News Feature
Puerto Rico plans its industrial future High hopes, serious problems raise questions over future policies, as Romero administration opens new industrial plan without strong technological infrastructure
Wil Lepkowski C&EN, Washington
Late next year, Vienna plays host to a massive United Nations conference on science and technology for development. Preparations have been under way for months, and a U.S. State Department team under Ambassador Jean Wilkowski is fashioning the U.S. contribution to that difficult-to-grapple-with subject. The conference will not discuss advances in science and technology as much as it will focus on how science and technology are used, and misused, for economic development. That being the theme, the U.S. might be expected to have a lot to offer from its own rich experience in transmuting the contents of test tubes to that philosopher's stone called innovation. Something basic, however, is missing so far from the American contribution. That something is a 35 X 100 mile island in the middle of the Caribbean Antilles known as Puerto Rico. There an experiment in industrial alchemy called Operation Bootstrap is nearing the end of its third decade. Bootstrap was the name given to Puerto Rico's industrialization program by its founder Teodoro Moscoso. Puerto Rico, a "developing country" when Operation Bootstrap began, has tasted and bought the American model, and in the present Administration's drive for statehood wants more of it. But now it is being forced to think hard about its future technological infrastructure in the wake of its huge high technology disaster: the collapse of its one-time showcase, Commonwealth Oil Refining Co. (Corco). This company once had plans for becoming the biggest petrochemical complex in the world. But its dream npw lies shattered and its outmoded plant is up for sale at bargain rates. The Puerto Rican story is complex to tell but important to understand for what it could reveal to the Vienna conferees about island economies and, more importantly, western-style industrialization. It combines such elements as: • The operations and ethos of the 22
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clandestine world of banking and finance on Puerto Rico and whether they are contributing to what one writer described as "economic cannibalism." • That peculiar universe of oil and petrochemicals that no one in the business purports to understand but whose underlying socioeconomic impact on Puerto Rico has yet to be assessed. • Puerto Rico's need to look closely at
This litany of harsh observations should not becloud the benefits achieved by Operation Bootstrap. Puerto Rico is an advanced economy by any capitalist standards. Were it an island of a million persons instead of 3.2 million, it might well be a capitalist Nirvana. Its literacy rate is high. More than 85% of those eligible to vote turn out at the polls every two years. Its business people understand the process of buying and selling. Moreover, the island itself is a gem of natural beauty, with seven distinct climate zones, a dazzlingly beautiful tropical rain forest, shimmering phosphorescent waters in one area on the southern coast, a carefully preserved Indian ceremonial ground in the mountains, a people on the whole brimming with kindness, and, of course, the charm of Old San Juan. The island has its share of squalor, along with a high crime rate, the usual run of public health problems, malnutrition along with outright bad nutritional health wrought by the uncontrolled consumption of food-stamp-financed U.S. junk food. It is a place, too, where every third person has a car, every third car has a musical horn, and every third car with a musical horn is hung together with string and sealing wax. The cost of living is high, taxes are onerous, and everyone is in debt Romero: we have been too dependent up to one's ears. Politically, the island sizzles. The the impact of technology on the economic system as well as on the human being, in Statehood Party under Gov. Carlos Roview of Puerto Rico's persistently high mero Barcelo is in power, succeeding in the last election the Commonwealth Party unemployment rate. • Questions over superficial values that led by Rafael Hernandez Colon. But the accompany Madison Avenue-style com- most charismatic political figure, Ruben mercialization, of which Puerto Rico has Berrios, heads the Independence Party, which wants to cut Puerto Rico's cona superabundance. • Energy and environmental programs nection to the U.S. It believes