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The Economics of Accomodation Published: Sunday, September 18, 2005 By: Dr. Manuel Ángel Morales

Throughout Puerto Rico’s history the role of government has been to promote development as the main player in the game. In other words people expected (are accustomed to) that government had to produce the solutions to economic and social issues that affect the nation. This was in part induced by a great need our society had in the middle of the twentieth century, which demanded quick, visible, dramatic and profound actions to jump start economic growth. In those days the role of government alone could perform such a role, because our social fabric was feeble and the spillover effect could be felt across the board.

But in our postmodern reality, a complex society has emerged bringing with it a whole new set of challenges, puzzles and dilemmas. Thus, responding with intelligence requires a lot more than decrees, regulations and codes. What we are saying is that our new social fabric is full of knowledge, trading, openness and empowerment, so government needs to couple with these new rules of engagement. It must come to terms with the reality that once upon a time it created the game, now it is just a player in a whole new game. The rules of the past do not apply to our current situation, thus actions must be well thought and well synchronized with other sectors of society.

One of the core assets of our current situation is Puerto Rico’s strong base of enterprises, business and private organizations. The economic growth depends mostly on what takes place in the free markets arena, in other words government does not produce wealth, and enterprises do. So government must be cautious, because it is documented that every time that the hand of government enters the fray of free markets, the end result could be that growth is restricted, elevated prices and extreme volatility.

If government wishes to contribute to Puerto Rico’s well-being it must come to terms with letting free markets deal with demand and offer issues; it must come to terms with the challenge of coping with what is taking place within free markets; it must come to terms with letting competition decide the best price structure for customers and finally it must come to terms with fostering wealth creation.

Becoming part of the solution is important, but problems won’t be solved by decreeing higher taxes to corporations, problems won’t be dealt with by regulating the basic price structure of markets and problems won’t be worked out by establishing stricter codes that become a death warrant to business organizations of all sizes and that erode the economic infrastructure and its capacity to produce trade, wealth and employment.

Government can facilitate the traffic of inputs and outputs; it can promote an open climate of tolerance, dialogue and problem solving discussions; it can encourage the creation of new knowledge and innovation; it can nurture new generations with sound education and equal access to opportunities; it can advanced the Puerto Rico’s current competitive capabilities; it can exert sound leadership by showing that it is important for individuals to learn how to fish; it can foster the distribution of responsibility between the private sector, the non-profit sector and other stakeholders; it can work to control its size, optimize its respond time and streamline its processes and ultimately it can nourish society’s hope that tomorrow will definitely be a better day for all of us.

The new success indicators will radiate from the smile of a child, the health of our elders, the productiveness of people, the optimism of society, the hope of families and the strength that comes from crystallizing a cohesive society, that understands the challenges for Puerto Rico’s sustained progress and that knows how to contribute, behave and think to successfully dealing with them.

God bless Puerto Rico, its government, its enterprises and its families.

 


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