Wednesday, October 11, 2017

Puerto Rico: A Few Suggestions



It’s unverified (by us), but we’ve heard that the “Jones Act Waiver” for Puerto Rico is going to expire and won’t be renewed.  And what, exactly, does that mean?  The “Jones Act,” which dates from the 1920s, stipulates that cargoes going from one U.S. Port to another must be carried on U.S. flag vessels.  This presumably helps the struggling U.S. Merchant Marine by providing employment . . . and greatly increases prices in Puerto Rico. . . .

"WHAT? They turned down the NMU deal? Are they NUTS?"
Interesting sidebar.  In 1972, the National Maritime Union hired Norman G. Kurland, ESOP-inventor Louis Kelso’s Washington Counsel, to gain Congress’s support for an ESOP strategy to save the American passenger vessel industry.  The “taxpayer revolt” had eliminated subsidies for “the vacations of the rich.”
Without the subsidies, of course, American-flag companies could not compete with subsidized and lower-cost cruise vessels operated by companies in other countries . . . and the industry appeared to be moribund, in any event.  Who took cruises, anyway?  Owners threw in the towel and petitioned Congress for permission to sell five American luxury liners (constructed with taxpayer subsidies. . . .) to foreign-flag operators.
Five thousand National Maritime Union members lost their jobs to lower paid foreign seamen on foreign flag vessels.  Desperate, the National Maritime Union proposed an across-the-board cut in labor costs of 50% — you read that right: fifty percent.  Joseph Curran, president of the National Maritime Union, testified that the union would agree to this if Congress allowed them to restructure the cruise ship industry through a 100% leveraged ESOP, profit sharing, and participatory (i.e., Justice-Based) management.
"Adios, U.S.A. We're Liberian, now!"
Led by Senator Russell Long — who later became the ESOP’s greatest champion! — Congress rejected the offer.  Even more ironically, in 1976, a relatively short time later, the ABC television network aired a made-for-TV movie, The Love Boat, which then became a popular television series.  The cruise ship industry took off like a rocket . . . for the benefit of the owners of foreign-flag vessels.
So, in one instance, Congress gets rid of thousands of jobs it could have saved by allowing the vessels to become competitive, and in another instance, lets prices go through the roof for shipping in order to prevent vessels from having to compete.  And the United States has a free market economy, how?
Suggestion Number One: Don’t just have a “Jones Act Waiver.”  Get rid of the Jones Act.
Live Free or Die . . . if you win the court case. . .
Here’s another sidebar.  One reason we’ve heard why U.S. companies don’t want to “create jobs” by investing in Puerto Rico is that they’re afraid that the people will vote for independence and nationalize the now-foreign investment.  That’s what we’ve heard, anyway, although it sounds a little . . . flaky.
First of all, any legitimate successor government must agree to honor all the obligations of the former government, or it is, ipso facto, not a legitimate government.  (For you legal enthusiasts, that was the import in the U.S. of the Dartmouth College case.  Dartmouth had a royal charter, which the new government of New Hampshire after the Revolution tried to argue was automatically revoked.  The U.S. Supreme Court said “No way.”  New Hampshire inherited all the obligations of the British Crown in New Hampshire.)  In any event, the U.S. government wouldn’t allow it to happen.
We have a sneaking suspicion it’s only an excuse, anyway.  With the Jones Act, it’s rather expensive to do anything in Puerto Rico and ship goods to the continental U.S.  It’s cheaper to do it on the mainland, or just buy foreign-made goods.
That, however, does not solve the problem of lack of investment.
Suggestion Number Two: Get rid of the Jones Act and pass a Capital Homestead Act for Puerto Rico.  This would open up access to the discount window of the New York Federal Reserve Bank for Puerto Rican commercial banks and provide all the new investment financing needed for any financially feasible capital project . . . as long as it is owned by people in Puerto Rico.  Nationalize what the people of Puerto Rico would already own?  Hardly.
"Ingrates! We took the land from you for your own good!"
You see, socialism tends not to go over very well with people who own what the State, collective, or community want to take over.  For instance, back in the seventeenth century, a band of socialists who called themselves “the True Levelers” (pejoratively known as “Diggers”) tried to take over common lands for the benefit of “the People.”  The rich were unable to dislodge them through legal action, but the local villagers whose commons “the Diggers” had appropriated in their name threw them out bodily.
And a final sidebar: Puerto Rico is energy-poor.  They need an alternative source of energy.  Hydrogen fuel suggests itself.  After all, the island is surrounded by water . . . and water is, what?  H2O.  That’s two hydrogen atoms to one oxygen atom.  They have an endless supply of hydrogen that doesn’t have to be imported.
Suggestion Number Three: Get rid of the Jones Act, pass a Capital Homestead Act, and immediately get to work developing feasible hydrogen fuel technology.
And do it now.
#30#

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