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Post Puerto Rico's Economy; from Ric Mauricio
Created by John Eipper on 10/09/14 4:13 AM

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Puerto Rico's Economy; from Ric Mauricio (John Eipper, USA, 10/09/14 4:13 am)

On 8 October, Bienvenido Macario unfavorably contrasted the Philippines with Puerto Rico, a US territory since 1898 which did not become independent. Ric Mauricio sends this comment:

According to Reuters, economic activity in Puerto Rico fell in July for a nineteenth straight month to a 20-year low, according to a government economic activity index published on Friday. Yes, you read that correctly, a 20-year low.

The Government Development Bank's economic activity index (EAI) fell 0.7 percent year-on-year in July. That brought the index level back to 125.1, the lowest since 1994.

The report is another indication that the island's economy continues to struggle, posing a headache for the government as it deals with budget deficits and high levels of debt.

Puerto Rico says the index strongly correlates to the island's gross national product. Puerto Rico's economy has been in or near recession since 2006.

The island's unemployment rate is around 13.1 percent. Poverty is around 45 percent. And the island people are emigrating from the island, with the population dropping at an accelerating rate.

My clients who emigrated from Puerto Rico to California confirm this.

Is this what Bienvenido wants for the Philippines?

JE comments:  I'll let Bienvenido respond for himself, but I'm sure he wishes the Philippines had Puerto Rico's freedom of movement to the US Mainland.

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  • Puerto Rico's Economy (Cameron Sawyer, USA 10/10/14 11:17 AM)
    Ric Mauricio's comment on the Puerto Rican economy (9 October) compares it only to itself. It may be that the Puerto Rican economy is struggling lately, but so is the Japanese economy, and no one would say that the Japanese economy is bad in absolute terms. It is really misleading to discuss only recent trends in the Puerto Rican economy.

    In absolute terms, the Puerto Rican economy is an absolute powerhouse by Latin American standards, with GDP per capita well into the high income country territory, or about $27,500, that is, fully ten times that of the Phillipines, which at $2,750 is one of the poorest countries in the world (at PPP, which is more relevant, the difference is less, but still more than 4x). Furthermore, the Puerto Rican economy is highly competitive, and in fact is considered the most competitive economy in all of Latin America, surpassing even some European countries in that regard, including Spain.

    The handiest references to the relevant facts are the relevant Wiki articles (the "Economy of . . . " in Wiki are always particularly good):



    Ric Mauricio asked, rhetorically, "is that what Benvenido wants for the Phillipines?" I can't speak for Benvenido, but if I were a Filipino, my answer would be, without hesitation, "hell, yes!"

    JE comments: Powerhouse may be more relative than absolute. During our week in Puerto Rico (March 2011), I recall a lengthy conversation with a Chilean restaurateur in Old San Juan (of all things, he ran a Peruvian restaurant). He complained of Puerto Rico's anemic work ethic, and that generous US transfers created no incentive for the island to produce, or even to grow its own food. As one example, compared to most other nations in Latin America, Puerto Rico has very little variety in the way of fruit.

    Chileans are particularly industrious, and maybe this entrepreneur was just having a bad day. But I think we need to qualify the notion of Puerto Rico as an "absolute" economic powerhouse.  Also, the island's prices are much higher than on the US mainland.

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    • Puerto Rico's Economy; Is it Better to be Rich than Free? (Eugenio Battaglia, Italy 10/11/14 4:52 AM)
      In response to Cameron Sawyer's post on the Puerto Rican economy (10 October), it's much better to be free than rich. The point is not to be a colony or whatever word you want to use to disguise the word "colony."

      JE comments: Bienvenido Macario would probably beg to differ, as would most Puerto Ricans. What say you, WAISers? First we have to qualify what "free" means. For people at the humblest level of society, it matters little if you're controlled by a foreign power or by local oligarchs.  What matters is if you're getting enough to eat.

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      • Is it Better to be Rich than Free? (Cameron Sawyer, USA 10/11/14 9:48 AM)
        Eugenio Battaglia wrote on 11 October:

        "[I]t's much better to be free than rich. The point is not to be a colony or whatever word you want to use to disguise the word 'colony.'"