that U.S. that today are not discernibly tied to any economic and cultural influence is killing the Puerto Rican identity and wants to kind of land policy. • An agricultural policy that has been wean the island away from its growing neglected for years and only now is be- identification with U.S. economic ginning to be taken seriously as the values. island's basic underpinning. Marxism is a small but mischievous • A primitive science education system force. The striking Electrical Worker's that fails to bring together technology and Union is Marxist-led and every few days industrial development and thus leaves no dynamites a pylon, interrupting the flow potential for any kind of innovation cli- of electricity for a while. Many intellecmate on the island. tuals—maybe most—are seen as at least
socialist, and the faculties at InterAmerican University and the University of Puerto Rico are said to have heavy Marxist and Independentista leanings. Conversations with all save those in San Juan's financial community reveal worry about Puerto Rico's future. They are worried about the erosion of everything truly Puerto Rican as U.S. investment money continues toflowin. They deplore the $3.2 billion in U.S. money that annually comes into the island from the federal government. They fear that the Puerto Rican's sense of manhood and self-determination is being slowly sapped by giveaway programs. Easily one out of three Puerto Rican workers doesn't have a job, although the official unemployment figure is about 18%. Puerto Rico appears to have two financial mentalities: one exemplified by those in expensive suits hustling about San Juan's Hato Rey financial district, and most of the rest, struggling to make ends meet. One should have no trouble concluding who outnumbers whom. As Martha Dreyer Magruder, editor of the alert weekly Caribbean Business, says, "There's money to be made here. You just have to work to make it." Nevertheless, dozens of local businesses fail annually. One company that for certain didn't make it was Corco. Two months ago, the big refining and petrochemical firm filed under chapter 11 of the Federal Bankruptcy Act after reporting losses over the past three years totaling $74 million. Chapter 11 essentially orders the bankrupt company's creditors to lay off while the patient tries to get well. Corco went under owing about $300 million to its creditors, which include Citibank, First Boston, Corco's parent company Tesoro Petroleum Co., New York Life, Fluor Corp., Exxon, Gulf Oil, several additional banks, including the Puerto Rico Government Development Bank, and a handful of chemical companies with which Corco established joint ventures. Currently it is buying its oil on a daily cash basis under a contract that expires Aug. 13. The Corco situation has given Puerto Rican leaders pause, because it has not proven to be the economic bonanza the island government's Economic Development Administration, known locally as Fomento, had rhapsodized over until about five years ago. In 1973, as everyone so well knows, the price of oil skyrocketed. Almost immediately, Corco, which was never applauded for wise management, went down. With the huge losses, combined with vicious haggling between Corco and companies with which it formed joint ventures—W. R. Grace, Hercules, PPG Industries, Nippon Zeon, and Mitsubishi—went the hopes of establishing a dynamic series of downstream operations ending with consumer goods made from plastics and synthetic fibers. At one point, Fomento envisaged a work force of 60,000 involved in industries in and around petrochemicals. Corco currently employs 1300, and many downstream plants have been closed.
San Juan has fewer doctoral scientists than three other cities of comparable size Biological scientists Economists Chemists Medical scientists Engineers Physicists/astronomers Mathematicians Agricultural scientists Psychologists Sociologists/anthropologists Atmospheric scientists Earth scientists Computer specialists Oceanographers Statisticians
