The Roots of Puerto Rico’s Debt Crisis—and Why Austerity Will Not Solve It

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The US government is at least partially responsible for the emergency, which is affecting millions of what are effectively second-class US citizens, Ed Morales writes in this article for The Nation. Here’s an excerpt. For the complete article follow the link below.

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“The economy of Puerto Rico is mainly controlled by US corporations. It’s a cycle of dependency that reproduces itself.” —Rafael Bernabe

Herein lies the Puerto Rican economy’s “structural problem”: It’s not about workers having salaries and benefits that are too high; it’s about the fact that the island’s territorial status means that since the days of the 19th-century sugar growers, whose drive to avoid tariffs were an early manifestation of hemispheric free trade, capital has fled the island at a steady rate, without interruption. “The economy of Puerto Rico is mainly controlled by US corporations, which generate a tremendous amount of profit that is not reinvested and does not create economic growth,” said Bernabe. “It’s a cycle of dependency that reproduces itself.”

It’s reasonable to ask whether the US government is at least partially responsible for the crisis—both through creation of the nebulous commonwealth status and the actions of its financial institutions—and whether it has a moral obligation to help resolve it through financial support. In 2004, legal scholar Pedro Malavet suggested that it was the social construction of Puerto Ricans as a non-white race that made them “unassimilable as Americans,” cementing their colonized status, and that they were therefore owed reparations.

While the idea of asking for reparations may have lost its feasibility after the Great Recession, both the United States and the ruling party of Puerto Rico should begin to view the debt crisis as a human problem affecting millions of what are effectively second-class US citizens, and not a matter of business mathematics. If mainstream politics on the mainland refuses to consider a restructuring of the US economy away from a blind profit motive, it should at least have the intelligence and decency to help Puerto Rico restructure its own economy to create new modes of capital reinvestment on the island, just as it would anywhere on the mainland.

Some argue that a change in political status is necessary to effect real change in the economy. Statehooders push for entrance to the union—highly unlikely, given the Republican-controlled Congress bent on reducing spending, which statehood would sharply increase, not to mention the probability that Puerto Rican voters would send Democratic representatives and senators to Congress. On June 22, the UN Special Committee on Decolonization called once again for the United States to “expedite a process that would allow Puerto Ricans to fully exercise their inalienable right to self-determination and independence.”

Any movement for independence, which might choose to lobby for reparations, needs to highlight class, race, and gender marginalization, as well as environmental reform, as part of its agenda. New parties that do not prioritize status change, such as All Puerto Ricans for Puerto Rico, the Sovereign Unity Movement, and the Working People’s Party have tried to enter the arena, but according to political scientist Manuel Almeida, “the rules of the game” in the island’s political structure have hindered their emergence. Puerto Rico’s ruling party has used technical challenges to delay the Working People’s Party’s re-certification for elections, despite electoral reform that had allowed the new parties to field candidates for the 2012 elections.

With an overly moralistic tone directed at the island’s mostly Catholic residents, Governor García Padilla spoke of “shared sacrifices,” in which the community, supposedly complicit in the actions of an irresponsible government, would share the pain with the bondholders. But many Puerto Ricans I’ve spoken with, from academia to the working class, agree that they’ve sacrificed enough, and that it’s time for those most responsible for creating this mess to own up to their transgressions.

For the original report go to http://www.thenation.com/article/the-roots-of-puerto-ricos-debt-crisis-and-why-austerity-will-not-solve-it

One thought on “The Roots of Puerto Rico’s Debt Crisis—and Why Austerity Will Not Solve It

  1. Reblogged this on It Is What It Is and commented:
    It’s time indeed for the creators of this mess to start cleaning up …. it’s started a long time ago, it hasn’t been addressed & seems it won’t be. In the meantime, who suffers? You tell me …. Don’t think statehood is coming anytime soon.

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