        This is a highly debatable point, but an interesting question which goes to questions of self-determination we have been discussing recently in connection with Scotland, the Basque Country, Ukraine, and so forth. I take issue with the Eugenio's tacit assumption that being ruled by someone more local, rather than someone less local, automatically amounts to "freedom."

        As I have often written on here, I think that states are all inherently oppressive--a necessary evil. I subscribe to Schumpeter's view that even democracy, well-implemented, does not change this in a fundamental way, because we are still ruled by rulers and never by ourselves. It is a really impressive achievement that North American and Western European countries have reached such a high level of civilization despite these inherent limitations of political systems.

        Whether one shares with me this belief or not, I think it's an objective fact that peoples getting their independence very often trade one group of exploiters for another, more local, but often more vicious group of exploiters. It is an insidious myth propagated by those who would like to govern (and usually, exploit) us, that they are more like us than they are like others who presently govern (and exploit) us. Look at the whole dreadful history of African independence movements of the 20th century. Much, maybe most of the idea of nationalism is just sentimental pap, intended, cynically, to make us more amenable to the claim of one group of would-be oppressors, over another. I think this proposition will resonate a lot with a great deal of Ukrainians today on both sides of the dreadful civil war going on there--that situation is really a case in point.

        There are certainly exceptional cases, but as a rule I don't see the point of redrawing borders, which just changes one group of oppressors for another. That includes Ukraine, where there is a great deal of justice to the claim the "Novo-Rossiya" and Crimea deserve to be Russian or independent, rather than be part of an alien, Ukrainian state. But redrawing those borders would create as many problems and injusticies as it solved, and there would be no end to the rejigging of borders if we accepted "self-determination," which has no logical end, as a general principle, so in my view it is better here, as in the great majority of cases, to leave the borders as they are and concentrate on reforming the nations which already exist.

        And so with Puerto Rico--I seriously doubt that one could find many Puerto Ricans who would exchange their history for that of the Phillipines (even taking off the table the question of the vastly greater material prosperity in Puerto Rico), much less for that of the Dominican Republic, Haiti, or other neighboring countries. US "colonialism" in Puerto Rico, while there have been some shameful moments, has on the whole had a pretty light hand, especially in the last decades, and the horrors wreaked on their own peoples by the rulers of neighboring, nominally more independent countries, must make an impression. Thus the idea of complete independence for Puerto Rico--something the US has offered, and would be glad to grant--has never gained much traction among Puerto Ricans. In a 2012 referendum on the question of independence, only 5.5% of Puerto Ricans voted for full independence, while 61% expressed a desire for Puerto Rico to, on the contrary, become fully integrated with the US as a new state. I think clearly the great majority of Puerto Ricans do not share Eugenio's view that greater independence from the US automatically equates to "freedom."

        As always, the reality is somewhat more complicated than that (there was a large number of abstentions), but it's still pretty clear that Puerto Ricans are not burning with desire to be ruled by their own strong men, free of the restraints of the US government, which in my view reflects a sober view of who is likely to be the worse, out of two oppressors.

        This is a bit of drift from the original topic, but naturally, the US does not use its power in Puerto Rico to do nearly as much good for that country as it could. The one area where the US could make a vast difference in the life of Puerto Ricans and the future of the country and strength of its society is in the question of corruption. How much funding would it take for the FBI to thoroughly break the Latin American culture of corruption as it exists in Puerto Rico? There have been a few FBI-initiated purges of the Puerto Rican police forces, but far, far more could be done, which could make Puerto Rico a society and an economy which is principally different from other Latin American countries, leading to much stronger social institutions, and much greater investment attractiveness of the country, amounting to an overwhelming advantage for Puerto Rico and its development. It is much easier to fight corruption when you are not entirely ruled by local people. It's a shame and a missed opportunity that this advantage of Puerto Rico's situation has not been fully exploited.

        JE comments: "Self-determination has no logical end." I am inclined to agree with Cameron here.  Discussions on nationalism have no logical end, either.  And I have no problem with that; it's a very WAISly topic.