The consensus in Hato Rey is that Corco is a good buy and that someone will recognize it as such and grab it. Alexander T. Ragan, chairman of the largely trouble-free Union Carbide Puerto Rico Inc. (which just announced a small expansion of polyethylene copolymers at Penuelas), says that the buyer would need to sink about $250 million into the complex to modernize it. That someone could be First Arabian Corp., which last week was talking to Tesoro about possible purchase. The prospect of Arab money and crude oil coming into Puerto Rico has set tongues wagging and visions of dollar signs dancing in Hato Rey heads. Nevertheless, there are some who say petrochemicals have prevented the island from developing a healthy and diversified economy. They say so quietly, knowing that chemicals make more money than any other industry on the island. Says one close follower of the Puerto Rican industrial scene: "I'd say petrochemicals have been a net drain. I can't prove it, but the facts are that they don't pay taxes, don't provide much employment, they pollute, they use up aquifer water, they enjoy a subsidy on electricity, and on the whole they're financially unhealthy." Arguments can be made on both sides, depending on whether one adopts the economics of environmental science or the pure cashfloweconomics of Chase Manhattan. Over the long run, that is, whether in the year 2000 analysts will look back and say petrochemicals were a good thing for Puerto Rico's evolution depends on the road Puerto Rico chooses to take in the evolution of its culture and economics. It does have choices. Puerto Rico's leaders are indeed taking the measure of the island's future. The overall feeling is that the form and format of the original Operation Bootstrap concept is now over. Puerto Rico no longer can offer low-cost labor now that the island falls under U.S. minimum wage regulations. Also, the unemployed Puerto Rican can parlay welfare and odd jobs
San Juan
Baltimore
Miami
Honolulu
87 38 29 28 24 23 20 19 13 2 0 0 0 0 0
594 74 305 245 379 283 149 2 271 90 0 29 42 0 26
263 49 91 147 124 44 18 24 160 29 0 93 11 17 6
204 28 60 62 79 51 44 109 99 55 15 28 0 68 0
into the equivalent of at least $3.00 an hour. Now Fomento is seeing the island in broader scope. "We feel," says Alex Vallecillo, who heads Fomento's New York City office, "that Puerto Rico can become a center in the Caribbean to service foreign markets in sophisticated service industries such as adjustment services, casualty and property insurance, architecture, engineering, environmental firms, and mail order houses." But he points out that industrial development no longer will grow in doubledigit proportions. "It is harder to get an increase in the kind of industries we have attracted," he says. "We are now moving toward attracting a different kind of industry having good profit margins and products susceptible to high growth. This is a new way we're going to go in economic development, in technologies less susceptible to cyclical aspects of the economy. One source of excitement, if a few more million dollars can be raised, is establishment by former Detroit auto executive Robert DeLorean of a plant to manufacture a stainless steel-bodied sports car. Thefirmwould be thefirstdemonstration that Puerto Rico's work force is sophisticated enough to produce from start to finish a high-technology prestige product. Fomento officials want the plant very badly and the belief is that DeLorean is expected to successfully combine tax exemption, auto dealer investment, bank credit, loans and loan guarantees from such federal agencies as the Farmers Home Administration, U.S. Economic Development Administration, and Housing & Urban Development Department to pull it off. Whether the car sells is another question. As one observer put it, "Fomento has had too many embarrassments to see this one fail, too. It needs a big one like this." The foundation of Operation Bootstrap's program has been tax exemption. Without it, chemicals and pharmaceuticals never would have come. Every cornMay 15, 1978 C&EN
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Puerto Rico: growth and imbalances in economy FY 1956
Unemployment Unemployment rate Population Birthrate per 1000 Agricultural employment (including forestry and fishing) Chemical employment Pharmaceutical employment New industries (numbers) Departing industries (numbers) Tourism income ($ millions) Exports ($ millions) Imports ($ millions) New workers Average hourly wage (October each year) Consumer debt ($ millions) Agriculture-value of production ($ millions) Income from mainland companies and Puerto Rican companies ($ millions) Gross federal expenditure ($ millions)
FY 1966
FY 1977
88,000 12.9% 2,239,000 34.2 161,000
84,000 12.1% 2,612,000 29.0 99,000
2,176 0 na na $25 $406 $633 19,000 na
3,059 1,155 208 78 $393 $1,155 $1,659 30,000 $1.31
15,298 6,885 131 91 $424 $4,480 $6,108 21,000 $3.09
$160(1960) $221
$332(1965) $270
$1,971 $486
186,000 20.1 3,337,000 na 43,000
$197
$622
$2845
$207
$452
$2911
na = not available.
