Weekly Review – July 23, 2020

Published on July 23, 2020 / Leer en español

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Dear Readers:

This pandemic has revealed the fragility of our society to many people who were otherwise oblivious to how the world actually works; who did not know, to put it in personal terms, that the steak they had for dinner last night did not magically appear in the supermarket, neatly cut and encased in a hygienic plastic package.

As usual, a work of “fiction” is most useful in illuminating these small personal epiphanies. In her 2014 novel, Station Eleven, which is set in an apocalyptic post-pandemic world, Emily St. John Mandel describes how one of her characters realizes that “there had always been a massive delicate infrastructure of people, all of them working unnoticed around us, and when people stop going to work, the entire operation grinds to a halt. No one delivers fuel to the gas stations or the airports. Cars are stranded. Airplanes cannot fly. Trucks remain at their point of origin. Food never reaches the cities; grocery stores close. Businesses are locked and then looted. No one comes to work at the power plants or the substations, no one removes fallen trees from power lines.”

While we are not yet in the situation Ms. St. John Mandel describes, her novel begs the question: at which point do things breakdown? People, after all, get tired of cheap talk about resilience. People get scared. People get angry. Here, illumination comes from a rather surprising source. Antonio Guterres, Secretary-General of the United Nations, in a speech remarkably free of the usual euphemisms and diplomatic cant typical of the public statements made by heads of multilateral organizations, put it quite clearly: the “world is at a breaking point”. Right now.

According to the Secretary-General, “the world is in turmoil. Economies are in freefall. We have been brought to our knees – by a microscopic virus. The pandemic has demonstrated the fragility of our world. It has laid bare risks we have ignored for decades: inadequate health systems; gaps in social protection; structural inequalities; environmental degradation; the climate crisis.”

Furthermore, said Mr. Guterres, “COVID-19 has been likened to an x-ray, revealing fractures in the fragile skeleton of the societies we have built. It is exposing fallacies and falsehoods everywhere: The lie that free markets can deliver healthcare for all; The fiction that unpaid care work is not work; The delusion that we live in a post-racist world; The myth that we are all in the same boat,” when in fact “multiple inequalities intersect and reinforce each other across the generations.”

These inequalities explain, to a large extent, the fragmented global response to the pandemic, “as not just private hospitals, but businesses and even individuals are hoarding precious equipment that is urgently needed for everyone.”

“Let’s face the facts”, said the Secretary-General. “The global political and economic system is not delivering on critical global public goods: public health, climate action, sustainable development, peace…We are at breaking point. But we know which side of history we are on.”

To which I ask: do we?

Sergio M. Marxuach, Editor-in-Chief

Insights + Analysis from CNE

Puerto Ricans: The Importance of Being Counted in the 2020 Census

By Rosanna Torres

At this point in time, it should not be surprising that Puerto Ricans have grown very weary of the state and federal government. Both have failed us in a big way, and much of that distrust is manifested in the lowest participation rate for the Decennial Census thus far – a questionnaire that, since 1910, the federal government conducts every ten years in Puerto Rico to measure the population and other important demographic variables.

Understandably, Puerto Ricans don’t respond to the promise of federal funds in the same way residents of U.S. states do, but there is a lot of truth behind the slogans that make up the Census Bureau’s campaigns every ten years. For example, if we don’t know how many people reside in a town, how will we know how many schools, hospitals, or homes are needed there? How can government budgets or public works be managed without understanding the size of our population?

Revisiting Risk With Professor Yarimar Bonilla

By Deepak Lamba-Nieves, Ph.D.

This week, we would like to share with you again a Living with Risk Conversation we recorded a couple of months ago with Professor Yarimar Bonilla. Yarimar is a renowned anthropologist who teaches at the City University of New York and studies Caribbean cultures. She co-edited a book titled, “Aftershocks of Disaster: Puerto Rico Before and After the Storm” and recently published an opinion column titled “La sociedad del riesgo in El Nuevo Día.

During our conversation, Yarimar shared some critical insights we think are important to recapitulate today — regarding the role of the state in post-disaster responses, how resilience is strategically invoked by government authorities, and the significant and lasting impacts of Puerto Rico’s Summer of 2019 protests. Professor Bonilla also commented on how relatively small initiatives at the community level, as well as unique municipal interventions, have made significant contributions to tackle big problems in Puerto Rico.

The Importance of Restructuring PREPA’s Debt

By Sergio M. Marxuach

Source: 2020 Certified Fiscal Plan for PREPA, June 29, 2020, p. 73

Recently public attention on the Puerto Rico Electric Power Authority (“PREPA”) has focused on a long-term contract to operate and manage the island’s electric grid. However, that contract, while important, has arguably less impact on consumer rates in the short-term than the restructuring of the ill-fated utility’s debt.

As shown in the chart above, the Financial Oversight and Management Board estimates that “PREPA would need to repay approximately $4.5 billion of legacy debt service obligations over the next five years, equivalent to approximately 6 to 7 c/kWh in real dollars (6 to 8 c/kWh in nominal dollars)”. Those increases are clearly untenable, given Puerto Rico’s current and foreseeable economic situation—not to mention the adverse effect that demand protection charges would have on renewable generation.

Therefore, it is essential that PREPA’s debt is restructured not only to a sustainable level, but in a manner that does not suppress renewable generation, that is, if we want to have a modern, flexible, and reliable electricity network.

On Our Radar...

How to Run an Economy at Half-Speed – The recent upsurge of COVID-19 cases in the mainland has forced many jurisdictions to reimpose some of the restrictions that were lifted in May and June. According to Ben Casselman and Jim Tankersley of the New York Times, “this new phase poses a unique challenge for policymakers. Economists across the political spectrum say it would be a mistake for the federal government to cut off support for workers and businesses while the economy remained weak. But those policies may need to be revamped to help the worst-hit industries and regions — and will have to change as the crisis evolves.”

Finding a Vaccine is Only the First Step – “Even if one or more vaccines emerge that promise to make people less susceptible to COVID-19, the public-health problem will not be eliminated. But policymakers can avert some foreseeable problems by starting to address key questions about financing and distribution now”, writes Richard N. Haass for Project Syndicate.

The Impact of COVID-19 on Labor MarketsIn this essay, Betsey Stevenson of the University of Michigan “explores the many ways the COVID-19 recession has affected the labor market. Stevenson shows that the labor market effects have not been evenly borne across workers of different genders, race, and educational attainment. The scarring effects of the recession will likely lead to high long-term unemployment and weakened labor market attachment for years to come.”

For the next two weeks, CNE’s Weekly Review will be taking a short summer break.
We will resume on Thursday, August 13th. See you then!