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        • Women and Democracy (Massoud Malek, USA 10/11/14 2:51 PM)
          On 11 October, Cameron Sawyer wrote:

          "I think that states are all inherently oppressive--a necessary evil. I subscribe to Schumpeter's view that even democracy, well-implemented, does not change this in a fundamental way, because we are still ruled by rulers and never by ourselves."

          Democracy is defined as a system of government in which power--regardless of gender--is vested in the people who rule either directly or through freely elected representatives.

          Women constitute more than half of the population of the North American and Western European countries, but they are ruled by men. This basically means that women are oppressed by men. Today, an American woman is paid less than a man for the same job. Family-planning advocates are currently traveling more than 10,000 miles to gather signatures for a petition urging lawmakers to lift the abortion bans currently in place for low-income women. Is oppression a necessary evil, or just the last remaining power that men have hard time relinquishing?

          Currently, seven women are holding cabinet-level positions and 3 women are on the US Supreme Court. Only 5 women are governors, 20 are senators, and 79 are serving in the House of Representatives. Never since the Declaration of Independence have that many women been represented in our democracy.

          Violence during the Rwandan Genocide of 1994 took a gender-specific form, when, over the course of 100 days, in an act of genocidal rape, up to half a million women were raped, sexually mutilated or murdered. Today, Rwanda has the highest proportion of female politicians in the world. 63.8% of politicians in the country are women, some of them are also the rape victims of 1994. Eighteen African countries rank higher in the percentage of women in national parliaments than the US, which ranks 85th with 18.3%. In Saudi Arabia, women don't have the right to drive but there is a higher percentage of women in the parliament than in the US. Finally, it is hard to believe that Afghanistan with 27.7% women in national parliaments ranks 41st?


          JE comments:  This chart is intriguing, and the results are rather surprising, as the highest representation of women tends to be in African and Western European countries (also Cuba).  The lowest?  Pacific island nations, such as Vanuatu, Palau, and Micronesia, together with some of the Gulf States (Qatar has no female participation in its parliament).

          But the world seems to be heading in the right direction, given that the idea that "democracy" should include women, or even all men, if a very new one. 

          Now we have to work much harder to address the gender imbalance in WAIS...

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          • Schumpeter on Democracy (Cameron Sawyer, USA 10/12/14 5:07 AM)

            Massoud Malek's comment about women and voting is non sequitur to the discussion about self-determination, but his definition of democracy deserves comment:

            "Democracy is defined as a system of government in which power--regardless of gender--is vested in the people who rule either directly or through freely elected representatives."

            This begs the question of what is a democracy without universal suffrage? But we'll leave that to one side for a moment. How do "the people" rule directly? And how do they rule "through freely elected representatives"? How do "the people" rule at all? Who are "the people"? These are naïve illusions--"the people" don't rule; rulers rule, even in democracies, and it's important not to be deceived. Here a really good summary of what Schumpeter has to say on this point:

            [Classical definition of democracy, similar to but deeper than the one proposed by Massoud]: "The democratic method is that institutional arrangement for arriving at political decisions which realizes the common good by making the people itself decide issues through the election of individuals who are to assemble in order to carry out its will."

            [Schumpeter, summarized and paraphrased:]

            • This definition assumes: (1) there is a known "common good" that we all agree on, which defines good and bad. The only issue to argue about is how quickly to move towards this ideal.

            • Problems: (1) There is no common good that we all can be brought to see through rational argument. Even those with good intentions can disagree on what is best for society. (2) Even if we could agree on a common good (ends), we would be unable to agree on the means. "'Health' might be desired by all, yet people would still disagree on vaccination and vasectomy." (3) Finally, those using this definition tended to come from a utilitarian perspective, such that the common good is that which is best for each individual. However, this view does not allow the people to express its will about the common good, but rather makes an assumption about what form that "will" should "naturally" take.


