Puerto Rican exceptionalism?

WORLD Magazine’s current cover story concerns Puerto Rico’s debt and its implications, but some residents of Washington and San Juan argue that the solution is obvious: The U.S. government should bail out Puerto Rico. These partisans tell conservatives concerned about setting a precedent not to worry, because Puerto Rico is exceptional, and its debt a result of its “colonial status.”

David R. Martin, author of Puerto Rico: The Economic Rescue Manual, acknowledges that “the ‘colonialism’ arguments play well to the vast majority of my Puerto Rican family,” but that’s because they “view reality through the kaleidoscopic prism of the island’s status-based politics. These status politics often trump any principled economic reasoning or objective data to explain or present solutions to the crisis.”

The status reports I’ve been reading every weekday for the past three months have led me to conclude that liberals who decry arguments for “American exceptionalism” should not support “Puerto Rican exceptionalism” either. The most common complaint concerns the Jones Act, legislation from 1920 that says only U.S.-owned and operated vessels can carry goods between Puerto Rico and the U.S. mainland. The Jones Act should be changed to allow more competition, but how terrible could it be when Hawaii abides by it also, yet has a strong economy?

Is it unfair to compare a territory with one of the United States? Let’s compare apples with apples, Puerto Rico and other Caribbean islands I’ve also visited, the U.S. Virgin Islands and the Dominican Republic. The Jones Act could not be the great determiner of island prosperity because the U.S. Virgin Islands are exempt from it, yet have higher consumer prices than Puerto Rico and comparable unemployment. Nor should the Jones Act be scapegoated for gasoline prices: The Dominican Republic is not subject to the Jones Act yet still has gas prices almost double those of Puerto Rico.

Puerto Rico needs not blame-shifting but a supply-side revolution that could unleash entrepreneurialism, which now largely fuels a thriving trade in illegal drugs. Reformers should go after not high taxes but the low or non-existent taxation of favored individuals or classes: Puerto Rico has exempted 90 percent of the island’s $100 billion gross domestic product from taxation. Owners of expensive real property pay very little. Public assistance to the poor should be funneled into something akin to the Earned Income Tax Credit so that residents can see the benefits of working.

Right now, those who go on welfare in Puerto Rico can take home much more than they receive for working a minimum wage job. Is it any wonder that only 40 percent of adults on the island are legally working?