt.

‘Observe the evidence’
“The key to pulling out of these problems is to observe what the evidence is telling us, not be led by word of mouth, but rather stop and take a close look at the route that Puerto Rico must follow,” said Colón de Armas. “For one, we have to redirect money toward investment, not toward consumption.”

And the solution, they said, is not in the government. The solution, they said, is in the private sector and its ability to take advantage of opportunities that exist, despite the grim outlook.

“Even in times of crisis, there is good news and opportunities for success. The key is to properly analyze available data and develop appropriate strategies,” Colón de Armas said.

“In recent years, our hemisphere, particularly in Latin America and the Caribbean, has had a good economic performance, while the rest of the world has experienced problems. This represents an excellent market that Puerto Rican firms can exploit to significantly increase sales,” he said.

Private sector needs ‘single voice’
Aside from looking for opportunities, the private sector also has the responsibility of working together and speaking with a single voice to the government and lawmakers on what is needed to pull Puerto Rico out of the ditch it has fallen into, Villamil noted.

“That’s the first thing the private sector has to do. What happened with the budget debate was truly embarrassing because each entity went there to defend their territory, giving politicians the opportunity to say, well if the private sector can’t agree, then we’re going to make the decision for them,” Villamil said. “There has to be a single voice that speaks coherently and sensibly.”

“And to put a plan in motion, everybody has to sacrifice something. We can’t continue with the idea that everybody has to protect its turf,” he warned.

Meanwhile, Colón de Armas added that the private sector has to “learn the numbers.”

“When we’re discussing budget, economy, development issues, we’re not discussing philosophy. What I see is a private sector that goes to discuss issues with the government without knowing the numbers. And I see how the government responds to the private sector with numbers that are wrong,” he said.

“The private sector is then neutralized because they’re making statements not based on true data and they’re disarmed by the government with numbers that appear correct, when they’re not,” Colón de Armas said. “Do your homework, know the numbers.”

Author Details
Author Details
Business reporter with 30 years of experience writing for weekly and daily newspapers, as well as trade publications in Puerto Rico. My list of former employers includes Caribbean Business, The San Juan Star, and the Puerto Rico Daily Sun, among others. My areas of expertise include telecommunications, technology, retail, agriculture, tourism, banking and most other segments of Puerto Rico’s economy.


  1. bluepup June 27, 2013

    If these two economists are claiming they know
    what the problems are in PR’s economy, why
    haven’t they spoken up sooner? Where were they
    all this time? If they spent less time diagnosing a
    problem, everybody is already aware of, and more
    time seeing to it that those in government or private
    investing know what to do, then maybe they would
    be onto something. It serves very little purpose, to
    come out “after the fact,” and state the obvious.
    They and their colleagues should have been more
    vocal and pro-active in making sure the following
    generation, fully understood where the island was
    headed unless people changed their thinking. That’s
    what great teachers do. What these economists are
    now saying is too little, too late. The time for spectators
    is past; “doers” are what’s needed.

  2. FJ June 27, 2013

    It’s not only the government’s inability to change, it’s the private sector’s and ultimately, society’s inability to change. This is the result of 500 years of colonialism.

  3. DavidRMartinR June 30, 2013

    A case in point is the administration’s recent trip to Spain in a quixotic effort to attract biopharma investors under the erroneous premise that Puerto Rico is globally competitive in this industry.


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