            This is a trenchant argument. And it is almost obviously true, when one observes the practical details of politics in real life. So is the Obamacare program the "common good," as "expressed by the people," for example? Of course not-- it's the Obama administration's own vision and initiative to reform our health care system, which is desperately in need of reform, but no one can agree what to do about it. It's the Obama administration's idea of the common good, not "the people's," and where else can policy come from? It did not spring from the brow of "the people"; the actual policy was made in the slaughterhouse of--well, politics--with x twisting y's arm and giving carrots to z, compromising here and there, maybe blackmailing a, doing whatever is done in politics to get policies formulated and implemented, partially in fulfillment of x's idea of the common good, and partially (in some cases entirely) in x's own interest in doing what is practically needed to hold on to power and get re-elected. That's the way "democratic" politics work--the rulers rule, not the people. It could not be otherwise. As a libertarian, I hate to admit this, but the people need to be ruled, to some extent. So getting around to something like Churchill's famous and wise dictum on democracy--for all of these ugly things about it, mankind has never come up with a better way to organize itself.

            Schumpeter, paraphrased again:

            • In classical theory (criticized above), each citizen has a rational opinion about every issue. Each citizen votes for a representative to carry out his opinion. Thus, selecting a representative is "secondary."

            • New theory reverses these roles: "The democratic method is that institutional arrangement for arriving at political decisions in which individuals acquire the power to decide by means of a competitive struggle for the people's vote."

            • Strengths: (1) Establishes a clearer criterion by which to distinguish democratic governments . . . (2) Accounts for the importance of leaders and leadership, unlike classical democratic theory which almost deems leaders superfluous. (3) If there are common notions of what is good, they are now given a more realistic role: they make their way into a candidate's bundle of policies, where voters choose which bundle they prefer. (4) There is a continuum between perfectly free competition and noncompetition, just as there is a continuum between perfectly free markets and perfect command markets. (5) This theory clarifies the relationship between democracy and freedom; democracy does not require or guarantee freedom, other than that "everyone is free to compete for political leadership by presenting himself to the electorate." [Important qualifying footnote: "Free, that is, in the same sense in which everyone is free to start another textile mill." However, this is likely to create general freedom for everybody. (6) The public does not control the government; it simply elects or evicts it.

            Emphasis added, and the last sentence is the absolutely crucial point. One might add to this point, that it is not "the public" as some kind of abstract whole, but 50% plus one vote of those voters who participate in a given election.  "The public" does not have anything like a unified will--this is pure Hegelian bullshit--and as we all know, a tiny part of the population acting as swing voters make huge decisions for all of the rest of us, in real life politics.

            JE comments:  I just learned that Schumpeter's first academic job was at the U of Czernowitz, now Chernivtsi University in Ukraine.  During the Interwar period the city belonged to the Kingdom of Romania.  Another interesting Schumpeter item, from Wikipedia:  "Schumpeter claimed that he had set himself three goals in life: to be the greatest economist in the world, to be the best horseman in all of Austria and the greatest lover in all of Vienna. He said he had reached two of his goals, but he never said which two, although he is reported to have said that there were too many fine horsemen in Austria for him to succeed in all his aspirations."

            See also this 2006 Ronald Hilton post on Schumpeter.  I already knew about RH's Studebaker, but not that he had taken a beating on Pan Am stock.  His successor, Yours Truly, could say the same thing about General Motors--concerning both the meager earnings and the refusal to sell:


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            • Schumpeter (Henry Levin, USA 10/12/14 8:27 AM)
              I have a couple of comments on Schumpeter. (See Cameron Sawyer, 12 October.) The first is that only a utopian definition of common good would suggest that we all have to agree on both goals and means. Democracy is a process, not an end result. It is always coming into being and can be messy and periodically unstable as it seeks a new equilibrium. But, some governance processes and outcomes are better than others; some requirements of rights, privileges, and responsibilities are better than others; some situational states of the world are better than others. This is central to welfare economics where, at the margin, if we can make one person better off without making anyone worse off, than we can improve welfare (the old Pareto criterion). The Wikipedia entry is very rough (too many cooks), but has some insights:


              Schumpeter was clearly brilliant, although the question of whether he stood out above the crowd of brilliant UK and US economists of his generation would certainly be a challenge. Many think that Schumpeter was Jewish, but that is not the case. In fact, along with Keynes and Hayek, he has written clear anti-Semitic prose. See Melvin Reder's article in the History of Political Economy (2000) for details and references. Enclosed is a short review of that article, but the actual text is in the article (which is copyright protected from easy access). There is also evidence that Schumpeter was a Nazi sympathizer.


