DONDEQUIERA

Personal Reactions to the NSF Public Hearings

2016-11-19T16:57:00.001-04:00

The Arecibo Observatory is part of NASAs Near Earth Orbit Program
charged with predicting asteroid threats to Earth

With the public hearings for the National Science Foundation's coming and going so quickly, it's left me with a real sense of futility. To join the effort to support the Arecibo Observatory with the last deadline for public participation only weeks away is disheartening.

It is going to take a massive showing of support in order for the NSF to back away from their currently proposed changes to the Arecibo Observatory. From having only participated in a couple of the public hearnings and researching the situation, it is unsettling how dire the situation looks.

It is challenging for anyone outside of the small community directly impacted by these proposed changes to integrate into these ongoing processes. However, that is the challange we are faced as concerned cititizens. And, to be honest, it is a chllange which seems so far behind what's happening (the reality), to dream of having any sort of impact.

Specifically, what I have witnessed so far is:

No media participation in the public hearings nor any coverage of the entire process;
No governement participation (nor any communications relating to the ongoing processes (expect for Pridco's appearance and testimony in the public hearing for the draft Environmental Impact Statement)
Disorganization and division amongst the largest players; who have known about the recent proposals, the desire of the NSF to defund the facility, and of the previous public hearings on scoping the propsals held back in June and didn't...tell more people...get better organized? Where are the publicity campaigns from ... anyone?
I'm not qualified to speak of the the chances of the worst possible scenario, nor about the prefeered option (defunding, continued operation with new collaborators), but I can talk about risk. You see, risk and probability, although perceived as having a strong link, which they do, that link is not required to assess risk. When thinking about risks, it is useful to ask yourself, if this happens, what are the worst things that could happen, and specifically for this discussion, how do each of the alternatives threaten the facility?

Laying Our Cards On The Table

Obviously, if the NSF takes no action, then the risks are low. Funding continues, and hopefully everyone involved becomes unified to find a more sustainable funding arrangement for the future observatory. While this maybe the most dire iteration of this dance, the observatory has been struggling with funding for 20 years.

If the NSF does decide to take action, i.e., not fund the observatory, then the options that are left on the table are all much more risky. Meaning that, as described in the current draft documents, some or all of the telescope and support structures will be at risk of being demolished. Something, that seems right out of a nightmare. The thought of the NSF recommending the complete destruction of the facility is the highest risk of all.

I'm afraid that everyone involved is thinking that complete demolition isn't a likely alternative. But the wording used in both the historic assessment and the environmental impact statement are so mechanical; it's there in black and white. If the NSF stops funding, and another stakeholder is not found, then NSF could recommend complete demolition. Then what?

The Future of Arecibo Observatory

2016-11-18T19:34:00.006-04:00

NSF Conducts Environmental Impact and National Historic Preservation Act Meetings #saveOurObservatory

Arecibo site before construction (Dec 1960)

In two different meetings yesterday, the National Science Foundation (NSF) conducted public meetings to discuss the impact of the agency's proposed plans to significantly cutting the operating budget of the Arecibo Observatory.

The first meeting was to discuss the draft Environmental Impact Statement (DEIS), whose purpose it is to analyze the potential environmental impacts associated with potential funding changes for the Arecibo Observatory in Arecibo, Puerto Rico. In this context, environmental impact is a broad topic encompassing: biological resources, cultural resources, geology and soils, groundwater, hazardous materials, solid waste, health and safety, noise, socioeconomics, traffic and transportation, and visual resources.

I'll be drilling into the DEIS to break down the proposed alternatives and sharing some of the public comments. Suffice to say, but many of the senior scientists with direct experience with the observatory indicated, that even at 272 pages, the draft was incomplete.

After construction in August 1963

The second meeting was centered around Section 106 of the National Historic Preservation Act. Specifically, the NSF reviewed the technical report "Proposed Changes to Arecibo Observatory Operations: Historic Properties Assessment of Effects."

Again, soon I'll be scouring the technical report and sharing what I learned at the meeting. Although, many in the audience thought it absurd that the NSF was conducting two very different administrative processes. In one, the NSF discusses their assessment of the historical effects on the Arecibo Observatory of reduced NSF funding. In the other, they are discussing deconstructing all or parts of the historic site.

Summary

First, even though the Arecibo Observatory is already on the US national list of historic sites, or even if it became a national landmark, it is still threatened by the outcome of these two administrative processes. In short, the NSF is in the final stretches of deciding how to divest themselves of the observatory. Of course, if new collaborators surface, then the future of the site would be more stable.

However, it is clear to me that we must make NSF hear our voices and defend the future of the observatory. To declare in a unified voice that the Arecibo Observatory is a Puerto Rican treasure, a national treasure and it must be saved.

Public Hearings for Future of Arecibo Observatory

2016-11-17T08:27:00.003-04:00

Famous telescope faces possible destruction

The fate of the Arecibo Observatory hangs in the balance. Last night in Arecibo and today today in San Juan, the National Science Foundation (NSF) is conducting Public Meetings for the Draft Environmental Impact Statement (DEIS) for the Arecibo Observatory, in Arecibo, Puerto Rico.

The meetings are today, Thursday November 17, 2016 at 10 AM and 1 PM at the San Juan Double Tree on 105 Avenida De Diego. A map to the hotel can be be found here.

Specifically the NSF is trying to determine first, whether the facility is worth funding. And, if not, what happens next. There is already a technical report on the proposed changes, which already lay the various drafts of the supporting documents for the DEIS. And yes, deconstruction of the entire facility is among the alternatives.

I urge any who can attend the meetings to please stop by. Just by showing up, we can show our support for the telescope! As one of the most recognizable landmarks in Puerto Rico, it would be a crying shame for it to be lost. I'd write more now, but I've to get moving. I hope to see you there.

Puerto Rico Death Spiral

2016-10-25T07:43:00.001-04:00

"I've come to release this info. I'll be brief and let me just keep shit simple." Squaredance Eminem

In these days of the endless droning of wide-spread use of propaganda, it's rare to get the "truth" these days. But last week, outgoing Puerto Rico governor Alejandro Garcia Padilla beseeched the Puerto Rico federal oversight board that:

“You will soon realize that any reduction in spending implies intolerable effects in aggregate demand, and will further throw Puerto Rico into a death spiral that will directly affect creditors’ recoveries across the board”

Puerto Rico End Game

For me, this prediction is simple, it is inevitable. As our economy continues to degrade, less is always less. By removing spending from the Puerto Rico economy (whether from budget cuts, payroll reduction (public and private), and immigration) it will mean that any economic development that does happen will falter.

