I have lived in Puerto Rico for a little more than seven years. In that time, I have experienced the island go through Chikungunya, Zika, a Commonwealth bankruptcy, hurricanes, earthquakes and now COVID-19. The Puerto Rican people are resilient.
They have been through so much, they just know they have to endure to survive. Prior to all of these catastrophes, the economy had been in a recession that has exceeded 15 years due primarily to the changes eliminating Section 936 of the U.S. tax code.
Because of laws 20 and 22, there had been an undeniable uptick in GDP to almost break through back to positive GDP growth this year. Then COVID-19 happened.
Puerto Rico was one of the first places to proactively lock down its people with mandatory self-quarantine. This emergency measure was done earlier than any state and I supported the swift action. Gov. Wanda Vázquez was decisive in preventing the pandemic from spreading here.
Since the lockdown, Estudios Técnicos has estimated the damage to the economy to be between $2.8 billion and $5.8 billion; later revised to $8.3 billion. I know the estimate is woefully inadequate in measuring the devastation.
In the U.S., we’re looking at GDP dropping to the worst levels since the Great Depression of the 1930’s.
Unemployment in the U.S. is expected to exceed 25% and there are confirmed almost 25 million people recently out of work.
Puerto Rico will only be worse in percentage terms as it started with much higher levels of unemployment and already negative GDP. At latest count, there was about 1,213 COVID-19 cases and an estimated 62 deaths. These are impressively low numbers even on a per-capita basis.
Yet when can we re-open the economy before the patient of business is dead? I am on the BEOC task force, which is the public-private partnership with the government to address emergency situations like these, created after Hurricane María.
I hear from the sector leaders three times a week about how the government support at the U.S. level has not been adequate, and the Puerto Rico government, which is still bankrupt, is not in a position to do more economically.
At what point can we ignore that the more than 100,000 small businesses that normally do not even have two weeks of cash reserves to even reopen, if we do not start opening now?
On one hand, if we consider to normally open the entire economy “business as usual” right now, we will certainly see a significant increase in cases and mortality rates. However, if we open in stages following the plan suggested to the government, and limit the quarantine to the elderly, the infirm, and the people at risk (i.e. diabetics, asthmatics), we can minimize these issues and at least give a chance to avoid the estimated 50% of businesses that will be unable to reopen because they could not sustain the losses long enough.
I heard a recent analogy that resonated with me: “If we drop the speed limit to 5 MPH, we likely will have no deaths from car accidents. Yet it would take someone 10 times longer to get to work which is not viable, and commerce would also come to a halt because the rest of the world operates at much higher speeds than 5 MPH.”
So, there is a delicate trade-off between the death of the economy and projected controllable death toll rates. Seeing both aspects as extreme opposites is unacceptable and yet there needs to be a tradeoff between the lesser of two evils.