pany coming in or expanding its plant gets at least a 10-year exemption from all taxes and up to 30 years if it locates in the mountainous interior. These companies are "936 corporations," so called because of section 936 of the U.S. tax code, which allows such exemptions. 936 profits in general stay on the island, and the figure is presumed to run into the billions of dollars. Companies prefer to keep the money in banks and investment houses, rather than pay the 10% "tollgate tax," as G. D. Searle & Co. recently did, by shipping the money back home. The pity over the 936 money, all sitting there tax-free, is that almost none of it moves into the Puerto Rican economy in support of an inherently Puerto Rican technological infrastructure. "Like anywhere else," says one economist familiar with the Puerto Rican scene, "Puerto Rico needs to maximize return from any economic activity. Almost none of the manufacturing profits are staying in the economy. They are investing in municipal certificates, government bonds, and bank deposits. They are just dollars gathering interest. Across the board— given increases in costs of production, labor, power, utilities, and so forth— Puerto Rico is losing its competitive position with the U.S. industrial sector." He adds: "People don't really have participation in the economy. Local capital is not involved in the production sector. The pharmaceutical industry is almost exclusively financed with mainland capital. Puerto Rico, of course, gets the benefit in jobs, but it's hard to see an infrastructural change that, say, the pharmaceutical industry has made on the island." It is the gap between unemployment and industrialization that Fomento 24
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through all its years has been unable to bridge. True, there's been some bad luck along the way. In recent years, thousands of "neo-Ricans" have come streaming back to the island from the mainland cities, many addicted to narcotics, speaking neither passable Spanish nor English. By now they number 200,000 and they continue to come, swelling Puerto Rico's already dense population, few prepared for any kind of work. Puerto Rico indeed has a strange economy. Last year a writer in Atlantic Monthly said of the island's economic plight: "With over $1 billion in outstanding private debt, and another billion dollars spent annually on importing American foodstuffs, the island is in some ways poorer than at the start of Operation Bootstrap The government, too, has been living beyond its means, building a modern industrial welfare state on borrowed funds. Although the Puerto Rican constitution expressly forbids budget deficits, public authorities have proliferated,floatingbonds that have increased the island's external public debt—rising in recent years at the alarming rate of $500 million annually." Against this, Gov. Carlos Romero's administration is proposing tax reform that would eliminate 100% tax exemption so that a portion of 936 funds can move into the economy. Romero says there is widespread approval for his plan, but the Puerto Rican legislature believes otherwise, and the Puerto Rican Manufacturers Association likes things pretty much as they are. But something must be done and Romero knows it. In essence, Romero is telling new corporations that he wants them to begin thinking of becoming citizens of Puerto Rico, even as—to his mind—the island
advances toward statehood. And he has moved to cut the public debt since the offending Atlantic Monthly article was written. "The rate of growth of the total public debt, including the debt of the commonwealth, the municipalities, and the public corporations," he says, "has been reduced to a projected 1.2% for fiscal year 1978. The commonwealth's total debt actually will be reduced over $87 million this year." The U.S. government is rethinking its role in the island's economic development, too. Early this year, President Carter instructed Commerce Secretary Juanita Kreps to do a wide-ranging interagency study on Puerto Rico's problems and outlook. Areas tabbed for study, according to project director William Pounds, range from agricultural and industrial development, to tourism. Curiously, the study ignores the role of technology and higher education in the sciences as an economic force, despite many studies showing that today a modern economy must contain strategies for technology transfer. In any case, observers wonder what has prevented Puerto Rico from exploiting the potential offered by the presence of such a high-technology industry as pharmaceuticals. No company has established any sort of research venture there. Pharmacological research along any line of sophistication is absent from the medical schools, and pharmaceutical philanthropy is of the humdrum kind— scholarship, community donations, and the like. The companies are there to provide jobs, make pills, and amass profits. There have been mumblings from Fomento to the companies that the island would appreciate a greater research effort, and it may yet happen. But little has as yet, beyond expansion of backup laboratory facilities. There are, indeed, arguments that the prevailing economic investment pattern is the only one, and the optimal one, in a society whose populace is either living in poverty or becoming indifferent to work. "I have seen a lot of wonderful papers and concepts over the years on Puerto Rican development," says Julio Pietrantoni, vice president of the Puerto Rico Government Development Bank. "But few have been realistic. We are living in a world where in 30 years the bulk of eco-
Science, technology patent activity low in Puerto Rico Year