Just as in the parable of the sower of seeds,

“A farmer went out to sow his seed. As he was scattering the seed, some fell along the path, and the birds came and ate it up. Some fell on rocky places, where it did not have much soil. It sprang up quickly, because the soil was shallow. But when the sun came up, the plants were scorched, and they withered because they had no root. Other seed fell among thorns, which grew up and choked the plants. Still other seed fell on good soil, where it produced a crop—a hundred, sixty or thirty times what was sown. Whoever has ears, let them hear.”

... instead, for Puerto Rico, PROMESA is the farmer, his seeds are economic development, the aggressive anti-competitive actions of market leaders are the birds, the massive government payroll is the rocky places, the low labor participation rates are the shallow soil, and the insanely anti-small business environment is the thorns.

I wish I knew what the good soil of the parable is for Puerto Rico. What I do know is that we are already in the grip of an economic death spiral. We have been since 2006. The real question is when will the spiral reach the bottom?

What does the bottom of this economic collapse look like? What other unexpected infrastructure failures are we going to see? Where will the economic growth come from? Will we be able to resurrect our lost manufacturing base?

The Real Truth Behind Puerto Rico's Financial Crisis

2016-09-07T07:55:00.000-04:00

Island Facing Economic Destruction

If you want to truly understand what is behind Puerto Rico's financial crisis, look no further than the U.S. Bureau of Labor Statistics "Economy At a Glance" for Puerto Rico. With some statistics dating back to 1976, the graphs and supporting data paint a very clear picture.

Since the peak at 2006-2007, employment numbers have dropped to levels reached 20 years ago. As I've mentioned in this forum before, what we are witnessing in Puerto Rico is the opposite of economic development; we are experiencing economic destruction.

Prognosis

The implications of this reversal of economic development are three-fold. First, going forward, all tax collection goals will be more challenging to meet. With a smaller labor force, that means fewer taxes collected. Unless of course, Puerto Rico implements sweeping tax reforms and switches from the IVU to the IVA.

Second, it is no wonder that there is a mass immigration of Puerto Ricans, there just aren't enough jobs to keep them here. And while the grey economy still remains strong in Puerto Rico, it appears that even on the fringes of society, there still aren't enough jobs.

Finally, while President Obama just announced the members of the Financial Review Board, it will take years, maybe even a decade for Puerto Rico to establish a floor to the economic destruction. Meanwhile, the economy is going to get worse, maybe much worse, before any economic development (and the jobs that go with it) can begin.

Conclusion

The scariest thing about Puerto Rico's economic downturn is not knowing how bad it will get before things turn around. I mean, where is the bottom? What will these numbers look like after the PROMESA is up and running? How many more jobs will be lost? Where will the new jobs come from? What companies? What technologies? What industries? I wish I knew...

Bonus Math

Employment is at 1,007,496 as of Jul 2016. In July 1996, employment was at 1,098,169; a difference of roughly 90 thousand jobs. Let that soak in for a second, yes, there were 90K more jobs twenty years ago! You would have to go back another year to August of 1995, to compare our current employment numbers. We've destroyed 21 years of economy growth.

Letter to the Puerto Rico Government, US Congress, and Puerto Rico Bondholders: Let's Not Create Another Katrina Catastrophe!

2015-12-28T09:51:00.003-04:30

In the latest op-ed piece about the Puerto Rico bond crisis, the New York Times reiterates a dichotomy between paying the bond holders and paying the police, hospitals, etc. This is a worrisome comparison and should be removed from everyone's discussion of the Puerto Rico financial crisis.

I'm imploring everyone to rethink this comparison. Whatever happens in the coming days and weeks, I urge everyone to prevent our on-going crisis from becoming Puerto Rico's Katrina.

Let's be honest and forthright when talking about the choices ahead. Whether it is through bankruptcy, an external financial review board, or if it comes to it, other payment default legal proceedings, some tough decisions are coming. However, let's all agree that there are many non-essential government services that can be defunded before we have to reduce our emergency preparedness.

I'm not suggesting that we make these budgetary changes now, I'm just putting forth my hope that we can agree that the last services to be placed under a budgetary microscope are those related to our ability to respond to an emergency, whether, it is an earthquake, a tsunami, a hurricane, or civil unrest (among many other possible threats). But just like Katrina, we have time to prepare for the eventual changes that this crisis will bring, so let's us that time judiciously and plan for scaling back non-essential government services.

If we must make these types of tough choices, let's close the parks, close the sports facilities, the libraries, all of the municipal governments, anything but the services that help us protect and preserve the citizens of Puerto Rico. The waters are indeed rising, please act responsibly.

Spam and the Anti-Design Pattern for Websites

2015-09-22T09:13:00.001-04:30

The hard lesson learned from e-mail Spam, was easy to understand but difficult to digest.

So while it was easy to detect Spam, and see it's reach growing in the size of our Spam folders, it was much more difficult to internalize just exactly why it was happening. Very simply it was the simple combination of two of humanities least favorite things, math and the science of very large numbers.

Large Numbers

As we reach the end of 2015, as predicted, the estimated number of Internet users is reaching 3,000 million; a number so large it becomes an abstract concept. It's an abstract concept because it is exceedingly complex to create a mental image of its' magnitude. We can visualize 100,000+ people, just imagine a full football stadium or concert. If we stretch ourselves, we maybe see a crowd of 200 or even 400 thousand people. Maybe we've even witnessed a million people together, but a 1,000 million? Never.

Math

Now for the hard part, while you may detest Spam, have you ever wondered why it still exists? After we've thrown a mountain of money to stop Spam, it keeps rolling into our e-mail accounts. The simple, uncomfortable fact is, that it works. For if it didn't work, do you think it would still be a problem? To answer why, we have to use math. So here it goes:

There are an estimated 14.5 billion spam messages generated globally per day. Now I know that you might never open and click on one of those messages, but if only .1% (.001 multiplier) of those messages were opened, that would still generate 14.5 million positive results PER DAY!

Small percentages, even if not all that small can also baffle many. If there are four of us together and only one of us gets married, that means 25% are married. Easy peasy, nice and cheesy, we get that immediately.

We can even grok 1 out of 10, or a hundred, or maybe even of a thousand. If percentages get smaller than 1, then the confusion starts to set in. Now we have to imagine a tenth, or a hundredth of a person. Say what?

