From the September-October 2015 issue of News & Letters
Puerto Rico’s gargantuan $72 billion public debt is now technically in default as the most recent interest payment could not be made in full. However, Puerto Rico can’t declare bankruptcy, and the Federal government has no intention of providing a bailout. While the debt has become unsustainable, the roots of the financial crisis lay within the human crisis stemming from the island’s 117-year history as a U.S. colony.
CAPITALISM DELIVERS MISERY
Since being taken from Spain’s colonial rule in 1898, Puerto Rico has been subject to the U.S.’s “benign” imperialism, which molded the colony for its own exploitative uses. In the early 20th century a third of the land came under the control of U.S. absentee landlords. Diverse agriculture (coffee, tobacco, sugar, fruit) was transformed into a one-crop export economy—sugar, controlled by a few syndicates. Small farmers, and others who lived off the land, were forced to migrate to the cities.
When it suited U.S. capitalism, Puerto Rico became a producer of cheap goods for the U.S., particularly when a minimum wage law wasn’t enforced. But when it became cheaper to produce goods elsewhere in the Third World, those jobs disappeared. Because of a special law tailored to the maritime industry, goods must arrive in Puerto Rico in U.S. ships or pay huge import fees. The cost of imports is far higher than in the U.S. Economic development has stagnated, and the government is now the largest employer.
Bonds were issued to keep Puerto Rico afloat. Creditors and bond rating agencies began demanding austerity. The legislature fell into line. The government has laid off workers; raised prices on water, gasoline, and electricity; increased property, sales, and small business taxes; cut public pensions and health benefits; raised the retirement age; and closed schools. Hundreds of thousands have moved to the U.S. because of lack of work and the high cost of living.
Average individual income is less than it is in Mississippi, the poorest state in the U.S. Most recently, the hedge fund manipulators who hold significant parts of the debt have demanded further cuts in education.
It is true that as citizens of the U.S., Puerto Ricans receive Social Security, Medicare and Medicaid. However, thousands of doctors have been leaving the island and a Medicare crisis is developing. But is there authentic self-determination for the island and its people? No! Puerto Rico is still under the thumb of the U.S.