Why the Lights Went Out in Puerto Rico

We’re on break until after Labor Day. Meanwhile, please enjoy some of our favorite articles commissioned by outgoing editor in chief Caitlin Zaloom. Today’s selection was originally published on September 20, 2018.
There is nothing like a prolonged blackout to drive home for American observers the unequal distribution of fortune.

There is nothing like a prolonged blackout to drive home for American observers the unequal distribution of fortune. We know that no matter what kind of natural disaster hit New York City or San Francisco, these cities wouldn’t be left alone to sit in darkness for several months. Today is exactly one year since Hurricane Maria’s landfall. Yet Puerto Rico’s electric grid was only recently announced fully restored by its electricity authority—a claim that has been disputed by residents still in the dark. Soil under US jurisdiction is home to scenes that mainland Americans would casually associate with poverty in the third world.

In the meantime, a futuristic image makeover for Puerto Rico is in the works. Shortly after Hurricane Maria’s devastation became clear, Elon Musk proposed to replace the old-school, centralized Puerto Rican grid with a decentralized web of solar-powered batteries. Google’s parent company, Alphabet, sent high-altitude balloons to the stratosphere above Puerto Rico to restore internet access. Cryptocurrency entrepreneurs donning hippie costumes are steadily marching onto the island to finance Puerto Rico’s transformation into a capitalist playground.

How to explain this cyberpunk turn of events in Puerto Rico—equal parts decaying infrastructure and futuristic promise? Puerto Rico’s devastated electric grid is an extension of the American approach to infrastructure. Since day one of electrification in the US, electricity industrialists, propped up by their government benefactors, selectively lit up the country, gradually bringing power to places wealthy and populated enough to be profitable. Together, they built a regulation system that delinked profitability from maintenance, efficiency, and public service. Like American capitalism more generally, the American grid thrives on these fluctuations in attention and quality—not in spite of them.

In recent decades, infrastructures in the US have been going “neoliberal”: that is, government planners and entrepreneurs increasingly want to meet infrastructures’ problems with solutions that are modular, decentralized, and, above all, competitive. Monopolist capitalists are thus threatened by the likes of Tesla and Google—relatively new players. Despite an all-too-common misunderstanding, neoliberalism has next to nothing to do with state rollback; it almost always rests on a strategic utilization of government prerogatives. The neoliberals are right that we must give the Puerto Rican grid a technological upgrade, but they want to bypass all channels of public accountability while doing so. What we need is a combination of progressive government regulation and community-based infrastructure models. Otherwise, soon enough, the lights will go out again.

Government remains capital’s henchman in the battle to turn public infrastructures into erratic profit machines for the already wealthy.

One of the current theories that attempts to explain Puerto Rico’s predicament focuses on government neglect coupled with predatory capitalism—a coupling we’ve seen, for instance, in post-Katrina New Orleans. Journalist Naomi Klein has been famously advancing this theory under the banner of “disaster capitalism” since her 2007 book, The Shock Doctrine. In January 2018, Klein was invited by an academic collective to visit Puerto Rico and discuss the island’s predicament as a case of disaster capitalism. Her most recent book, The Battle for Paradise: Puerto Rico Takes on The Disaster Capitalists, which came out this past June, relays her observations on Puerto Rico’s incoming capitalists and its grassroots resistance.

At just 96 pages, prepared for publication at lightning speed, The Battle for Paradise exudes urgency: it’s a perfect little pill to take for anyone who might have been temporarily uplifted by capitalism’s helping hand in the wake of Hurricane Maria. The disaster, Klein points out, gave a convenient excuse to the Puerto Rican government to kick into high gear its longstanding economic plan for the island: a plan based on attracting capital with tax breaks, the cost of which would be borne by Puerto Ricans in the form of higher local taxes, fewer public services, and fewer jobs in the public sector.

Any capital instability—like the 2006 expiration of tax breaks or the 2008 global financial meltdown—has meant catastrophic borrowing for the island and justified a tighter grip by Washington. In 2016, Klein notes, the US government appointed a seven-person body to oversee the island’s finances, “six of whom appear not to live on the island.” As a result of this economic coup, by early 2017—months before Maria made landfall—“parts of San Juan looked very much like they had been hit by a hurricane,” one of Klein’s interviewees remarks.

The well-being of the majority of Puerto Ricans has been sacrificed for mainland American interests before. The island, of course, served as a colonial laboratory for the United States’ chemical and economic experiments, from Agent Orange to special economic zones, before those creations were unleashed to cause destruction abroad.