Anti-Design Pattern

So keeping this in mind, what do you think will be strategy for websites? For they too are ruled by large numbers and math. And if you thought the Spam numbers were large, they are small compared to what's happening on the web. The standard measure of success online is the advertising click through rate.

Currently, the overall web display advertising click through rate is .06% (.0006 multiplier), and the rich media click through rate is slightly more, 0.27%, but still very small.

Example pop-up ad from website visited to
research this post

Therefore, we should think of some websites as Spam we voluntarily seek out. thus giving us our Anti-Design Pattern:

When you go to a website, and they immediately throw up an advertisement, that pop-up message, to join their email, our download their whatever, is an online website Spam message. If you click through on that ad, the website has achieved it's goal, and captured a way to contact you.

Of course remember, whenever a website can successfully extract any form of online contact, they will Spam you incessantly. Just think about it. See how Spam creeps into our online experience; even for the most sophisticated and discriminating web surfer?

Conclusion

The reason why I think website pop-ups are an anti-design pattern because this practice runs counter to what just about any "social media expert" will tell you. Aren't you supposed to build a relationship and generate value, before you ask for permission?

Mandatory pop-up advertisements do the exact opposite. They levy an "attention tax" on you as soon as you enter a website, before I've even got a chance to start a relationship or receive something of value.

Puerto Rico Squaredance

2015-09-11T09:03:00.002-04:30

First these words from the prophet Marshall Mathers:

"All these people I had to leave in limbo
I'm back now, I've come to release this info
So I'll be brief and let me just keep shit simple..."

You know that one metaphor about re-arranging the chairs on the Titanic? Well since we have to Boriqua-ize everything, try this one on for size. The debt-reduction plan that Puerto Rico's Governor, Alejandro Garcia Padilla announced this week, amounts to nothing more than installing new glass windows in your house, right before a category 4 hurricane hits the island.

While the jury, read the US Congress and Wall Street, is still out on whether the new plan will be accepted, the news leaking out about the plan is very disturbing. In general, the new plan seems to be constructed on basic financial and psychological assumptions about Puerto Rico which are just not true. Chief among these assumptions are:

Lowering government spending will help the local economy grow

Only on the spreadsheets of the Governor’s advisors and in the wet dreams of Republican presidential hopefuls does spending less equate to more and better paying jobs in the public sector. As I’ve noted before, the financial clout and largess of our economy was purchased on the backs of various administrations creating unnecessary government jobs and doling out cushy government contracts.

Is it any coincidence that our economy peaked, just as the government payroll peaked? No, the only way to grow the economy in Puerto Rico is to stimulate the creation of more high paying jobs. Just as Operation Bootstrap brought the island out of an agrarian economy and into 20th century using high paying manufacturing jobs, Puerto Rico needs hundreds of new hi-tech global businesses and the creation of thousands of high paying jobs.

By tightening up tax policy and other business restrictions, the grey economy will produce more taxable income

While it isn’t everyone’s first talking point, the plan includes all of the previous tax reform policies. Remember all of that hullabaloo about the IVA? Well it’s back! Only this time the stakes are even higher. The new plan contains even more policies that are aimed at making tax evasion more difficult. I’ve written ad nauseum about this, so I won’t rehash those points. The bottom line remains the same, as long as the grey economy is easier, more profitable, and carry minimal risk of punishment, the underground economy will thrive.

Much of our current tax evasion problem comes from people and organizations who simply choose not to follow the existing rules. Unless these new policies make tax collection easier to enforce, they are mere words and promises.

Labor participation rates will increase

This should be evident from the first two assumptions, but it is worth it’s own discussion. Think of it as their corollary. One of the primary justifications for this new plan is that by adjusting our economic policies, it will encourage more people to join the labor market. I can’t think of a more ridiculous idea than suggesting that lowering wages will incite more young people to join the job market. That is, unless you're a Republican, which theoretically the Governor is not.

In the past, this ploy was feasible, because they were cushy government jobs, however isn’t that what this new plan is supposed to eliminate? Where will these new low paying jobs come from? Isn’t our economy just about saturated with service economy businesses? Let’s get real here, thinking that Puerto Rico can compete with the low cost labor available in China, Mexico, or even the Dominican Republic is impossible.

Rico will eliminate it’s debt

As hard as these new policies have been defended, you’d almost expect them to leave Puerto Rico free and clear of it’s debt, but that has never even once been suggested. So let’s be clear, in order to pay for it’s current debt, Puerto Rico must refinance, or restructure, that debt with more debt. Further, the only legal mechanism for restructuring debt is bankruptcy, which both Congress and Wall Street are dead set against.

So where does that leave Puerto Rico? In my summation, I’d say just about exactly where it is now. The only thing different is that the “economic hurricane” that is just about to hit Puerto Rico has been upgraded to a category 5, but it’s just going to hit us just a little bit later.

With lower than expected tax incomes due to a stubborn and evolving underground economy, lower than expected labor participation rates, and without a rapidly growing economy, Puerto Rico will revisit, time and time again, the looming "economic hurricane" of outstanding debt. Alas, the lost Xanadu that Operation Bootstrap brought to the island will never be seen again.

The Illusion of Fairness: Part 1

2015-04-21T11:18:00.000-04:30

As promised here is the follow-up on the “Incentives for the Payment of Taxes in Advance of the Tax Transformation Project Act.” In this installment, I’d like to breakdown the provisions which allow for citizens to prepay taxes.

First of all, it should be crystal clear to everyone, that tax reform is coming to Puerto Rico. There is no question whether the IVA will pass or not, it is only a matter of time. How else can you explain the Puerto Rican government creating a process for citizens to prepay taxes? I mean let’s get real here, it’s in the title of the new law.

Our old friend Occam’s Razor almost guarantees us that the only way to explain the creation of this new law is because it is a forgone conclusion that tax reform is coming. I would go further to suggest that this law represents an unspoken covenant between the richest citizens of Puerto Rico and the Puerto Rican government.

Still not convinced? Let’s just imagine that the tax reformation does not happen. If that’s the case, then the Department of Hacienda has quite a mess on their hands. They will have received payments for taxes, based on future tax rates that did not become law. I guess they could simply refund the payments, that is, unless they really needed the cash (which they do). What happens if the government spends some of the money? Where will they get the money to make the refunds?

As I mentioned in the previous post, this program is aimed at a very selective group. Here is a summary of the types of taxes eligible (PDF) and who would be likely to benefit from the discounted taxes.

