[Column] Think Strategically: Dreams of My Generation
DACA and immigration reforms
As the Martin Luther King weekend drew to a close, we must continue to think about the challenges, difficulties and hardship that most African-Americans faced during the Civil Rights fight. It is important to remind every American of such events as the Student Nonviolent Coordinating Committee (SNCC) leading a voter registration campaign in Selma, Ala., a small town with a record of consistent discrimination against black voters.
When SNCC’s efforts were frustrated by stiff resistance from the county’s law enforcement officials, Martin Luther King Jr. and the Southern Christian Leadership Conference (SCLC) were persuaded to make Selma’s discrimination against black voting a national concern. They hoped to use the momentum of the 1964 Civil Rights Act to win federal protection under a voting rights statute.
Six hundred marchers assembled in Selma on Sunday, March 7. One march, organized by Georgia’s current congressman, John Lewis, was referred to as “the 1965 Bloody Sunday march.” At that time, Lewis was 25 years old and beaten until his skull was fractured when he and other demonstrators tried to cross the Edmund Pettus Bridge on their way to Montgomery from Selma.
The Alabama State troopers and local police blocked protesters and ordered them to turn around. When they refused, the officers shot tear gas and waded into the crowd, beating the nonviolent protesters with billy clubs and ultimately hospitalizing more than 50 people, including Lewis.
My generation dreams that similar discrimination should never again happen in the U.S., and we must all unite to prevent similar acts of discrimination.
Also on our mind, we have DACA (Deferred Action for Childhood Arrivals) and immigration reforms. President Trump and congressional leaders are trying to work out an agreement that would address issues ranging from border security to legal immigration policies, and a solution to provide legal status for “dreamers,” who are undocumented immigrants who entered the U.S. as children.
There is an urgent need to arrive at a consensus in Washington and solve DACA before March 5, when these protections expire.
Most Republicans and the Trump administration are seeking to fix DACA while also tackling other broader issues such as a wall along the border with Mexico. On the Democrats’ side, they are trying for a bill that resolves DACA without mixing with other issues.
The road to resolving these complex issues will be difficult and twisted, but we are cautiously optimistic both sides will reach consensus. Otherwise, we will crush the dreams of several generations of children who have only known the U.S. as their home.
Crumbling U.S. infrastructure next on agenda
During his first year, he has already managed to pass tax reform, initiated efforts to reduce 75% of regulations and increased job growth. His credibility could grow if he tackles all the initiatives. The president’s approval rating averaged 39% during his first year, according to Gallup.
We reviewed Trump’s 282 economic campaign promises, with the top seven initiatives below promised during his campaign.
- The Tax Reform Act;
- Eliminate 75% of all regulations;
- Invest $1 trillion in rebuilding the nation’s infrastructure over the next 10 years;
- Double U.S. economic growth and create 25 million new jobs;
- Encourage manufacturers to build/grow their factories in the U.S. with incentives;
- Revamp the U.S. steel industry;
- Expand the U.S. auto industry to become bigger and better than before.
As the Trump administration gets ready to invest $1 trillion over the next 10 years to rebuild the nation’s infrastructure with the releasing of its infrastructure plan, a group of bipartisan lawmakers in the House issued a report calling for an increase in the existing gas tax to help fund infrastructure projects in the years ahead. The Trump plan is expected to advocate for $200 billion in federal funding for projects, with another $800 billion coming from state and local governments and private investors.
Some private-sector associations are starting to address the need to rebuild the infrastructure. The U.S. Chamber of Commerce on Jan. 18 will host “America’s Infrastructure Summit: Time to Modernize.” The high-profile day-long event will serve to jumpstart crucial conversations about revitalizing the U.S. infrastructure, ensuring the topic is a top policy priority for 2018, and bringing together the business community to voice broad industry support. Most economists have projected this effort will contribute positively to growth, perhaps as soon as in the latter half of this year. In the past 30 years, the U.S. has been in 13 wars, spending $2 trillion…. No matter how good your strategy is, you are supposed to spend money on your people, and that time is now.
Puerto Rico Update: Second Promesa Conference Jan. 31
The Puerto Rico Chamber of Commerce and Birling Capital Advisors LLC have released details on the Second Promesa Conference, which will be held Wednesday, Jan. 31, at the Condado Plaza Hilton. This conference brings together a group of experts in financial matters, leaders from the business sector and government agency heads to discuss the progress made since the first conference and educate on the challenges and opportunities currently being managed by the Financial Oversight & Management Board.
Puerto Rico faces greater uncertainty, and not only in the fiscal arena. Now, the country has to deal with the destruction of a significant portion of its infrastructure and more than 250,000 homes that experienced Hurricane Maria’s destructive impact.
The island’s search for new tools and better solutions now becomes urgent, if not critical. We have revised the conference’s educational program to include unique analytical panels and plenaries that foster critical thinking, focusing on short-, medium- and long-term solutions.
Some of the conference topics include:
- Fiscal & Economic Update. A View of Two Islands: Private & Public Sector
- Energize, Revitalize, Transform & Restructure our Electric & Water Services
- Legal Challenges with Promesa: The Impact on the Budget & Taxes
- Puerto Rico Economic Development Growth Plan
- The Legislature’s Views on the Economy, Promesa & Opportunities
- Reinventing Cities: Governance, Finance & P3s
- Keynote & Update from the Promesa Board
- The Business Sector: Perspectives & Proposals
If there was a critical time to host such an event, it is at this juncture as the island searches for solutions to its fiscal and economic challenges. For more information, call 787-721-6060 or visit 2nd Promesa Conference 2018.
Final Word: Measuring the benefits of government spending in a recession
To increase our economic growth by more than 2% over the next 10 years, Puerto Rico must implement a package of structural reforms, strengthen infrastructure, reduce regulations, create employment opportunities and convert the government into a facilitator.
We have faced the fact that due to our current fiscal environment, our ability has been severely limited to stimulate growth and positively affect the business cycle. Most of the new investment has to occur through public-private partnerships and must encompass a diverse package of creative investing. Most economists have found it challenging to quantify the gains from prudent fiscal policy or the return on investment from spending taxpayers’ revenues.
How much should we spend to spur prudent growth? The answer to this question depends on a diversity of issues.
From our perspective, there are two views to examine: What will be the initial impact of changes on public spending that Puerto Rico is now facing through Promesa, and also potentially with FEMA; and subsequently, what would be the impact of future fiscal policies on the sentiment of consumer and entrepreneurial decisions.
Comparatively, during the United States’ 2007-2009 Great Recession, the impact of increased public spending provided higher returns that demonstrated that $1 in federal spending during the financial crisis generated more than $2.50 in output over five years. Using this metric provides Puerto Rico a unique opportunity to wisely invest in itself and measure its return on investment.
Thus, we should remind ourselves of the term “creative destruction,” coined by Austrian economist Joseph Schumpeter and an essential part of Capitalism, which has become the description of the free market’s way to deliver progress. Puerto Rico must be open to increased entrepreneurship, innovation and exports while breaking into new markets. Our focus must now be on destroying our old economy and creating a new one.
As Sir Winston Churchill wisely said, “The farther backward you can look, the farther forward you can see.”
Puerto Rico has a deep, rich history of success. We only need to learn our way back to prosperity.
–Francisco Rodríguez-Castro is president & CEO of Birling Capital. He has served in government, multinational and public corporations for more than 25 years, and has advised multiple entities in a diverse array of market segments. He has also participated in multiple mergers and acquisitions as well as structuring transactions that combined surpass $10 billion.