Betting on Other People’s Lives

By Daniel Fridman

Klein convincingly draws a line from that history to Puerto Rico’s 21st century: where its government has racked up debt at the public’s expense at astronomical interest rates, in ways that experts argue were illegal under the Puerto Rican constitution. In 2017, the island saw mass protests asking for a debt audit and Governor Ricardo Rosselló’s resignation.

Hurricane Maria has stabilized Rosselló’s job and fiscal plan. He is now doubling down against public ownership: proposing to privatize the Puerto Rico Electric Power Authority and close 300 public schools. Mainland entrepreneurs are being lured to the island with more tax breaks, the convenience of good weather, the proximity of resorts, and not having to relinquish their US citizenship. But there is no plan to keep Puerto Ricans from leaving or help them return. Klein is right to note that the question at hand is “simple”: “Who is Puerto Rico for? Is it for Puerto Ricans, or is it for outsiders?”

Klein occupies a rare space in the North American intellectual sphere: she has the influence of a popular journalist, but the analytical ambition of an academic. Both Shock Doctrine and The Battle for Paradise theorize capital as a moving force that needs to be kept in check by governments; accordingly, neoliberalism happens when the checks are removed, capital is unleashed, and the public sector is forsaken.

Despite its popularity across media and academia, Klein’s theorization is unsound: capital is no magic moving force; neoliberalism is not merely destruction by way of neglect. Instead, governments lubricate capital’s path; neoliberalism transforms our public infrastructures, and by extension our daily lives, by way of a competitive, modular, and decentralized capital. Klein’s own reporting shows time and again government officials working around the clock to turn places like Puerto Rico into profit machines for venture capitalists, but the conclusions she draws persistently diminish government-driven neoliberalism in favor of magically fueled capital.

Rather than trying to dodge regulation, 19th century monopolists did the opposite: lobbying for the creation of regulation agencies

In Klein’s view, capitalism—including its inconsistently defined variant, neoliberalism—is a storm that, upon making landfall, leaves public infrastructures in ruins. Accordingly, Puerto Rico’s devastated electric grid is capitalism’s collateral damage.

But capitalism does not seek capital to be “unchecked” or “unencumbered” by bureaucracy, as Klein would have it; it is its own hefty bureaucracy and it invariably depends on deals struck with governments, local and federal. And public infrastructures, like the electric grid, are breeding grounds for these deals, as richly recounted by Gretchen Bakke in her 2016 book, The Grid: The Fraying Wires Between Americans and Our Energy Future.

Bakke takes us back to the early days of North American electrification, in the late 19th century, when the industry’s growth briefly did look “unchecked.” Multiple small-scale grids—some privately owned, some by municipalities—competed in the same tiny urban spaces, layering streets with wires. Shortly thereafter, however, a few well-connected industrialists found ways to eliminate competition and monopolize electricity delivery. They sure had business tricks up their sleeves: they practically invented “economies of scale,” the model based on increasing production to achieve reduced costs per unit of production. But these industrialists wouldn’t have made nearly as much progress if federal and state governments had not systematically granted them low-interest loans to expand their production fleet.

Rather than trying to dodge regulation, these monopolists did the opposite: lobbying for the creation of regulation agencies in state after state throughout the 20th century. Consequently, they enjoyed regulated electricity prices that guaranteed the return on their investments along with a preset profit margin. The regulators ensured that utilities’ costs would be borne by consumers, encouraging the industrialists to sit on their inefficient, shabby, but profitable infrastructures. Together, the capitalists and the government officials propagated the concept of a “natural monopoly”—an industry where competition is undesirable because it increases prices. The electricity industry became this concept’s prime example, now enshrined in economics textbooks.


The Big Picture: Coalthink

By Gretchen Bakke

Around 70 percent of all electricity transactions in the United States are still controlled by these electricity leviathans. Puerto Rico’s government-owned power authority is a rarity, owing to the political and geographic challenges the island has posed to mainland electricity capitalists. But not for much longer, it appears. Governor Rosselló and the island’s Financial Oversight and Management Board have blamed the grid’s failures on its being publicly owned, even though the government itself caused the grid to fail more miserably by delegating repair to no-name contractors from the United States.

Public ownership is not the devil that the Puerto Rican government has made it out to be, but that should not distract us from the fact that the Puerto Rican grid is antiquated and in need of a major update. Like the US grid, it was built for fossil fuel use; but as is the case on other islands with no domestic fuel supply, it depends even more dramatically on expensive and polluting fossil fuels, with oil providing almost half of its electricity. (Within the continental United States, this figure is less than 1 percent.) Also like the US grid, it was built for centralized control, which lets grid failures cascade and get out of hand. But once again, islands are at increased risk, since one failed transmission line can have a bigger effect in a smaller system with few backup options.