Type of tax	Beneficiaries
Annuities	Owners of life or endowment insurance annuities
Capital Gains	Individuals, estates, trusts
Capital Gains	Corporations
IRA's and Educational IRA's	Individuals with IRA or IRA educational accounts
Dividend Distributions	Share holders of public corporations issuing dividends
Implicit Distributions	Corporations with accumulated earnings and profits

Secondly, as you can see, these discounted tax payments are aimed at any citizen with annuities, IRAs, and stocks. In other words, these discounted taxes will benefit the richest of our citizens.

In addition, it is also aimed at companies large enough to have long term capital assets and those fortunate enough to have large profits.

I'm always suspicious of laws that claim to be doing one thing, but actually authorize something completely different. In this instance, the press release from the Department of Hacienda claims the governor signed into a law a tax amnesty program. However, if you read the release or review the law (Ley de Incentivos para el Pago de Contribuciones en antelación a la Transformación Contributiva), you will realize that it also sets up a new program for the most wealthy Puerto Ricans to prepay taxes at discounted rates.

Photographic Collection From Okeanos Explorer: Exploring Puerto Rico’s Seamounts, Trenches, and Troughs

2015-04-13T14:57:00.000-04:30

Science Alert: Exploring Puerto Rico’s Seamounts, Trenches, & Troughs

2015-04-13T08:33:00.001-04:30

Mona Passage

NOAA To Explore the Puerto Rico Trench in Historic Dive

The National Oceanic and Atmospheric Administration (NOAA), on whose work we rely on during all tropical storm activity, is currently operating an exploration of the ocean surrounding Puerto Rico.

The expedition will explore Puerto Rico’s seamounts, trenches, and troughs. Using both at-sea and shore-based science teams, the expedition will investigate unknown and poorly known areas, including the Puerto Rico Trench, Muertos Trough, Mona Passage, and the Virgin Islands Trough.

NOAA Okeanos Explorer Program

Amazingly, the expedition is able to live stream the dives over YouTube, as illustrated in this image from the mission plan.

Blast From The Past

I remember my teacher wheeling the television into my classroom so we could watch video from Apollo 16. Truth be told, now that I think about it, that experience fundamentally changed my life. It kindled a life long passion for science, to which I am forever grateful.

ROV Deep Discoverer

So when I watch live video from our exploration of uncharted territory right on my very doorstep, forgive me, it gets me going. It takes me right back to that classroom in the dark, watching my life change before my very eyes. I hope it takes you there too, for we are witnesses to history in the making. Truth.

Prelude: Corrupt is as Corrupt Does

2015-04-10T09:29:00.001-04:30

Puerto Rico Tax Collections Take The Easy Road

https://youtu.be/uwlAvsPvPfg

Very quietly this week, Governor Garcia Padilla signed into law, the 2015 Puerto Rico Incentives for the Payment of Taxes in Advance of the Tax Transformation Project Act. The new law offers an amnesty for payment of taxes. The hope of the Garcia Padilla administration is the new incentive will encourage the payment of overdue taxes. Beginning immediately, the amnesty will be open until June 30, 2015.

With the new law, the Puerto Rico government is looking to raise around $290 million during its operation. The taxes collected are predicted to help reduce the government's fiscal deficit for this year.

Analysis

What surprised me most about the news is who the new law is targeting. Besides snuggling up to those evil evasores, with the new law:

"taxpayers can prepay, at incentivized rates, tax that will be payable in the future on the capital gains arising from the increased value of certain assets, including equity investments, and contributions to individual retirement and savings accounts."

Wait a minute, hold the phones. This is a pretty dense way of saying that, if you're rich enough to actually have capital gains, you can reduce your income taxes with this new amnesty law. How convenient for those who have the "burden" of capital gains.

Conclusion

I'm saddened that our government doesn't have the will to pursue the taxes our laws demand be paid. But, I've seen this before, it's fairly common. In fact, our legislators are offering a two-fer, consequently with the Hacienda amnesty, CESCO is also currently offering an amnesty on toll violations.

In a previous life I worked in IT for a major wireless carrier, so I know what collections is all about. Cutting edge technology was always a factor in collection rate optimization. Because going in, it was already accepted that collections would never reach 100%, ni por tanto. If memory serves me, I think we had an average 30% success rate on past due collections. Your company's rate may vary. ;-)

I offer this anecdote to provide a perspective for these questions:

What is the minimum accepted collection rate for this program?
What is the overall amount of past taxes due? And how many people or companies are we talking about?
Just how many toll violations are there and how much is owed in the corresponding fines?
Don't we have their contact information? What, we don't know how to "find" them?
What is the Government's resolve concerning enforcing the rule of law?

Puerto Rico's Prepaid Tax Program

Rarely do you see the clear intention of laws made to benefit the few, maybe only the "1 percent" of the Puerto Rico general population. Of course, since corporations are now people, they're included in the 1% as well. For brevity's sake, I'll break down this new program and prove that it straight up "informal corruption."

It Takes A Pueblo - Culture Change in Puerto Rico

2015-04-08T12:03:00.001-04:30

You need to walk a mile in the shoes of a (hu)man before you can understand the (hu)man. In order to teach that (hu)man, you must understand the (hu)man.

Recent articles by Jay Fonseca and Samuel Oakford call our attention to the immigration of young upwardly professional Puerto Ricans p'al norte (migration to the US of A). Here's another perspective to consider...

Where Do We Learn?

Without out access to a formalized school system, mankind suffers. To doubt this suggests you doubt science. And we know what Neil deGrace Tyson shows us; science doesn't need your belief to still be true.

However, whether a child relieves a formal education or not, they will always get educated by his(her) pueblo. Especially so, by her parents, his immediate family, or even groups and individuals outside their family (media,church, politicians, etc.).

Gettin' Schooled!

Melvin Resnick studied the history of English bilingualism in Puerto Rico and shared his findings in the 1990's. In a landmark paper, he observed "motivated failure" within the English as a second language, educational system.

Most ESL students on the island confront real obstacles to learning English. To illustrate the failure of teaching English, consider that most school children in Puerto Rico receive 12+ years of English (SL) education, but some 80% of Puerto Ricans remain functionally monolingual (Spanish only).

Resnick points to effort to convince the Puerto Rican people that the learning of English meant the loss of identity and subjugation to a foreign colonial power (coming after 400+ Spanish colonialism, in the end, most Puerto Ricans were pretty sick of the treatment by the Spanish).