              JE comments:  The review addresses the claim that anti-Semitism was "typical of educated people in the interwar years."  Could we discuss this further?
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            • Democracy.com? (John Heelan, -UK 10/12/14 9:30 AM)
              As I am not a political scientist, it seems to me that Cameron Sawyer's usual erudite comment (12 October) does not address two basic philosophical problems of democracy, viz, the election of "representatives" and the method of the public "expressing its will" in continuous form rather than just at election time.

              Electing a representative implies inserting a set of filters into the process of deciding the "public good," i.e. those pertaining to the representative him/herself. The representative becomes the actual decision-maker not the general public and is influenced by his/her political ideology, political compromises, promises of reward and/or threats of sanction. Examples of the last abound, ranging from withholding of promotional funds to promise/denial of state honours or post-politics posts. Thus the public good decision passes through the personal filters of the representative.

              The second problem is timing. Currently, the public "expresses its will" at intervals that coincide with elections, deciding the favoured candidate on the basis of then current political ideologies, the candidates' personal values, trustworthiness and value as the replacement of a failed predecessor--e.g. the "Anyone but Blair/Dubya/Sarkozy/González" syndrome in the most recent UK, US, French and Spanish general elections.

              Modern technology would now allow us, the general public, to express our wishes continuously (via electronic referendum, provided suitable protection is provided to ensure electoral validity), on decisions relating to public good rather than just at intervals of some years at election time.

              This would change the "representative making up his/her own mind" into an "agent instructed by his/her principal, the electorate," thus attenuating ideological and other pressures currently suffered by elected representatives and reflecting the current wish of the public. Proper democracy might then result.

              JE comments:  Inevitably we'll be seeing more such things, beginning with the voting process itself. But at-home computer voting only mimics the traditional process. John Heelan asks: why not continuously monitor the public will--democracy in "real time"?

              Is the public wise enough for this?  I'm not sure.

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              • Is the Public Ready for Democracy.com? (John Heelan, -UK 10/13/14 4:27 AM)
                John E doubts, in response to my suggestion of "real-time democracy" (12 October), whether the public is wise enough to practice such a thing.

                With great respect to our Editor, this is a patronising attitude that smacks of the advice to women in previous electoral times that they "should not worry their pretty little heads," and limiting suffrage to certain classes of persons.

                The old adage that the electorate "gets the government it deserves" would be even closer to reality--for good or bad--if my suggestion were implemented. However, it would be nearer to true democracy than the faux democracy we experience in Westernised countries today, filtered as it is by the personal interests of elected representatives.  Further, it would involve the populace having to understand the nature and gravity of the political decisions to be made and signalling their support or otherwise with their votes. Electorates in many countries are currently signalling their distrust of the political process with low voter turnouts. (I believe that voting should be compulsory, because citizenship has duties as well as rights, one of those duties is to choose governance.)

                JE comments:  I'll retract my "wise enough" crack, which sounded too patrician for a middle-class guy.  My concern had to do with what government would look like when a vengeful citizenry can throw the bums out with a click of the mouse.  (Mouse?  How quaint.  Now it would be through an "app"--swipe right to keep, left to evict.)  Politicians would be terrified to make decisions.  Democracy.com might be a good way to pick our next singing Idol, but laws?  And what about foreign policy?  (Left for peace, right for war...)
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            • Democracy (José Ignacio Soler, Venezuela 10/12/14 2:20 PM)
              I have been following recent discussions about democracy, in particular the posts of Massoud Malek and Cameron Sawyer (11-12 October).  As somebody living in a country (Venezuela) in which there is a claim by the government regime to democracy, or what they call "socialist democracy" as it is also called in Cuba, the subject always interested me. I have observed with pragmatism some of the most well-recognized democracies in the world. My preliminary conclusion has always been that democracy is something much more than just the "free elections" of representatives, or a "democratic government" or leader.

              I did not want to get deep into analysis of formal definitions of democracy, old or new. My interest was to identify what should be the practical political or social conditions to exist for supporting a "Democracy."

              • Solid democratic laws and institutions are the first condition to guarantee the basic background. Of course it remains to be defined what a "democratic law or institutions" concept should be, but let's pretend for the moment this issue is consensually agreed upon.