Number of patents
1969 1970 1971 1972 1973 1974 1975 1976 1977
26 39 47 34 29 25 25 15 25
nomic activity will be carried out by 300 corporations. So it is difficult to develop an independent program without considering such a future environment. I think that whatever policy Puerto Rico develops, it should be geared to making Puerto Rico an attractive site for research and development." Ten years ago, Pietrantoni recalls, a proposal was made to build a "brain bank" similar to the Princeton Institute of Advanced Studies. The major problem was that Puerto Rico lacked a Princeton University or anything close to it, and still suffers from the same lack. Another proposal was made at about the same time to attract retired scientists to the island where they could form the core of a research center. But that idea, too, fell by the wayside. Puerto Rico didn't, and still doesn't, nurture a scientific climate that every developing country needs to take its place in the industrial world. But the beginnings could come in agriculture and energy. Says Pietrantoni: "We have an industrial society now, and now it is time to rethink agriculture, for example. Today, our traditional crops of sugar, coffee, and tobacco cannot compete, so we are developing a program to grow such food crops as rice, vegetables, and beans." One major and one minor barrier stand in the way to a successful new agricultural policy. The major barrier is the traditional indifference in Puerto Rico's agricultural colleges to connect experiment station agriculture to marketing and distribution systems. That must be overcome, and everyone knows how difficult it is to overcome inertia in any university. The second barrier is represented by rice. Puerto Rico imports almost all its rice from a California cooperative that produces it almost exclusively for the Puerto Rican market. Its planned rice venture would meet stiff lobbying from the California enterprise. So it would go for crop after crop. Farm leader Luis Berrios thinks Puerto Ricans need to come to a new appreciation of geography. "The Puerto Rican people," he says, "have not realized the natural value of our only natural resource—the land. We need to determine how the land can be exploited to improve our own economy and human development. Nature has given us the great privileges of a warm climate and fairly good topsoil. But it is being misused." Food stamps and unemployment compensation are "hurting our morals," says Berrios. "We need to modify welfare to make it a subsidy of wages. We are creating a delegation of lazy people relying on the United States." But he says private banking is doing little to help farmers. Nor does Fomento show much interest. "I don't believe they do what they should," Berrios says. "If when Bootstrap started, they had treated agriculture with the same stick by which they measured heavy and light industry, Puerto Rico would have a solid agricultural system today." He is similarly derisive of the government development
Ragan talks about Carbide Puerto Rico Few industrialists know Puerto Rico's social and economic climate better than Alexander T. Ragan, chairman of Union Carbide Puerto Rico. Ragan's friends call him "Ronald," after the conservative politician-movie actor from California, but whether it is because their last names share a common pronunciation or because they hold similar political views is unclear. What is known is that nobody calls Ronald Reagan "Alex." Ragan has been in Puerto Rico since the 1960's, running Carbide's extensive chemical and petrochemical operations from his headquarters at the Banco de Ponce Building in the Hato Rey section of San Juan. He figures Carbide's operations contribute $140 million to the Puerto Rican economy. For a corporate executive, he is refreshingly outspoken on the way the world and Puerto Rico ought to be. "In light of the Corco situation," he says, "Carbide has been successful. We feel that with the right set of circumstances Puerto Rico is a good proposition. Part of our facilities came down here to get cheap foreign oil and tax exemption. This is our 20th anniversary here. Then the OPEC thing flipped in and prevented us from making what we thought we'd make." Ragan isn't surprised at the collapse of Corco. "Right at the start," he says, "Corco did not have marketing knowhow, experienced people, or current technology." All their executive talent had to be imported, he says, and the result was management disarray. But even with good talent, he adds, it is still difficult to make a profit with chemicals in Puerto Rico. With tax exemption, a company should make twice as much as anyone. But this hasn't worked out. Everything costs more in Puerto Rico, exports must be shipped on expensive U.S. vessels under Jones Act regulations, and productivity is lower than that in Gulf Coast chemical operations. But he says he finds the Puerto Rican worker just as trainable and skilled as workers in the Gulf states. The problem is that they are younger, averaging under 30, whereas the average age of the Gulf worker is between 40 and 45. "There are lots of things I'd like to change in Puerto Rico," he says. "I don't like the excessive ethnic reliance on the federal government, for one thing. If the $600 million sent down here in food stamps had gone to public works, Puerto Rico would be infinitely better off. Before food stamps came, nobody was starving. Stamps were not needed to alleviate hunger. After an initial flurry, Puerto Ri- ' cans went back to their regular diet. The stamps then went to support retail businesses. If the money had gone into public works, people would by now be working for their money."
