The Real Reason America Keeps Puerto Rico Poor

Summary

Puerto Rico, a small island in the Caribbean, has faced long-standing economic struggles despite being a U.S. territory. Although it has potential, its unique relationship with the U.S. has kept it from prospering. The island’s economy has been hindered by policies favoring U.S. companies, lack of political autonomy, and significant underfunding. Over the years, Puerto Rico has faced severe challenges including economic depression, a shrinking population, and a growing debt crisis. With a weak economy dependent on U.S. policies, Puerto Rico continues to struggle with poverty, job losses, and insufficient public services.

Takeaways

• 😀 Puerto Rico is a small island located in the Caribbean, which has been an unincorporated territory of the United States since the late 1800s.
• 😀 Despite its relationship with the United States, Puerto Rico remains economically disadvantaged and faces significant challenges such as poverty, debt, and government mismanagement.
• 😀 Puerto Ricans are U.S. citizens but do not enjoy the same political rights or benefits as those in the mainland U.S., such as voting representation and equal funding for federal programs.
• 😀 Puerto Rico's economy, despite its potential, has been hindered by policies designed to benefit U.S. businesses, which often divert the economic gains away from Puerto Ricans.
• 😀 Between 2004 and 2017, Puerto Rico's economic output dropped by 14%, and a significant outmigration of citizens has occurred, worsening the island's problems.
• 😀 The United States' treatment of Puerto Rico as a colony has contributed to the island's continued underdevelopment, with U.S. policies favoring its economic extraction rather than fostering independence.
• 😀 The island's economy was heavily reliant on sugar production for centuries, and U.S. interests further exploited it for cheaper sugar production, worsening Puerto Rico's economic dependency.
• 😀 Operation Bootstrap, initiated in the mid-20th century, aimed to industrialize Puerto Rico, but it primarily benefited U.S. companies, rather than improving the living standards of the island's residents.
• 😀 Changes in U.S. tax law, such as Section 936, allowed American companies to avoid paying federal income taxes on profits from Puerto Rico, diverting even more benefits from the island's economy.
• 😀 Puerto Rico's financial collapse was precipitated by the revocation of policies that once supported its economy, causing widespread job losses, a decline in public services, and massive debt.
• 😀 Despite receiving some federal benefits, Puerto Rico is systematically underfunded in comparison to U.S. states, further exacerbating its issues like poverty, healthcare, and public services.

Q & A

Why is Puerto Rico's relationship with the United States described as 'unincorporated territory'?

Puerto Rico is an unincorporated territory of the U.S. because it is not a full state and does not have the same political rights as U.S. states. It is subject to U.S. federal laws but lacks full representation or control over its own governance.

How does Puerto Rico’s economic situation compare to other U.S. states?

Puerto Rico’s economy is much poorer compared to U.S. states, even the poorest state, Mississippi. Despite having a similar population size, Puerto Rico receives far less federal funding, which contributes to higher poverty rates and economic stagnation.

What are some of the key factors contributing to Puerto Rico's economic struggles?

Puerto Rico’s economic struggles are driven by factors like a shrinking population, a debt crisis, bankruptcy, mismanagement by the government, and underfunding from the U.S. despite the island's residents being U.S. citizens.

How has Puerto Rico's status as a U.S. territory affected its development?

Puerto Rico’s status as a U.S. territory has limited its ability to make its own decisions and develop an independent economy. Policies that benefit the U.S. have often come at the cost of Puerto Rico’s economic growth, keeping it dependent on federal support and U.S. businesses.

What role did sugar production play in Puerto Rico’s economy historically?

Sugar production was a key part of Puerto Rico’s economy for centuries. The U.S. exploited the island’s climate and labor to establish a sugar industry, turning Puerto Rico into a monocultural economy reliant on the crop, which limited diversification and long-term growth.

What was ‘Operation Bootstrap,’ and how did it affect Puerto Rico?

‘Operation Bootstrap’ was a series of U.S. policies in the mid-20th century aimed at transforming Puerto Rico’s economy from agricultural to industrial. While it initially boosted economic growth, much of the benefit went to U.S. companies, and the island remained dependent on U.S. economic policies.

How did the revocation of Section 936 impact Puerto Rico's economy?

The revocation of Section 936, a U.S. tax incentive that allowed companies to operate in Puerto Rico with tax exemptions, led to a massive withdrawal of investment from the island. This caused economic collapse, job losses, and further exacerbated Puerto Rico’s financial crisis.

What is the significance of Puerto Rico’s high levels of poverty?

Puerto Rico's poverty rates are among the highest in the U.S. and the Caribbean. Nearly half of the island’s population lives in poverty, which is five times higher than the mainland U.S. This has serious implications for public services, living conditions, and the overall economic outlook of the island.

How has the U.S. federal government contributed to Puerto Rico’s current economic crisis?

The U.S. federal government contributed to Puerto Rico’s crisis by repealing policies that supported the island’s economy without offering sustainable alternatives. It also neglects Puerto Rico’s need for federal benefits and resources, which worsens poverty and economic instability.

What is the impact of Puerto Rico's debt crisis?

Puerto Rico’s debt crisis has led to severe austerity measures, cuts in public services, and an unsustainable level of borrowing. The island has struggled to maintain basic infrastructure and social programs, leading to a vicious cycle of economic decline and further migration of skilled workers.