The rhetoric can even go so far as suggesting that the resistance to learning English was a simple rejection of the United States' attempt to Americanize Puerto Ricans through the public school system.

Finally

This is just one motivated failure example, among an infinite others that occurs outside of the formal education system. Me, I was raised in a pluebo that was prejudiced against the black. In others it might be homophobia or prejudism against Dominicans. Or maybe even as extreme as pueblos which forbid women from showing their faces or receiving any formal education. For certain, in all of the varied places around the world, it's our pueblos that define who we are and how we see the world.

Throughout (hu)mankind's existence, we've repeatedly seen that only through education and community can we get (hu)man to act against his self-interest. Just as our ancestors used a new found respect and belief in science to bring us out of the dark ages and into the age of enlightenment, we too must find our way out of the blinders which keep (hu)mankind ignorant and afraid.

So while we must depend on public and private schools to teach our children reading, writing, and arithmetic, we must find new ways of teaching our children something which goes beyond technology or even information literacy, let's call it perspective(science) literacy. In perspective literacy we use science to teach (hu)man his place in the universe, her place in her pueblo, and how that science dictates our place within them all.

Into The Future

A new digital generation will soon bear the burden of humanity. Grown from long term technology literacy and digital independence, this new generations relates differently; it doesn't need television news, consumes mass quantities of modern media, and shares nearly everything that happens in their lives on the Internet.

It will take considerable study of the impact of this new generation. What tragedies are bound to happen? Which tragedies have the highest probabilities of impacting our well-being? How will this generation (or the next) be any less self-serving than most of it's predecessors? Unfortunately, all of this a big ask of any pueblo, even for any group of (hu)mans.

Of course there are always tragedies which bring about the end of the world as we (Puerto Rico) know it; who knows it may even be a large scale extinction event, the kind that forever changes a pueblo. It's been a while since Puerto Rico has faced one...we can only wonder what might be the first, or the next. How will our pueblo change? How will our pueblo survive?

The Magical Mystical Unemployment Rate: Inside Puerto Rico's mysterious drop in unemployment

2015-03-31T12:06:00.001-04:30

[Roll up! Roll up for the magical mystery unemployment rate! Step right this way!]

The February unemployment figures came out for Puerto Rico and there was a surprising drop in the numbers; they dropped from 12.4 to 11.6%. This was possible through a 9K+ net increase in employment. And while the jump might seem dubious, unemployment has actually been dropping since October of last year.

Roll up, roll up for the mystery unemployment rate
Roll up, roll up for the mystery unemployment rate
Roll up (We've got everything you need), roll up for the
mystery unemployment rate
Roll up (Satisfaction guaranteed), roll up for the
mystery unemployment rate

These days, I'm not even sure if unemployment rate is what Puerto Rico economists should focus on. As I have suggested in the past, the labor force participation rate, is, for me, the most worrisome.

If we look, once again, at the U.S. Bureau of Labor Statistics, Economy At A Glance (Puerto Rico), we see a long steady drop in the labor force. Starting in 2006, the decreases in the Puerto Rican labor force has dropped down to levels not seen since, 1989.

In total, there has been a drop of about 290 thousand participants in the Puerto Rico labor force since 2006. Curiously, there has also been a drop of about 272 thousand people employed, during the same time period. Finally, there has been a total population drop of 257 thousand, roughly the same amount, again, during the same period.

What's the narrative?

A reasonable explanation of these trends could be, as jobs were lost in Puerto Rico, a large majority of the unemployed decided to leave the island. So as the number of total jobs dropped, unemployment skyrocketed, but eventually leveled off, as more and more unemployed went off the grid. They didn't migrate away, they broke with the Pack, and begin using informal economies to support their well being.

Enter the ever illusive, Puerto Rico informal economy. The raison d'etat of 8 years worth of complete incompetence in all things IVU or IVA. As was recently expressed, managing a micro-economy is hard, and few, if any, of our governmental leaders (and their administrations) have been in control of said micro-economy.

The magical mystery unemployment rate is coming to take you away
Coming to take you away
The magical mystery unemployment rate is dying to take you away
Dying to take you away, take you today

Labor force participation rate, total (% of total population ages 15+) (modeled ILO estimate)

Getting back to the labor force rate, here is a graph from the World Bank. Labor force participation rate is the proportion of the population ages 15 and older that is economically active: all people who supply labor for the production of goods and services during a specified period. In Puerto Rico, this critical rate went from 48.9% (2005) to 42.6% (2013). That means that only 4 out of every 10 people in Puerto Rico are working "inside" the traditional BLS type of "employment" model. Prior to this drop the labor force rate had been climbing since 1990, where the rate was 44.7%.

And Here is The Kicker

So if all of the major economic indicators show declines in the past 8 years, how has the Puerto Rico gross domestic product(GDP) and GDP per capita been able to sustain their continued growth? How is retail purchasing in Puerto Rico rising? How?

[Dying to take you away, take you today]

Mall of San Juan - Praise the Lord

2015-03-26T18:24:00.000-04:30

Sure, I know how curious people can be, but, if you ask me, Puerto Rico has a new house of worship. Move over Plaza Las Americas, there is a new temple in which to praise the all mighty. The new "Our Lady of Holy Capitalism," is open for business. Let us stand back and adore thee.

As thousands demonstrated yesterday, the new Mall of San Juan opened to unprecedented numbers of shoppers and gawkers. From all accounts, it looks like the new shopping mecca is an instant success, as predicted.

The Mall of San Juan: Destined to Be Successful?

2015-03-19T11:31:00.002-04:30

Next week, on March 26th, Puerto Rico will open the Mall of San Juan and add another crowning jewel in efforts to make the island a high-end destination for travelers. The project is from a leading retail property developer Taubman Center Inc.

With anchor stores from Nordstroms and Saks Fifth Avenue, the new mall will, according to the Maria Mainville, Taubman's director of strategic communications, represent a "dominant upscale shopping destination."

Other notable retail stores slated for opening in the new mall include: Abercrombie & Fitch, Nouvelle D’Spa Boutique, Williams-Sonoma, Pandora, Versace, Louis Vuitton, Kate Spade, Jimmy Choo, Gucci and Omega. The center will also house more affordable labels such as Chico's, Gap, Banana Republic, Boston Proper, Herve Leger, Hollister, Tommy Bahama, Vans, and House/Black Market. It will also feature several restaurants like: Brio Tuscan Grille, Burger and Beer Joint, and Kona Grill.