Ragan reckons that the combination of food stamps and other welfare support gives a person the equivalent of $2.72 an hour. Under-the-table income easily can bring a person's hourly "income" to more than $3.00. Should Puerto Rico strive for statehood? I've got to put on my purely American hat to answer that. If the U.S. wants Puerto Rico and if Puerto Rico wants to become a state, then I'd say yes. But unless the U.S. really wants it, I see no reason for the U.S. to take on Puerto Rico." He doesn't think Puerto Rico is in a particularly advantageous position for competing with states on the mainland. "We have good climate and lots of people. But the island has few natural markets, no raw materials, and is isolated. But there is a little light in the tunnel. Puerto Rico could become an export center to Central and South America. But it's going to be tough. In South America, trade associations are getting together and intend to export. All want to meet their own requirements and export. It's going to be more difficult to break into some of these markets than in the past." He sees high promise for agriculture if the plans are carried out well. The problem is to overcome the cane field mentality, which equates farming with miserable slave labor. "Sugarcane here is like cotton in the South," he says. "It took a generation to convince a guy that he could make more in peanuts than in cotton. It's the same way here. The problem is to make farming a desirable educational goal. For too long, they put a star up to the professions and bred out blue-collar work." He says Puerto Rico now needs to push science and technology, but that, too, will be tough. "We can offer skilled mechanics $1200 to $1500 a month. But many of those people request transfers to office jobs paying $400 or less because to them an office job has more status." He also believes Fomento (Puerto Rico's Economic Development Administration) could be doing a much better job planning industrial development. "Realistically, Fomento should attack the agricultural problem. There's no reason so much money in food stamps has to come here, with a whole food industry potentially out there. The planning has been dismal because it has to be made so political." He sees Puerto Rico as a "humane capitalism" in many respects. He says visitors are impressed with Puerto Rico after comparing conditions in the other Caribbean islands. And although Puerto Ricans are more loyal to each other than to the organization and live for the next fiesta, he says he is impressed with the quality of the average Carbide worker.
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bank. He says development means agriculture, yet it is only recently that the bank has begun recognizing agriculture's importance. Similarly in energy, Puerto Rico has just begun to structure a program and has appointed former U.S. Department of Energy official Frank Castellano to head the commonwealth's new energy office. Castellano touts the Romero administration line of wanting to have "an energy policy that has the least impact on the environment." He adds, "We want to create jobs and raise the gross national product. Many of the technologies we are considering are exportable to the rest of the Caribbean." If he pulls it off, Puerto Rico could be a future renewable energy showcase, with wind-generated power, solar panels heating water in thousands of rural households, small dams scattered along hundreds of rural streams in the island's extensive mountains generating electricity to villages, and thermal gradients in the waters offshore producing electricity for much of the island's larger needs. It is an idyllic scenario out of E. F. Schumacher's book "Small Is Beautiful," right down to the production of methanol from vegetation to supplement the gasoline farmers use for their trucks. For all that, the core of Puerto Rico's power needs into the indefinite future will be coal and crude oil. That's the official assessment. Yet, Castellano knows the crude will someday run out, that coal is dirty, and that Puerto Rico could be the place where he could establish himself as the man who built the world'sfirsteconomy based solely on renewable sources of energy. It is a heady dream, but one whose economics may not conform to the present system. Puerto Rico could very well be setting the stage for a major industrial boom—as well as continuous 35% unemployment. Perhaps the wheels are grinding inexorably ahead, while the important, intense personal questions go unanswered over what technology is the best technology; what science is the best science; what kind of society do Puerto Ricans really want? Puerto Rico is at the same time fortunate and unfortunate. It has an early warning signal from the U.S. itself that conditions are deteriorating in the cities because the former natives are coming home, in droves. The question may boil down to whether Puerto Rico can learn to relax and take technology in stride, preserving the really important things in life and building technology around that. Those questions are not yet part of Fomento's portfolio of inquiry. There is recent emphasis on strengthening a sense of Puerto Rican culture in island schools. But there is little visible attempt to develop what might be called a scientific tradition. Puerto Rico lacks an academy of sciences, as each state has, or a research center of a kind where intellects could gather to help develop programs of the type that would contribute to an intellectual infrastructure. Only 80 chemists with Ph.D.'s live on the island. There was a recent stir in Fomento 26
