Here’s How the U.S. Has Ruined Puerto Rico’s Economy
The sun-drenched island of Puerto Rico is diverse in its landscape, from the lush mountains and rainforests of El Yunque to miles of pristine beaches. Before Hurricane Maria ravaged the Caribbean, Puerto Rico was a bit under the radar of many in the U.S. While tourism thrived as travelers from all around the world visited the United States commonwealth, nearly half of Americans weren’t aware the island is part of the U.S. and that its residents are U.S. citizens.
But shining the light on Puerto Rico’s struggles is long overdue. Is it possible the U.S. government prefers not to highlight the financial trauma the island has dealt with for decades? The majority of the suffering these islanders continue to experience is partially a result of Puerto Rico’s economic woes — and the U.S. shares some of the blame for the island’s troubles.
Puerto Rico and the United States get together
It wasn’t Puerto Rico’s idea to marry up with the U.S. During the Spanish-American War U.S. forces invaded the island, and in 1898 Spain ceded it to the U.S. That was just the beginning of how the U.S. government influenced Puerto Rico’s economy.
Next: Why Puerto Ricans can’t vote.
No voting for you, Puerto Rico
In 1917, President Woodrow Wilson signed the Jones-Shafroth Act, which granted full U.S. citizenship to the people of Puerto Rico and restructured the island’s government. And with full citizenship came things, such as the U.S. military draft. But Puerto Rico’s governor was appointed by the president, not elected, and the island did not receive electoral votes in the U.S. presidential election. Plus, the U.S. Congress could stop any action by the Puerto Rican legislature.
While some aspects of the Jones-Shafroth Act have been superseded (the governor is now elected, not appointed, for one), Puerto Ricans still have no voting representative in Congress and can’t vote in U.S. presidential elections.
Next: Another law that hits Puerto Rico’s economy hard
The other Jones Act
Here’s where things start to get a little confusing — and messy for Puerto Rico’s economy. A few years after the Jones-Shafroth Act granted citizenship to Puerto Ricans, the U.S. government passed the Jones Act of 1920. This other Jones Act was part of an effort to both beef up and create safe maritime commerce after World War I, and it required that all goods shipped between U.S. ports be delivered by a U.S. vessel. But it inadvertently managed to suffocate the island.
To put this into perspective, a ship from China can’t ship supplies from the mainland U.S. to Puerto Rico. Instead, the cargo must be transported by an American vessel, even if it’s more expensive. The extra cost means goods cost more once they finally hit store shelves in Puerto Rico. It’s estimated that the Jones Act costs Puerto Rico around $537 million each year.
Next: Snatching away tax breaks
Operation Bootstrap of 1947
The goal of Operation Bootstrap was fairly straightforward. The United States offered massive tax exemptions for businesses willing to move their operations to Puerto Rico. The hope and overall goal was to bulk up the economy of the island. Of course a slew of businesses jumped on the opportunity to avoid taxes by moving.
The industrialization of the island collapsed the agriculture industry, and suddenly there weren’t enough jobs in manufacturing to employ islanders. An exodus of Puerto Ricans to the United States mainland followed. To make matters worse, President Bill Clinton signed a law to phase out the tax breaks. Businesses pulled out, leaving a skeleton of the hopes and dreams from the industrialization.
Next: Crushing debt
Puerto Rican economic collapse ensues
The proof is in the pudding for Puerto Rico, and the United States is the primary culprit of the island’s financial woes. As the U.S. government promoted industrialization of the island and agriculture jobs dwindled, droves of residents left. And when businesses left, too, that led to an unemployment rate well above the U.S. average. Furthermore, the government took on $74 billion in debt in order to keep itself afloat as its economy started to shrink, which has left this island in complete and utter despair.
Next: A devastating disaster
To make matters worse, throw in a natural disaster
No fault of the United States, Puerto Rico and its surrounding islands were ravaged by Hurricane Maria in September 2017. Sifting through the wreckage of this storm is merely the beginning. And with the enormous amount of debt already weighing on the island, it’s hard to say how long the recovery will take. But with the storm costing an estimated $45 billion to $95 billion in damage, it’s sure to take some time.
Next: What the Trump administration is doing
What’s Trump and his administration doing about all this?
In terms of the relief efforts for the island in the wake of Hurricane Maria, President Donald Trump waived the Jones Act regulations on Sept. 28 for 10 days. The lifting of the act has now expired without any plans to waive it again. In regard to assisting with Puerto Rico’s debt, Trump raised the idea of erasing it, but his administration later backpedaled on that statement. Meanwhile, the struggle still continues for Puerto Rico.
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