Note: Many of the upscale stores listed above are the first retail locations in Puerto Rico.

Prognosis

First, let's put one to rest, right off the bat. This new mall is going to be successful. I remember back when Macys opened their store in Plaza Las Americas. Back then, I had a personal conversation with a leading marketing professional where I shared my concern over the longevity of the store on the island. Very astutely, the professional shushed me and then assured me that Macys would do fine. To her credit, she was right.

Remember when there were speculative rumors that Starbucks would be entering Puerto Rico? At that time, many confidently stated that no one in Puerto Rico would be willing to pay over $5 for a cup of coffee. I guess we all know how that turned out, they were wrong.

Finally, I wonder what Taubman Center Inc has to say about the new shopping center? "You have to go back to one thing," said Bill Taubman, chief operating officer of Taubman Centers. "There's only like 5 square feet per capita of retail. There's almost no competition of any kind."

Puerto Rico's Debt Crisis: An allegory of stupidity and greed

2015-03-18T09:35:00.000-04:30

Have you ever purchased a home or a car? In these transactions there are three key principals: the buyer, the salesperson, and the seller. During such transactions, there is an agreement between the seller and the salesperson, that for each sale, the salesperson receives a commission for said sale. While agreements vary, usually the commission is based on a percentage of the final sale price.

I think that's fairly well understood by most people, but let's up the ante. What if we are talking about municipal bonds? As a thought experiment, let's say the principal actors in this "hypothetical" situation are Oppenheimer Funds Investment Management (buyer), UBS Investment Banking (the salesperson), and the Autoridad de Energía Eléctrica (the seller). In this "hypothetical" transaction, the Autoridad contracts UBS to help them sell $3.5 billion in municipal bonds. Now for simplicity purposes, let's imagine that Oppenheimer Funds purchases all $3.5 billion of the bonds.

So the burning question for this "hypothetical" sale, is: "How much did UBS earn in this transaction?" Now, I'm not an economist or even a financial advisor, but math tells us that even a small percentage of $3.5 billion is still a shit load of money.

The Moral of This Story

Trying to unravel in the ins and outs of our debt crisis is a mess, so, as my first Spanish teacher used to tell me: "Don't make a trouble for you're head."

After all of my investigation into this debt crisis, all I can conclude is that the commission on $70 billion is an even larger shit load of money. Over the last twenty years, our sales of municipal debt has exploded.

There are probably very sophisticated economic theories involved in why this has happened, but if we use a hybrid of philosophical razors, I think the moral becomes clear.

First, let's use Hanlon's razor (which I mentioned recently). Hanlon's Razor states: "Never attribute to malice that which is adequately explained by stupidity." I don't think current and past Puerto Rico administrations intended to do anything evil in selling so many bonds. I think they sold so many bonds because they could.

And finally, let's use Ockham's razor. Okham's razor states that among competing hypotheses that predict equally well, the one with the fewest assumptions should be selected. All things being equal, the motivation for selling so many municipal bonds is greed.

Let's face it, it's pretty common within our commonwealth to exchange lucrative government deals for favors. Whether these deals are in exchange for prior financial support during a politician's campaign or simply the action of a politician showering contracts on friends and families, one thing is painfully clear:

The sales of Puerto Rico municipal bonds over the last twenty years have generated a lot of profits in the form of takedowns, management fees, and underwriting expenses. Because in the end, isn't it always about the benjamins?

IVA Propaganda - Departamento de Hacienda

2015-03-10T15:25:00.000-04:30

I found some nice pro-IVA artwork on the Departamento de Hacienda website. Here are my favorites:

Income Tax Versus IVA

Everyplace is using IVA

Less taxes, um hum, sure...

No more income tax withholding

Again, income tax and IVU is less than IVA - refunds

My absolute favorite!

Besides the consultants (KPMG), the clear cut winner with the IVA so far, are the advertising agencies and the ad sellers (mostly El Nuevo Dia, or should I say GFR Media?)

Risk Assessment for 2015 Puerto Rico Tax Reform

2015-03-09T10:28:00.004-04:30

Ooooo doggie, did I strike gold. I found me a glory hole!

I was poking around on the Transformacionpr Web Site and found the risk assessment for the new Puerto Rico Tax Reform (PDF), prepared by KPMG. As an introduction to this new glory hole information, I offer you the top five threats to a successful implementation of the VAT (IVA) in Puerto Rico

1) Current Economic Instability - Yeah, this is pretty high risk, it's what we call a doozy.
2) Ad Hoc Legislative Changes - Already happening! So I'd also pretty high risk, like 100% likely.
3) Continued Culture of Tax Evasion - Funny how easy it was to find pertinent information about IVA evasion in other countries. Don't hear so much about that part of "other places use it too!" See the tale of the Scorpion and the IVA.
4) Inconsistent Enforcement Efforts - In a kleptocracy like ours, this is a given. This is almost certainly to go hand in hand with the the culture addressed above.
5) Population Loss - In the end, the true measure of the new tax reform is will it rescue the economy? Will it prevent the mass exodus of Puerto Ricans looking for greener pastures in a much evolved United States. Almost exclusively, when this happened before, many went to New York. Now much more of the US is ready to receive the flood of Puerto Rican refugees. Prediction: highly probable.

I didn't want to get to heavy into this, but if you study the risk document, it is rich with context and strategy. Let's get this party started!

Playing Russian Roulette With Puerto Rico's Debt

2015-03-06T08:20:00.000-04:30

One day, when discussing some stupid ass shit going on around here, a friend of mine reminded me that we didn't need to assign to negligence or other nefarious reasons, what good old fashion stupidity could explain.

So I've been studying the end game for our debt crisis. And my initial impression is that no one really knows what they're doing, and our leadership thinks this whole debt crisis is a game. Unfortunately, some games, like, let's say Russian Roulette, can have some very tragic endings.

So, just to remind everyone, this is not a game; when you fuck with someone's livelihood you are in for a major slap down. Take for example, Tom Mayer, counsel to funds managed by Franklin Municipal Bond Group and by Oppenheimer Funds, Inc. Mr. Mayer was testifying at the House Subcommittee hearing on Puerto Rico Chapter 9 Uniformity Act of 2015—H.R. 870.

With respect to our public corporations, Mr. Mayer said:
"They should, among other things, cut expenses, increase rates, and engage in more robust collection efforts before going down the Chapter 9 path or any other restructuring scenario."

