WASHINGTON. From the dawning of the 21st century, and particularly now in 2018, post-Maria Puerto Rico has transformed into an economic and social engine that’s running on empty.
Until recent decades, the island of Puerto Rico had enjoyed a relatively robust economy, as Caribbean island economies go. The island boasted a modest balance of industry, pharmaceutical manufacturing and agriculture.
Prior to that, for more than four hundred years, Puerto Rico counted on its flourishing agriculture sector to feed its people and as exports. In fact, the island grew copious amounts of sugar cane, tobacco and citrus fruit for export income.
But that was then and this is now. Today post-Maria Puerto Rico imports 85% of its food, a situation that grew worse after the destruction wrought by Hurricane Maria. But the Commonwealth’s current crippled economy is very much a result of a local government that has for decades failed its people.
The same story has played out throughout Central America as well in Nicaragua, Guatemala and Belize. As for their socialist governments, broadening out their economies to encompass other sectors is the least of their concerns.
Puerto Rico is only the latest economy to be brought low by such policies. Hurricane Maria was simply the final blow.
Post-Maria Puerto Rico: A rapidly dwindling population
In 2010, Puerto Rico saw its population decline from 3,808,610 residents registered in the 2000 U.S. Census to 3,725,789 in the 2010 Census. The estimated population of Puerto Rico as of July 1, 2015, was 3,474,182. representing a further 6.75% decrease. By 2017, estimated Census Bureau reports revealed that Puerto Rico lost yet another 100,000 people (from 3.4 million to 3.3 million) from July 2016 to July 2017.
Since Hurricane Maria, another 135,000 are estimated to have left the Island of Enchantment.
No island for the young
Many recent exiles leaving post-Maria Puerto Rico are young people. The youth exodus can be blamed on an unemployment rate of 12.2 percent (Bureau of Labor Statistics). Unfortunately, this is the same demographic the island desperately needs to retain to build a new future.
This ongoing Puerto Rican exodus almost universally heads for the continental United States as individuals and families seek to restart their shattered lives. It’s a logical move, since residents of the Commonwealth are already American citizens.
But many island exiles face similar problems to those they confronted in their own land, notes the Pew Research Center.
“More recent Puerto Rican arrivals from the island are also less well off than earlier migrants, with lower household incomes and a greater likelihood of living in poverty.”
Corrupt politics and massive debt
Puerto Rico’s gradual population exodus actually got underway during the decade prior to Maria. The indirect cause was the Commonwealth’s worsening financial situation. The invasion of Hurricane Maria served to push the island’s painful economic decline over the cliff.
Worse, in a way, than the hurricane’s massive swath of death and destruction is Puerto Rico’s debt load, estimated in excess of $70. This is a debt the island can never repay. Crushed by this gloomy, hopeless outlook, Puerto Ricans are leaving the island in droves. With these emigrés go the skilled labor and education necessary to rebuild the island’s damaged infrastructure and jump-start its economy.
An aging population
Not necessarily by choice, an aging population remains on the island. No longer working or able to work and often suffering from serious health issues, this demographic can’t be counted on to revive the Puerto Rican economy. Without a younger population to help care for their extended families and provide a tax base to support government assistance programs, post-Maria Puerto Rico now finds it nearly impossible even to run in place economically.
In an interview with USNews.com, Anibal Acevedo Vila, agrees.
“We are losing people who are [not only] educated but in their most productive ages. On average, our population is aging, with younger people leaving and older people staying. It puts a lot of pressure on social services and health services. And if you don’t have the upcoming generation willing to be part of the economy, it’s a big challenge.”
The problem of poverty in Puerto Rico
The Borgen Project’s review of the situation attributes ongoing poverty in Puerto Rico to a number of causes. The core issue: The island’s worsening debt crisis, ballooning to more than $70 billion currently. This crippling debt load keeps the island perpetually impoverished and continues to affect children and families on the island.
Puerto Rico’s financial situation leads to continuing budget cuts. These, in turn, only worsen conditions for the poor.
In order to pay off the debt, Puerto Rico has taken the following actions.
- Delayed tax refunds and payments to suppliers
- Cut budgets on health care and public transportation services
- Closed schools
- Increased sales taxes
PROMESA: The Puerto Rico Oversight, Management and Economic Stability Act
Before leaving office, Congress passed and President Obama signed the Puerto Rico Oversight, Management and Economic Stability Act. Given the island’s unusual political structure, PROMESA, among other provisions, protected Puerto Rico against lawsuits for non-payment of debt.
The government intended, through PROMESA, to provide stability, better services and ultimately prosperity for the people of Puerto Rico. PROMESA also ordered several additional steps.
- Appointment of a seven-person board to oversee negotiations with creditors
- A fiscal plan that must include the “adequate” funding for the island’s bloated pensions, currently underfunded by more than $40 billion
- Debt restructuring, which, among other steps, may including the option to employ a bankruptcy-like process
PROMESA Board moves ahead
According to the previously cited Borgen Project, the PROMESA board’s work continues to move ahead.
- The Puerto Rican government submitted a fiscal plan that was approved, with conditions, by the financial control board.
- Starting in 2020, the Commonwealth must decrease pension spending by 10 percent.
- The island must also remove Christmas bonuses, and execute employee furloughs to prevent a short-term cash crunch.
PROMESA also includes a number of stringent economic measures.
- A reduced minimum wage of $4.25 for workers age 24 and under
- An austerity program where bondholders are paid first
- A provision that does not allow the local government to interfere with mandated fiscal measures
“I’m afraid this bill provides little more than a Band-Aid on a bullet hole with regard to Puerto Rico’s unsustainable debt,” he said. “Mark my words—if we don’t seize this opportunity to address this crisis in a meaningful way, we’ll be right back here in a year from now picking up the pieces.”
But the problem for PROMESA’s critics is that Puerto Rico’s debt and infrastructure crises had already gone off the rails before Hurricane Maria struck. There are no longer any happy solutions to the desperate plight of post-Maria Puerto Rico.
— Next: Despite the odds, Puerto Rico tries to get back to normal.
— Headline image: A neighborhood in Puerto Rico was heavily damaged by the storm.
U.S. Air Force photo by A1C Nicholas Dutton. Released by Air Force Magazine into the public domain.