Puerto Rico needs its own Economic Policy: Capitalism-induced Underdevelopment

During these last few years, there have been enormous changes in Puerto Rico's commercial marketplace. One of the largest bookstores in the island, Borders, closed (2008 approx.). Now, it turns out that TigerDirect, formerly CompUSA, will also be shutting its doors during the month of december (2015). While these changes might not appear to be of significance to many United States continental residents, they are of enormous social consequences to Puerto Rico. By that, I mean of course, the underdevelopment which is an inevitable consequence of irrational capitalistic dynamics. 

    There were many reasons why the appearance of Borders was of such importance to the island. It was the first bookstore to appear which was 'on par' those of the US, meaning that it had an enormous variety of high quality books that could be easily had by simply lifting it with your hands and taking it to the cashier counter. But there were secondary traits which were as much, if not more important. One could simply browse through the shelves and simply discover good information resources one did not know existed. Some of the best computer books I have read were discovered in this manner: it provided the user a profile of information which the user might have not even conceived of existing. Being able to personally look at the book and leaf through its entirety, would provide an immediate indication of its quality and gamut.

    One can actually say exactly the same thing about CompUSA/TigerDirect. Anyone who deals with computers know there is always 'something amiss' that needs to be obtained for a technology to work its magic; an ethernet cable of the right category and length, a converter from usb to ethernet, an important hard drive that died at the last minute. It was easy to just to get to the store, pickup the item, and one would be 'up and running' in no time at all. As with Borders, the store was also important because it made the customer aware of products that one would never have conceived of existing. I was able to obtain a simple but good security camera kit (with recorder and 4 cameras) for under $100.

    One might dispute this point by noting that 1) there are other stores, as BestBuy, and that 2) there is the internet. This points to an enormous misunderstanding and poor appreciation of the unique services which these stores provided.

    To compare BestBuy to CompUSA/Tiger Direct is like comparing a Nintendo game of the 1990s to that of a modern portable tablet. The wide range of technical supplies provided by CompUSA/Tiger Direct meant that it was 'cater-made' for the 'do-it-yourselfer': it sold all of the internal components of computers, which allowed a prouser/techie to quickly and easily obtain a given part. While BestBuy sells SOME components, their availability is extremely limited, and its main 'philosophy' would be more of a 'consumer driven' rather than 'techie-driven' one. BestBuy sells finalized items that he user is not expected to tinker, fix, or modify; BestBuy sells 'toasters' as opposed to 'computers', only that its toasters are more sophisticated than the ones sold at Sears. Finally, one might point out that most other computer supply stores require 'technical certificates' to allow even entry into the store, much less the purchase of objects--as if computers were tantamount to nuclear weapons' grade uranium items that only a selected few can obtain.

    A key economic argument could be made with regard to both Borders and CompUSA/Tiger Direct: they were more efficient distributors of key items than their counterparts. Both had enormous inventories that were shipped in bulk to Puerto Rico, which meant broadly speaking that there were more efficient at transporting goods than alternative systems. Every time you want to order something from a book or computer online retailer, by definition the item has to be shipped directly to the consumer; thus multiplying by various orders of magnitude the energy use of that transaction. In other words, Amazon-driven transactions, by definition, have very high carbon footprint that is detrimental to the environment. The size at which both Borders and CompUSA/Tiger Direct meant that they both had what is regarded as 'economies of scale": they could deliver a wider diversity of goods at a fraction of a cost of its competitors.

    Another important argument is a cultural one, but to explain it we have to begin with an example. It has been recently shown that the amount of books a family has sitting on its shelves is a key indicator of the intellectual level of the children raised in that household. A parent never has enough time to teach a child everything they would want to teach them; by having a large number of books in a household, the child on their own, will explore these books and explore on their own knowledge--again, information which they child could not have conceived as existing or much less aware of its importance. (This is one of the reasons for the development of the Library of catalog classification structure.) While, in theory, there is an 'infinity of information' on the internet and a tablet/cellphone that has access to this information,the child will know intrinsically know what is important and what should be avoided. The presence of books on shelves thus provides a crucial guide to the world of learning in the development of children.