And you may think, "That's quaint, but that would never work here. They just don't understand that things are different here." And you might be right, but here's the rub.

Just as there is no way to stop the bullet that finally kills the poor unfortunate Russian Roulette contestant, if we default on our bonds, Mr. Mayer will have his way with our asses. Because, when the bonds fail and the lawsuits begin, we will be like the victim of a twisted gunslinger ordering us to dance, and dance we will. We'll start dancing better than Michael Jackson in Thriller. And we won't be able to stop dancing until every major holder of our junk bonds get's their pound of flesh.

The Elusive Puerto Rican Informal Economy

2015-03-05T10:36:00.000-04:30

Funny thing happened to me while I was trolling the economic data for Puerto Rico yesterday. Surprise, surprise, I found yet another paradox. According the Puerto Rico Government Development Bank (GDB), Puerto Rico's Economic Activity Index and Retail Sales are growing. How is this possible? With lower population and lower employment rates, shouldn't the economic activity be shrinking? How can there be more money in the economy when there are less people working?

Ask yourself, how could there be more money in an economy, when there is less income? The only logical conclusion is that there is another source of income. Now ask yourself, what other sources of income are there that aren't from employment? Now you might respond, clearly you are overlooking self-employment. Unfortunately, the labor data available for the GDB doesn't support this theory. On the contrary, self-employment is at it's lowest since 2008. So if it's not self-employment, then what could be the source of this money?

According to Occam's Razor, the only answer to this riddle is the elusive Puerto Rican informal economy. Estimated at $17 billion dollars, or 27% if gross domestic product [of Puerto Rico], the black market is the primary target for both the IVU and the IVA.

When the debate surrounding the IVU caught my attention back in 2006-07, I started watching the growth of a local pulgero, a flea market. I watched as the IVU became the law of the land, the size of the pulgero grew rapidly. However, as the years went by and the informal economy continued growing, my local pulgero maxxed out. Recently, the number of stalls, constructed out of wagons (steel enclosed trailers typically used for goods transport), has roughly stayed the same. I share my heuristic, to call into question, the origin of the informal economy.

I love the way, the Puerto Rico informal economy has become an accepted fact. I love it for the irony it represents, for not only does this represent the cash-based economy where goods and services are exchanged outside of law, it also includes drugs and guns trafficking.

It boggles the mind that so many "law-abiding" citizens are complicit with major crime and the syndicates they represent. Since it is, by definition, off the books, there is no way to estimate the breakdown of the estimated $17 billion. I wonder though, how much of this economy is drawn from drugs, guns, and prostitution?

Of course, within a kleptocracy like ours, an informal economy is the most nefarious type of corruption. It slowly leaches into our daily lives, increasingly corrupting more and more of our society.

Much heralded, is the community that protects the gang that helps them to survive, providing "jobs" and income for the community where none existed. But I wonder....how many of the participants in Puerto Rico's informal economy would openly support murderers, thieves, and extortionists? Especially, if you factor in that Puerto Rico's population is approximately 95% Christian?

Sadly, I'm left with only the illogic from Star Tek's classic "I Mudd" episode. "You say that Jesus and The Bible are your strength, but openly allow murder, stealing, and bearing false witness. But if God was your copilot, you wouldn't take what isn't yours."

Puerto Rico Employment and Jobs - A Classic Myth Retold

2015-03-04T11:22:00.001-04:30

I am a proud supporter of Abre Puerto Rico. I fundamentally believe that the only way we can influence our future is understanding the facts about how we live now.

Take for example the U.S. Bureau of Labor Statistics. They maintain a tool called the Economy At A Glance(1). I've used it here many times to help explain my observations. For me, it cuts through all political propaganda. Which brings me to today's myth.

Let's play a game. It is November 2012, and the candidate Alejandro Garcia Padilla has stated that, if elected, he will add 50,000 "new" jobs within 6 months. Now flash forward to right now. Did he meet his campaign promise? Here's one take...

It seems pretty clear, that in terms of net employment, it's been all downhill.

At least, until September 2014. That sounds good, looking from here, but with the recent loss of both Radio Shack and Doral, I doubt we will see additional growth.

Lump in the confusion about the IVA and the Crude Oil tax, and it doesn't look good for the Governor. No wonder he's in such a rush to implement the IVA, the dude's got to do something. His administration is bleeding jobs and employees. According the Puerto Rico Government Development Bank, the employment and participation rates are near record lows.

While, Garcia Padilla claimed that said 50,000 new employees were added, he didn't ever really claim it was going to be net growth, did he?

That takes me back to my old cellphone accounting days, when business success was measured in three ways, new additions, net subscribers and the churn. Subscriber additions and cancellations were important, but also misleading. In order to have the true performance of the wireless company, we had to look at overall net subscriber growth. The same goes for el pais.

A Myth Revealed

So, based on the data, we can conclude that Garcia Padilla misled us. Shock! Gasp! Politicians lie! I know, right? It's a political truism.

President Obama said he was going to close Guantanamo Bay prison, I guess he was lying. We all acknowledge that this happens a lot and use the results to fit our needs.

Political junkies, like me, know that fulfilling campaign promises is a complicated affair. Sometimes they are possible, but to steal one of the master's lines, sometimes there are the unknown unknowns. Things that you were clueless about during your campaign, and well, sometimes they are immutable; they simply must be accepted as is, and thank you very much, we'll be moving on now...

And still! Still! We act as the things that politician's say are true. We act as though everything coming out of their mouths, is fait accompli. And we're shocked when what they say, turns out to be nothing more than propaganda. What to know my favorite joke?

Want to know when a politician is lying? When he moves his(her) lips.

(1) Super Pro Gold Tip: Looking to move to a state in the fine US of A? The Economy At A Glance is just the tool for you. Available for all 50 states and, duh, the territories, too; it's the tool for you.

Use the Economy At A Glance (EAG) to research possible destinations. Want to know which state unemployment rates are the lowest? EAG! Want to know which state has the most IT jobs? EAG! Bon voyage!

The Fable of the Scorpion and the Puerto Rico IVA

2015-03-04T07:55:00.002-04:30

Recently the ex-governor of Puerto Rico, Anibal Acevedo Vila made an interesting announcement on his blog, entitled "Refrescando la Memoria." In his discourse, he suggests that the IVU, which he signed into law in 2006, is one of the reasons that the Puerto Rico economy has not emerged from it's decade old depression.

