The Golden Trap of Social and Economic Dependence

Presented at The 1996 Annual Conference of

The Club of Rome

by

Elas R. Gutirrez, Ph.D.

November 29 - December 1, 1996 Ponce Hilton International Hotel Ponce, Puerto Rico

Introduction A Fourth World of poverty and marginalization has emerged in the midst of the richest nations of the modern world. An encroaching way of life that wastes human capital, a discard remnant of industrialism, representing the polar opposite of the quality that should define progress. A variant of this phenomenon lies within the heart of Americas cities, i.e., the urban ghetto. The dependent society has been nurtured by government policies originally designed to help the poor in times of need. Instead, a horrible distortion, a Frankenstein, if you will, has been born. Technological developments have made outcasts of growing numbers that toil desperately, and are hopelessly trapped, within ghettoes of concentrated poverty and crime. These now constitute a growing underclass with a torn social infrastructure whose basic unit, i.e., the family, is on the verge of extinction. An apartheid where the basic human need for association is increasingly filled by criminal organizations. This, in full view of consumption patterns, stimulated by modern communications, bring in a clear message: you are, not what you do, but what you consume. In a Golden Trap The experiences of unemployment and loss of work-derived income, once typical of cyclical economic conditions, have become permanent fixtures in the dependent transfer-based urban economy. Policies, once-thought transitory, designed to ameliorate the effects of the economic cycle have, in fact, become accomplices to a vicious circle that condemns large numbers to permanent dependence on government dole. The Island-nation of Puerto Rico has become an Island-city exhibiting the same characteristics that rule in the urban ghettos of the northeastern United States. But, being the only nation that depends on an externally generated flow of funds to finance its welfare state, this is a transfer economy unique in nature. Thus, the trap glitters with an ephemeral sense of security that flows from what seems to be an unlimited source of wealth. Nevertheless, a trap it is. The psychological and economic implications are profound. The extent and degree to which this reality takes place would require more than the allotted time for this presentation. Let me just assure you that it usually provokes, at least, incredulity.

The Political Nature of the Trap We must notice that those sharing the trap include, not only the poorest of the poor in urban communities of erst industrial giants, but others still not in such extreme conditions. In fact, driven by political processes that have changed national priorities from productiondriven to social-welfare-entitlement-driven models, most western democracies have fallen into a condition that impedes long-term policies needed for sustainable progress to take hold. The policies dictated by financial responsibility require unlikely political support. Politicians perceive political costs associated with long-term, fiscally responsible, initiatives. In order to avoid falling into the snare, modern democracy requires an educated population, quality information and enlighten leadership. The modern democratic model, driven by electoral imperatives, is not apparently up to the task. Therefore, it is evident that conditions that perpetuate dependence, marginalization, extreme poverty and social havoc amongst consumption and waste, are not necessarily economic but essentially political in nature. Political structures driven by electoral processes based on majority rule and limited --or even manipulated-- information, ambush communities within the golden trap of the transfer economy model of dependence. A trap from which all exits spell pain to electorates unwilling or unable to trust leaders that preach discipline or the need for adjustments. Limits to the Traditional Sectors Science and technology have changed the nature of work. The organizational paradigms of the past are now unfit and uncoupled from the requirements and possibilities of post-modernism. Thus, the private economic sectors are unable to absorb human labor, when disjointed from minimum skill and educational levels. To complicate matters, protestations of incumbent politicians notwithstanding, public sectors are already facing the financial consequences of an emerging deadly combination. A new demographic structure, slow productivity growth, and the uncoupling of work effort from expected minimum living standards in the minds of an ever larger proportion of society, are principal ingredients to this combination. Minds have been

molded by decades of dependence and pampering from aspiring politicians. Minimum living standards are now expected as a right stemming from citizenship. But, hypergrowth has finally met its limit. Government expansion has been slowed or even paralyzed. Technology and globalization have limited private sector potential to absorb local labor. The fastest growing sectors, in terms of economic power and absorption of human activity, are the informal and criminal. In fact, money laundering has become the second largest world scale industry. An Alternative Supported by enlightened governments and corporate organizations, the third sector may become an alternative driven by community self-effort and voluntarism. Though significant, to large degree, this sectors activities lie outside the monetarised sphere of the economy. Even this alternative will require enormous political leadership to surmount the natural resistance to change expected from special interests. The required financial support will have to come from resources denied to the criminal sector, via consumption taxes and confiscation of properties impounded by law enforcement authorities. The Challenge Puerto Rico is but one example of dislocation derived from the dependent model produced jointly by post-industrialization and a political system driven by priorities dictated by electoral short-term visions. But we are also unique. Puerto Rico is a nation, a people. A people that took strides to progress, but finds itself immobilized in a golden trap from which all exits seem closed for reasons of paradigmatic change and political unfitness. As we have said, we share space with others in this trap. But there is one basic difference among those sharing the trap. That difference stems from the stock of wealth with which each entered the trap. That will dictate how long procrastination will be possible, before socially disruptive conditions ensue. One thing is clear: a way must be found out of the trap. A way that preserves and protects inalienable rights. There lies the challenge.