Everything I Know About Puerto Rico in 966 Words

You cannot get a bad cup of coffee in Puerto Rico.

Even in McDonald’s. Even in Subway. It’s some of the best coffee in the world. But to taste it, you pretty much must go there. Puerto Rico’s coffee-export business, once a mainstay of the island’s economy, is kaput.

There are reasons for this. Climate change is one. More to the point, though, is U.S. policy, which has been—what’s the word I want?—capricious.

Several decades ago, prodded by the late Gov. Luis Muñoz Marin who believed the island couldn’t depend on agriculture going forward, Washington decided to Do Something. That meant industrialization, passing generous tax policies for drugmakers to induce them to set up plants.

Soon Puerto Rico had a booming manufacture in generic drugs. Puerto Rico already boasted good universities graduating well-qualified people. Drug companies offered plentiful good-paying jobs. Workers left coffee, sugar, banana, pineapple and tobacco cultivation, former mainstays of Puerto Rico’s economy. Plantations languished. And then ...

... deciding that the tax breaks hadn’t created enough hoped-for jobs, Washington changed its mind and yanked the breaks.

The drug companies responded as you might expect: They fled, though not necessarily back to the mainland. Some remain on the island but the drug business is far from the economic engine once envisioned. Puerto Rico lapsed into a recession—depression, really—that has lasted some two decades. The unemployment rate was 8.4% in December, up from 7.9% the month before. Just in time for holiday gift-giving.

Capricious, like I said. Well, whatever.

Now, Puerto Ricans are Americans ... but with an asterisk. (Let’s refer to them herein as Americans*.) So for example, these Americans* can live anywhere they can afford in the U.S., territories and possessions. Move to Florida? No problem, now you’re a Floridian, go ahead and vote. But stay on the island? Then you may not vote for President; your representative in Congress will be a “resident commissioner” with no floor vote; and you will lack any representation whatsoever in the Senate. Washington can do what it will to you. As it has done, as it now does, as it likely will do in the future.

Washington allowed agriculture to wither without much thought. Then Washington undercut the drug business it’d enabled while putting nothing in its place. Tourism helped little; it’s never been equal to many other parts of the Caribbean. No oil, no gas, not much to dig from the ground. The economy tanked. Americans* were going onto welfare at a high rate and getting hungry. Lifetime pensions were threatened. Something had to be done.

Now, a nice thing about being an American* is that you don’t pay U.S. income taxes. But that bennie is offset by stingy entitlements, notably in health benefits. At the end of the day, most Americans* are worse off than non-asterisked Americans.

The Puerto Rican government has limited taxing powers. So, in a decision that must have seemed right at the time but doesn’t look great in retrospect, it borrowed. It took advantage of a loophole that renders its bonds “triple tax free.”

What this means: When you buy a Puerto Rico bond, you pay no tax whatsoever on the interest. No local tax, no state tax, no federal tax. Doesn’t matter where you live. Puerto Rico’s government bonds are as good a deal as your home state’s—better, really, because the island is so broke it has to pay a really handsome rate.

And Puerto Rico’s bonds are backed by the full faith and credit of the U.S. Government. Best rates available...triple tax free...and government-guaranteed. Wow, huh?

Wall Street responded by buying up slews and slathers of these bonds and selling them to you and me. We bought ‘em and why not? They were the Holy Grail of investing, a really and truly sure thing.

Only they weren’t. Aren’t.

Puerto Rico eventually defaulted, as it had to, and the U.S. Government didn’t back up its sure-thing guarantees, as it promised to. The island couldn’t declare bankruptcy, no provision in law for that, so it created a workaround commission to fashion a payment plan. Wall Street responded with an army of lawyers filing a blizzard of lawsuits that have slowed down the island’s recovery while still not making Wall Street whole. These worthies will settle for X cents on the dollar of their supposedly-sure-thing bonds.

Hard to have sympathy for Wall Street, perhaps. If it looks too good to be true, it probably is. Live by the sword, die by the sword, right? But what about those widows and orphans?

To be sure, Puerto Rico doesn’t come to this with clean hands. Americans* celebrate more holidays, and spend less time at work, than nearly anyone anywhere. Island government has been notoriously corrupt since forever. The electric company is a prime example, a government-operated, patronage-riven public utility that couldn’t turn on the lights after Hurricane Maria for weeks, months, even years. More recently the Governor was driven from office after disclosure of emails in which he callously disses supporters. Average Americans* are avidly political but also deeply, justifiably cynical about their leaders.

So here we are. A weakened industrial sector, a nonexistent agriculture-export sector, tourism ruined by Maria and ruined again by the recent earthquakes, an economy so deep in debt—insolvent, really—that it’s hard to see any way out, Americans* fleeing the island by the thousands to start new lives as, um, Floridians.

Too bad, so sad. Such a lovely place. No passports, no visas. Your dollars are good, your English is (mostly) good. The main roads are good (though not the byways). It’s 84o like clockwork every afternoon in January and a gentle breeze never ceases to blow. Nice people, interesting culture, foreign yet not-foreign. Grrrreat coffee.

Yes, it’s America.

With an asterisk.

keycom@verizon.net

Facebook author page: https://www.facebook.com/Frank-S-Joseph-Author-797574090306259/

P.S. ...

This isn’t really Everything I Know about Puerto Rico. After nine visits, and writing a novel set there, I’ve learned a lot about the island. I may share more in future posts.