              • Separation of powers, meaning the state institutions are politically independent and they supervise each other's performance.

              • A free elections system, supported by an independent institution of political interest.

              • Organized political parties, a guarantee of pluralism of ideas.  Without them the democratic praxis might be intolerant, autocratic or fanatical.

              In the absence of just one of any of the above factors, democracy is just a fiction, nonexistent, a mockery. I believe these are the factors that should coexist in equilibrium, more or less stable, to support such a system.

              However, in my humble experience there are other determining constraints, conditionalities, aspects that necessarily will sustain democracies in the long term: 1) good standards of ethical and moral values in society, and 2) a minimum educational level in the population, and last but not least 3) freedom of speech. Without them, the system might get easily corrupted and the people manipulated.

              The above considerations would perhaps provide criteria that might explain why many of the modern states, Western or Eastern, which claim to be democracies really fail to become one and eventually collapse in perhaps authoritarian regimes or dictatorships. Of course, it is not necessary to say that in this country most of these factors are nonexistent.

              JE comments:  Excellent reflections.  Of José Ignacio Soler's four points, I would venture that organized political parties are the least important, and can even be counterproductive for democracy.  
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        • "Self-Determination Has No Logical End" (Jordi Molins, -Spain 10/12/14 7:49 AM)
          Cameron Sawyer wrote on 11 October:

          "As a rule I don't see the point of redrawing borders, which just changes one group of oppressors for another."

          I almost always agree with Cameron. However, this post is an exception.

          First, the statement above could be used in the same way as an argument against democratic elections themselves. If an election process just changes one group of oppressors for another, why bother with elections anyway?

          The argument above has several flaws: on one hand, the fact that democracy itself serves not only as a tool to make public preferences more transparent, but as a game field to negotiate before the elections take place, such that political parties almost always want to become more "centered," less radicalized, in order to win the votes of the undecided citizens. On the other hand, "oppression" is not a binary variable, but a continuous one: I prefer the "oppression" of the Swiss democracy (citizens have the right to overrule their parliament through referenda; Swiss citizens agreed not to increase their holidays in a referendum not too long ago! This is one of the moments in which a human being may reconcile with the world) rather than a Communist or Extreme-Right dictatorship.

          Second, even more important than voting in an urn, it is important to be able to vote with one's feet. Independence allows to do so more easily. Maybe Catalonia will become a country "oppressing" its citizens more than Spain does nowadays. I do not think so, but it is conceptually possible. However, if that is the case, Catalan citizens will be able to emigrate to Spain. Instead, currently this is not possible: if you are a Catalan Spaniard, you are doomed.

          Finally, about Cameron's "self-determination has no logical end:" well, political negotiations have no logical end, and that is not a problem. We have elections every few years. And that is good. What makes no sense whatsoever is that currently, most developed countries decide everything what is important in a democratic fashion, except for one thing: national borders. National borders can only be changed by war. That is an anomaly. I hope there will be a new wave of freedom-seeking citizens trying to normalize that aberration. Democracy cannot be the only tool to provide freedom, but freedom without democracy is utterly impossible.

          JE comments:  Good point:  why is it that national borders (largely) cannot be determined democratically?  The most recent exception(s) would be the Czech-Slovak divorce.  And Scotland, which decided to stay in the marriage.

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          • How Are the Catalonians "Doomed"? (Anthony J Candil, USA 10/13/14 3:30 AM)
            Sorry to say it, but I cannot follow the reasoning of Jordi Molins's post of 12 October.

            Why are Catalonian Spanish citizens doomed? Are they more doomed than the others? In what sense?

            In my view the whole of Spain is doomed if they don't change their political system sooner rather than later. But, do Catalonians have less rights than the others? Do they pay higher taxes than the others? Are they restricted from attending certain universities? Are they restricted to where and how they can live within Spain?

            I can understand their will to be a nation on their own, but not because they are a minority with less rights, because they are not. On the contrary we may feel from abroad that Catalonia is up to a point the most prosperous state or region within Spain, and that Catalonian business people are probably more skillful than others.

