02 December 2009

The P(ove)R(ty) Trap

"Until you earn about $40,000 a year, you’re pretty much stuck in poverty, an economists’ numbers show.

In fact, until you get past $40,000 a year, any raise or higher paying job you get might actually sink you deeper into poverty."

The quote is from a column written by Megan Cottrel in True/Slant.com. It places the "poverty barrier" at $40,000 a year in a country with a gross national income per capita (2007) of $45,422.

Okay. Our gross national income per capita (2007) was $15,062.

That's less than 38% of the amount needed to "break" the poverty barrier and almost exactly one-third of Our northern owners' number. So what the column indicates is that in the U.S. of part of A., you must reach the per capita income level to truly break free of poverty, but for Us, who live in pretty much the same system, We must almost triple Our per capita income to achieve the same breakaway.

Now poverty is relative in terms of "how much you have versus how much is needed." People in Central Africa or some corners of Eurasia are very poor when compared to Us. We take for granted having food to eat (several times) every day, running water, cell phones. a house, car and more. But Let's just focus on Puerto Rico, on what We need to break out of the poverty trap We are in because--in Our minds and pocketbooks--We are definitely poorer than Our owners.

And no matter how you slice the argument, no matter how many factors you want thrown into this debate (from historical-political to cultural-emotional), the whole ball of wax boils down to two factors and only two:

1) We don't produce enough on Our own.

2) We don't keep enough of what We produce.

Yes, welfare weighs many of Our people down with the "damned if I do, damned if I don't" quandary framed in Cottrel's column. But it's simply a symptom of having an economy in which We don't produce enough Ourselves to provide Ourselves with a greater range of opportunities for growth.

Note that in the U.S. of part of A., according to the column, the quandary is how to move up. The underlying assumption is that the opportunities are there and simply must be managed. In Our case, it's not a case of how to move up, but how to create the opportunities.
And then, having created the opportunities, then We can focus on keeping enough of what We produce to break out of the poverty trap.

The formula for this, pared to essentials is: External value + Innovation + Efficiencies = Growth. You must create an economy that focuses on external value--what others value--uses innovation to deliver/create value and develops efficient processes, systems and methodologies to improve the value/cost ratios. Let's break it down:

External value: Guano on the rocky coasts of Chile is of little value to the locals, but of great value to farmers around the world. Electronics are of great value to the industrialized world. In Our specific case, We tend to aim for Our relatively piddling market of 4 million Islanders instead of aiming to reach the 6.6 billion potential customers worldwide. We don't see what the rest of the world values because We don't see--or think about--the rest of the world. Once We do that consistently, We can start serving what billions value.

Innovation: We'd rather imitate than innovate. And We've been limited to imitating rather than innovating. Less than 1% of corporate investment here is for Research and Development (R&D) and We rank dead last (have for years) in patents granted amongst the 50 States and territories. Imitation can get you started, but only innovation will help you catch up and then pass your competitors. We can blame the education system or Santa Claus (We love the freebie concept and innovation is soooo haaard), but We just need to blame Ourselves for believing that creativity is for crazy people who slash their ears off. It isn't: it's for passionate people who want to frolic in new spaces.

Efficiencies: A bottom line approach that anchors innovation to real-world results. Yes, you can build a bigger car, but it won't be valuable if it guzzles gas like a whale. You can build a faster car, but if it bears the same heavy operational cost, it won't sell. Build a bigger, faster, cheaper-to-fill-up car and you have an efficiency. Do the same with everything you produce, from panties to Prozac to premarital counseling to pancreatic cancer treatments and you will have an economy that races towards and breathes the fire of...


Japan did it. Turned its economy from crappy gewgaws and toys into a global powerhouse. So did Korea, beginning with Japan's sloppy seconds and exceeding it in the most vital industries of electronics and cars. "They are bigger than Puerto Rico" you say? Then look at Singapore, from rogue port to industrial R&D tiger in three generations.

"But they have autonomy," you say. Fine. Let's get it. But until We do, the only autonomy We need is the one We give Ourselves by looking at the world, understanding its needs and wants, realizing We can serve those needs and wants in Our fashion, doing so and improving the process every day.

But if We keep focusing on what We don't have and on the next freebie to come down the pike stabbed in Our guts, then the poverty trap will be the P.R. trap We have ultimately helped to create for Ourselves. 

The Jenius Has Spoken.

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