Thanks to a strange coalition of advocates (from new entrepreneurs who want a slice of the cake, to environmentalists who demand more renewable energy, to blind apologists for free markets), the United States has started to see more fuel diversity and more competition in the otherwise monopolistic electricity industry in the last three decades. Tesla’s and Google’s interest in Puerto Rico is part of this transformation in infrastructure capitalism—a “neoliberal” transformation, meaning, not just neglectful or destructive the way Klein understands it, but poised to commoditize ever new domains of social life.

A heterogeneous and decentralized electricity system would, in fact, be more desirable than our contemporary disaster-prone grid; but we have done little to ensure that those championing such a system—like Google or Tesla—will prioritize public well-being, or be held accountable if not.

The strength of Klein’s book lies in its depictions of Puerto Ricans taking the matter into their own hands and building decentralized, “community-based” infrastructures, from solar-powered micro-grids that can disconnect from the larger grid in the event of an emergency, to community farms cultivating root vegetables that defy aboveground calamities. Back in the US, Bakke traces similar instances of going “off-the-grid” among, not the politically radical, but the “mild-mannered townsfolk,” who are tired of the authorities’ dissatisfying response to bad weather events, especially in the Pacific Northwest. These grassroots practices certainly illuminate the path we must take, but they are not without complications.

Communities at risk can generate neoliberal individuals convinced of the need to pull themselves up by the bootstraps, thus perpetrating their own victimization

Unlike the much-needed optimism that it inspires, post-disaster dissent in Puerto Rico raises thorny questions. When Klein contends that Puerto Ricans “know, beyond any shadow of a doubt, that there is no government that has their interests at heart,” is she suggesting that the opposition must give up on government politics? Looking back on the aftermath of Hurricane Katrina, we have reason to pause before celebrating that option. In After Katrina: Race, Neoliberalism, and the End of the American Century, Anna Hartnell warns against putting the burden of recovery on disaster victims and expecting them to turn into citizen entrepreneurs just to secure survival.

Like Puerto Rico, New Orleans—the original inspiration for Klein’s theory of “disaster capitalism”—is a Caribbean town that white Americans have variably considered foreign or American depending on how much its resources, like labor and location, served US strategic interests. New Orleans, too, was giddily declared a “blank canvas” after its disaster by its government officials, who brought outside capital into the city and celebrated the exile of its natives. New Orleans had a grassroots opposition, again like Puerto Rico, especially against rebuilding projects that targeted affordable housing to make space for convention centers and highways. In a forewarning for Puerto Rico, that opposition subsided when the city’s rising “nonprofit complex” gestured at involving the residents in the process, by placing them on dead-end committees where they had to defend affordable housing. To Klein’s narrative of neoliberalism, Hartnell offers a corrective, shifting the focus away from shock and toward the role of the consent and cooperation of neoliberalism’s victims. Communities at risk, she shows, can generate neoliberal individuals convinced of the need to pull themselves up by the bootstraps, thus perpetrating their own victimization.

Assessing the transformation of New Orleans’ schooling and incarceration infrastructures, Hartnell paints a stark picture of violence: public schools turn to the police and criminal judges to arbitrate quotidian classroom fights between children; meanwhile the nation’s largest prisons house New Orleanians displaced by the storm, the capitalists, and the police. Yet, despite her gentle critique of Klein for her excessive focus on neoliberalism’s shock factor, Hartnell’s conclusions about post-disaster neoliberalism echo Klein’s, in a way that speaks of a passive government “retreating” from the public sphere and “opening the way to market penetration.”


The Big Picture: Working-Class Environmentalism

By Daniel Aldana Cohen

Bill Clinton, for instance, declared the end of big government in 1996—even as he was at work dramatically expanding the policing infrastructure. Instead of telling a story of capital gone rogue, like Klein and Hartnell do, why not point the finger at a government strategically using incarceration to pursue an economic policy promoting cheap labor and mass unemployment? Is installing mercenaries in the public sphere to prop up capitalists the same thing as retreating from it? Government remains capital’s henchman in the battle to turn public infrastructures into erratic profit machines for the already wealthy.

A blackout might be sobering, but it’s nothing next to Puerto Rico’s death toll, which was recently officially raised from 64 to 2,975. Hurricanes kill, but they are aided and abetted by capital’s bureaucracy. Capital’s rules and regulations are lodged in our electricity, water, schools, and prisons. It is imperative that they are reformed to fortify public accountability, be it at the community, state, or federal level, for the lights to stay on.


This article was commissioned by Caitlin Zaloom. icon

Featured image: The morning after Hurricane Maria, on the route between lower Castle Comfort to Roseau, Puerto Rico, 2017. Photograph by Roosevelt Skerrit / Flickr