            Borders with Spain shouldn't be a problem but with France? Would a new Catalonia pursue an integration with the French Catalonian region as well? (I mean the so-called Rousillon, the present French department of Eastern Pyrenees and the Cerdagne.)

            From the point of view of creating a new country in southern Europe, it will be interesting to see it, though the French government may see it different and not agree.

            JE comments: Several WAISers picked up on Jordi's use of the word "doomed."  I also hope Jordi will clear up my confusion about his "vote with their feet" concept.  If Catalonia secedes, I imagine the rump Spanish state would not be very welcoming to Catalonians moving there, at least for a decade or so.

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            • "Voting With Their Feet" and "Dia de la Hispanidad" (Jordi Molins, -Spain 10/13/14 1:28 PM)
              When commenting Anthony Candil's post of 13 October, John E wrote:

              "I hope Jordi will clear up my confusion about his 'vote with their feet' concept. If Catalonia secedes, I imagine the rump Spanish state would not be very welcoming to Catalonians moving there, at least for a decade or so."

              Let me describe a simple model to show independence may be Pareto optimal (or close to it):

              Let us assume a country has 100 citizens. 16 of them are of the "small" region, and the remaining 84, of the "big" region.

              Let us assume there are only two ways to suffer oppression: "low oppression" and "high oppression." Let us assume the 84 citizens of the "big" region suffer "low oppression," while out the 16 citizens of the "small" region, 10 suffer "high oppression" and 6 of them, "low oppression."

              The bottom-line fact is 10 citizens in that country suffer "high oppression," which is bad.

              Now, let us assume the citizens in the "small" region manage to become independent (the majority of them, 10, feel "high oppression," so they have a strong incentive to get out of the country).

              Let us further assume the new country arising from the "small" region just reverses roles: the 10 citizens who initially were under "high oppression" are now under "low oppression," and the remaining 6 who were under "low oppression," now are under "high oppression."

              So, we have reduced the number of "highly oppressed" people from 10 to 6, but that is not enough. In order to accomplish Pareto optimality, the 6 has to become 0.

              But now there is an advantage: the Constitution of the original country continues giving citizenship to the 6 "highly oppressed" individuals in the new country. As a consequence, these may "vote with their feet" and move to the rump state. There, these 6 individuals become "low oppressed" again.

              Bottom line: now there are no "highly oppressed" citizens anymore, despite the fact that the new country is no better than the original one.

              Why is then the "world" better off (in fact, in a Pareto optimal state) after independence? The reason is citizens are able to vote with their feet, unlike before, when the 10 "highly oppressed" people could not do anything about it.

              Anthony J Candil asks if Catalan people have less rights than other Spanish citizens. This is equivalent to asking if the "high oppression" state exists.

              My answer is positive, since discrimination is not only due to specific laws hard-coding discrimination, but most importantly, how those laws are applied. For example, yesterday it was the "Día de la Hispanidad" in Spain. In Barcelona, there were two demonstrations, the "radical" one and the "moderate" one.

              In the "radical" one, there was the proposal to bring the Catalan president, Artur Mas, in front of a "firing squad" if the 9-N consultation takes place, at 2:55 of the following video:


              In the "moderate" one, several individuals cried "¡Artur Mas, a la cámara de gas!" ("[Catalan President] Artur Mas, to the gas chamber!"), at minute 0:48 of the following video:


              Every year we have the same kind of threats during the "Día de la Hispanidad" in Barcelona, and nothing happens to these neo-Nazis, who can act with complete impunity. Please note the identification of the individuals is trivial through the videos.

              Despite the fact the Spanish law says all Spaniards are equal, in practice that claim does not hold. There are different qualitative and quantitative standards for different people, depending on their political opinions.

              JE comments:  I know it's just a model, but the notion that the six previously "low oppressed" people would become the highly oppressed minority in the new state is troubling.  I'm trying to think of a real-life historical example.  Zimbabwe...?  In a nutshell, if people have to emigrate to achieve universal "low oppression," it's not a good thing.

              It's very interesting how the Spanish extreme Right has co-opted the figure of the Savonese mariner, Christopher Columbus, as a way to celebrate their Hispanidad.