Yes, let's refresh our memories and see what emerges, but first, I'm reminded of an Aesop Fable, that might help us with our memories:

A scorpion and a frog meet on the bank of a stream and the scorpion asks the frog to carry him across on its back. The frog asks, "How do I know you won't sting me?" The scorpion says, "Because if I do, I will die too."

The frog is satisfied, and they set out, but in midstream, the scorpion stings the frog. The frog feels the onset of paralysis and starts to sink, knowing they both will drown, but has just enough time to gasp "Why?"

Replies the scorpion: "Its my nature..."

The Moral

As some of you political monsters out there might remember, during his political campaign against ex-govenor Pedro Rossello, Acevedo Vila was likened to a scorpion. So let's keep that in mind as I unwind the tatters of history and reveal the moral.

But didn't Acedo Vila, himself, sign the bill into law? Yes, but he remembers thinks a little differently: "Aunque tenía dudas muy fuertes sobre la imposición de un impuesto al consumo, acepté la propuesta del PNP. (While I had strong doubts about the IVU, I agreed to the PNP proposal.)" So let's deconstruct that statement, because it's a doozy. So the PDP governor, accepted the IVU proposal from the opposition party, the PNP. Yeah, that happens here, like, never.

Maybe the blog post is a secret cry for help, because the governor is surely suffering some type of memory robbing affliction. Maybe it's the early stages of senility, because Acevedo Vila must not remember having had the power to veto while governor. Anyway, I digress.

The Informal Economy

When the IVU was implemented it was heralded as the way to increase tax collections from the informal economy (the black market) and those pesky tax evaders. But like a horrible punch line to a sadistic joke, long story short, it didn't. As the landscape changed, so did the behavior of the evaders, as well as the merchants and consumers of the black market.

Unlike our fable, in this version, Acevedo Vila isn't the scorpion, he's the frog. And the willing participants of the black market and those wily tax evaders are the scorpion. For you see, as ugly as it sounds, if there is one thing tax evaders excel at, it is bending the rule of law to their favor.

What's My Point?

If one of the motivations for the new tax law is to capture taxes from the informal economy and tax evaders, then the VAT (IVA) is doomed already. For just as certain as the sun rises in the east and sets in the west, the moment the VAT becomes law, people will find a way to beat the new system. It is just our nature, we can't help ourselves, even if we tried. Therefore, all of the tax revenue projections are based on a flawed assumption.

Exiting the Puerto Rico Debt Crisis

2015-02-26T09:13:00.000-04:30

In a thought provoking piece from the Bloomberg View, the editors are recommending that Puerto Rico be allowed to slip into bankruptcy. A bold suggestion, that I’m sure will ruffle some feathers, but it is not without merit.

As some of you know, I’m a serial entrepreneur with a long string of failed businesses. In some circles this would grant me a badge of honor, for me, it’s just another badge I’ve accumulated in a long career. When building a startup, it’s critical to know your exit plans; do you intend on taking the company public, do you hope to sell it, or will this become a life-style business? So for purposes of a thought experiment, let’s apply the same analysis to the Puerto Rico debt crisis.

You can file this under more assumption analysis of our debt problem, but let’s say that we have a magic wand, and the VAT(IVA) works perfectly. Then what? We see right away, that we just can’t get away from revisiting our assumptions:

$79 Million in outstanding bonds.
Interest payments of these bonds are 13% of our annual budget.
S&P and Moodys determine the grade of our bonds, their grade determines the amount of interest our government must pay on both outstanding bonds and new ones as well.

To solve our debt problem, the VAT(IVA) must produce a budget surplus, or at the very least, balance the budget so we don’t need to issue any more bonds. Additionally, the VAT (IVA) should prevent any further degradation of outstanding bonds. Further degradation means that the VAT(IVA) would have to overcome the additional interest due.

Here’s what the Bloomberg View editors have to say about that:

“Shrinking Puerto Rico’s debt will require running a budget surplus for years and an economy that grows at a nominal rate consistently higher than the interest rate on Puerto Rico’s debt. Neither is likely.”

Let’s be clear, the goal is not to eliminate all bonds, but to bring them under control and eliminate the burden of massive interest payments we currently have.

It is a simple truism that you can not solve a problem quickly that took decades to create. The VAT(IVA) is not a silver bullet solution. Even with perfect execution, one that generates a budget surplus, we would still need to keep that surplus until the public debt is under control.

Troubling Unknowns

How will an aging tax-base impact collections?
What if more citizens take their chances in the United States and move away?
What if citizens find a way to avoid paying the VAT? A common solution to not paying tax on a purchase is to find an alternative source, can you say Amazon? What about Ebay. While we try to tax Internet purchases? Hmm, good luck with that one.
With Radio Shack and Doral Bank ready to disappear, how will additional business closings affect the problem?
What if the federal government raises the minimum wage?

I used a dominoes analogy of our debt crisis early, but chess will do just fine. If our debt crisis is like a game of chess, then we are only just a few moves away from checkmate. With each move we take, we move one step closer to checkmate, so now the question becomes, "What happens when Puerto Rico defaults on our bond payments?" Let's explore that scenario, but be prepared for one thing, much wailing and gnashing of teeth.

Puerto Rico Governor Calls Us All Crooks

2015-02-24T11:45:00.001-04:30

What makes the Daily Show and other "fake-news" shows so effective,a and funny, is when they can draw on the assumptions of how current events are explained and reported.

Holy Freaky Assumptions Batman!

So lets take the implementation of a VAT (IVA in Spanish) in Puerto Rico. What are the plan's basic assumptions?

The obvious ones are:

The Puerto Rico economy is in a bad way, IMHO, which never really recovered from the global financial meltdown of 9/11. Still crippled from that downturn, the banking meltdown of 2008 put our economy on life-support.
We owe a shit load of money, and want to borrow more.
People are fleeing Puerto Rico like rats jumping a ship, something the country already saw happen after the Great Depression; when millions of Puerto Ricans jumped the pond in search of a more prosperous life.
There continues to be a large black and grey market within Puerto Rico.

The subtle assumptions are:

To fix our economy we must reform our tax system.
We need to fix our tax system, because our current tax laws are generating less income.
Finally, we are not raising more tax income, because there are some who are evading the current system.

So, with that logical sequence of assumptions, we can can come to one conclusion, that the Governor of Puerto Rico, Alejandro Garcia Padilla believes that Puerto Rico is full of liars and crooks who will do anything to keep from paying taxes. And there you have it, comedy gold. With the focus on this new assumption, let the joke begin, the IVA, I mean.