    The same with 'brick and mortar' online retailers: they serve as the 'household shelves' for adults as these seek to solve solutions in their everyday life. In other words, they readily present solutions which individuals might have not known existed. And by being able to briefly touch and explore these solutions, new and original conceptions and uses could be devised. CompUSA/Tiger Direct was bought out by a company that has no retail chain, and hence was forced to close down many of its more profitable stores. (It is to be noted that Borders made so much money in Puerto Rico, that its key executives had to travel down to verify in person that a scheme of fraud was not going on. What the incident actually reveals was the thirst for knowledge in an island that had traditionally had few

    Before going on to the final and most important point, I want to make a disclaimer.

    I am not defending Borders or CompUSA/Tiger Direct by any means. They were not 'perfect' stores at all, and there was much to gripe about their services. Local employees at Borders who decided on books to be obtained had a 'hegemonic' attitude, holier-than-thou attitude that was utterly despicable. In this sense, the notion that Borders represented the 'totality' of academic achievement is certainly an error. In fact, one of the key benefits of Amazon os precisely that it provides an variety of books that is orders of magnitude larger than Borders could ever hope to have been. One also has to mention that the return policy of CompUSA/Tiger Direct was horrific. Even though they claimed a 30 day return policy, in actual practice there was a large variability whether they would or not accept devolutions. Some items were accepted, others were not, and one never knew. Again, this is one of BestBuy's leading benefit. So far as I have seen, they will accept all devolutions, no questions asked. These key differences are perhaps what account for the rise and success of a group of stores and opposed to another.

    Borders and CompUSA/Tiger Direct thus have to be seen in their appropriate context: in their own 'tier'. In essence, they provided a cheap and easy way to access a large diversity of high quality goods. While they did not represent the totality of goods, the scale and efficiency with which they did led to their own uniquely valuable contributions to Puerto Rico. And this is precisely why they were so valuable, which brings us to the the third and most important observation.

    While it might seem rational for the closing of Borders and the sale of CompUSA/Tiger Direct from a United States point of view, it is wholly irrational from a Puerto Rico point of view. The reason for this is that, in a continental context, both stores operate on a much larger marketplace with a wider diversity of competitors. Borders has Barnes and Noble, and TigerDirect has Fry's for example. Their exit from the marketplace does not represent a zero sum loss in that there are many other competitors providing the same services in its same sociocultural market niche.

    HOWEVER, when seen from the context of Puerto Rico--a small island in the middle of the Caribbean--these commercial alterations constitute monumental sociocultural changes in that the small nature of the marketplace by definition means that they will likely have no other substitutes. Lacking substitutes as Frys or Barnes and Noble means that the very special services provided by such entities COMPLETELY DISAPPEAR IN THE CONTEXT OF SMALL ISLAND NATIONS. The real and significant contributions to DEVELOPMENT, in the truest sense of the word, suddenly vanish from one day to the next--and hence directly contribute to the underdevelopment of such regions, as Puerto Rico.

    Their loss is of such social significance, something that is often not conceived of and understood by stateside residents, that Puerto Rico has to have a distinct autonomous economic policy that is independent of that which is made in the United States.

    One might ask, 'what sort of economic policy are you suggesting?'. Well, this would have to be formally studied and evaluated by economists. However, being aware of the social consequences of such policies, would lead me to suggest something along the following lines. Before such as store is to be closed, a law could be made that 'first buyer option' would always be given to a local entity (and or government) so was to preserve the unique services which these enterprises provide. There are obviously problems with this suggestion, in that entities such as Borders and CompUSA/Tiger Direct do not only represent 'brick and mortar stores', but rather networks of commercial relationships. That being said, however, it is important to note that the services are of such value, that they would still merit for a creation of a similar commercial substitute. For example, all of the employees who had previously labored at the firm, would be given the means to continue operating the store, so that such services would not be eliminated.

    The answer is obviously much more complex. But when looking at the social consequences, it would merit an appropriate response by the government, so as to not further degrade the sophistication of its economy and its culture.

 

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