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              • Nationalism Again; on Models and Their Limitations (José Ignacio Soler, Venezuela 10/14/14 7:58 AM)
                Regarding Jordi Molins´s model description trying to explain the "vote with their feet" concept (13 October), it might be useful to clarify some facts. The model seems to be convincing. However, it lacks perhaps fundamental consistency and is merely rhetorical.

                To describe a model properly, it is necessary to clearly define the assumptions which it is based upon, not only the description of how it works.  Jordi's model is based on the concepts of "oppression" and two distinguishable concepts: "suffering" and "feeling." The first is a real physical felling of an unbearable kind, most likely the product of a painful experience, allowed or tolerated; the second is merely a subjective perception from senses, emotions, attitudes and/or sentiment.

                First, it is difficult for me to assume everybody in a country "feels" or "suffers" oppression in the more general sense of being subjugated by cruelty, force, torture, or any sense whatsoever which would imply that the whole territory is subjected to a criminal regime or dictatorship; second, that there are people suffering or feeling cruelty or torment on a "low" level and, simultaneously, on a "high" level in the same country under the same criminal government; this seems to be very unlikely and simplistic.

                To measure oppression with these parameters to explain an idea is also inappropriate, if not harsh or excessive, to describe a very complex real world context, which is the ultimate reason Jordi uses to justify Catalonian independence because of the alleged "oppression" by Spain´s government and the referendum problem. Perhaps it would have been better to use another term than "vote with their feet"?

                Anyway the assumptions and conclusions of the model are rhetorical and even pretentious, based on discrimination, intolerance and unfairness. The people "suffering high oppression" in the independent region, in order to "suffer low oppression" must have to emigrate to balance and optimize the model´s equations for a better outcome. This conclusion is unfair and discriminatory.

                It would be very useful to understand better Jordí´s model if he explains the concepts used as assumptions, and how they relate to real-world or actual circumstances in Spain. For instance, what is the "high oppression" of Catalonians, and what makes them different from any other Spaniard from other regions suffering from "low oppression"?

                Jordi claims that "despite the fact the Spanish law says all Spaniards are equal, in practice that claim does not hold." This is probably and unfortunately true in Spain and in any other country in the world. In practice in the real world, citizens are "all are supposed to be equal, but there are some more equal than others."

                However, if Jordi is referring to demonstrations and acts of intolerance against Catalonians from radical and minority sectors, on the other hand I know for a fact and reports from Catalonian friends and newspapers that there are also violent harassments and persecutions of Spaniards or Catalonian unionists by pro-independence activists, tolerated and maybe instigated by the Generalitat.

                Unfortunately, intolerance is a social disease.

                JE comments: There's the famous economics maxim that all models are wrong, but some of them can be useful. Who said that? (I could look it up, but perhaps my ignorance will spark a good discussion.)

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      • Puerto Rico's Economy; Peace Corps Training (Richard Hancock, USA 10/11/14 10:38 AM)
        When I was working for the U of Oklahoma, we were awarded a contract to provide specialized backup for the Peace Corps (Camp Crozier) training center in Puerto Rico. We arranged for some of the trainees to study at the University of Puerto Rico Agricultural Experiment Station near Ponce. I thought that these stations were doing impressive work which was extremely important to volunteers who were going to work in rural Latin America. In traveling through Latin America, I saw many plant breeds developed at the University of Puerto Rico.

        One of the agriculturalists at the station made some interesting side comments about the effects of Puerto Rico's relationship with the United States. He stated that Puerto Ricans were responsible, hard-working people, but that social programs promoted by the US government had ruined them. When a trainee suggested that this could easily be resolved if Puerto Rico would just disassociate itself from the US, he held his hands above his head with the palms turned upward and said, "You can't blot out the sun with your hands." I think that is a meaningful description of the relationship of Puerto Rico with the United States.

        JE comments:  Puerto Rico prior to 1815 was a true backwater, more or less forgotten by the Spanish Empire.  Colonists in remote areas always develop a strong work ethic and sense of independence.  In the 19th century, when PR was one of Spain's few remaining colonies, the island's population quadrupled, to nearly a million by the time the US took over in 1898.  This attention must have done a lot to change the "national" character.

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