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toward developing a research and technology center at the old Ramey Air Force Base, which is now an industrial center. Proposals were made and the idea looked as if it might gather momentum. But when details of the plan were examined by resident scientists in the Puerto Rican universities, they rejected the idea. The plan would have offered tax-free incomes to scientists from off the island but no such break for the top local scientists whose heavily taxed incomes are well under $25,000 a year. What seems needed are some programs within the universities aimed at training individuals in the innovation process. That is, what it takes to start a business based on sophisticated technology—how money is raised, patents acquired, licenses negotiated, accounting done. As Robert Colton of the National Science Foundation's office of innovation says, "You need to bring in the universities into the beginnings of an innovation structure to educate the students to take an interest in becoming entrepreneurs. The trouble is that the universities would like to keep themselves aloof from the business world." He says NSF has been approached by a group of faculty members from the University of Puerto Rico who inquired about establishing an innovation center
good for Puerto Rico's overall development. It is a tropical island, with immense potential for building a leisure society based on what Schumacher called appropriate technology. But big money seems inappropriate to appropriate technology, because it is mainly based on credit—big credit. Puerto Rico's basic problems are at the scale of the village. Puerto Rico's answer may be to recognize that it really has two economies— different but with the potential for merging. One would be for the hightechnology model that the mainland economy and its banks have drawn Puerto Rico toward. The other would be a community-centered technology based more on Schumacher's concepts—agriculturally based, focusing on the fundamental human needs of food, shelter, clothing, health, good schooling. That second economic system exists at least in part in the cooperative movement on the island—a group of struggling supermarkets, banks, insurance companies, and sundry other enterprises that are managed by the people themselves. These cooperatives are no base for a complete restructuring of the economy, but they are closer to true capitalism than the corporate and federal welfarism that exists on the island. One consumer co-op in fact has received some funding from the National Science Foundation. The grant is to establish public health and energy information programs in the villages. Some such compromise seems needed, for Operation Bootstrap has so far proven that high technology based on drawing industry to the island through tax exemptions and other inducements not only does not appreciably reduce unemployment but also lowers morale. It's an approach too full of effort and strain and could produce economic cannibalism if the process is pushed too far. An article so full of questions and speculations might best end with a vision. Visions are the closest things to goals. They at least raise spirits. The following is Gov. Romero's vision. It raises the spirits, but it also will take a lot of work and innovative thought to achieve: Vallecillo: sophisticated services "By 1990, Spanish-speaking people are on the island. But so far nothing has come expected to become the United States' of it. Colton says NSF already has estab- largest minority group. As this trend delished four such centers in the U.S., that velops, new markets should be opening up they appear to work, and that he would for Puerto Rican writers, entertainers, like to see many established around the designers, technicians, and professionals. country. At the same time, the general public on The Romero administration is making the mainland will gradually awaken to a a minor stir toward searching for new new and greater awareness of Hispanicanalytical concepts for the island's overall American culture. problems. The governor's chief of staff, "And as this occurs, Puerto Rico's most Antonio Santiago Vasquez, has asked promising tourist potential should at last NSF's Intergovernmental Science Pro- begin to be fulfilled; not as an alternative gram for funds to assess Puerto Rico's to Miami Beach or Las Vegas, but as a needs and resources so that it can move special place all our own, with an appeal toward a more scientifically oriented de- more far reaching than that of Hawaii—a velopment plan. unique and very beautiful corner of the And so it goes. The problem of Puerto U.S., where visitors can experience a Rico's future poses more questions than fresh, new environment, a distinct Spananswers. A big chemical company has ish-American culture, among a people failed. There's legitimate doubt, but in- that welcomes them as fellow Americans, sufficient analytical tools to determine, yet speak a different language and unthat petrochemicals over the long run are derstand and speak English." D
