“If you want to party, you don’t have to leave Puerto Rico.” So go the lyrics of a popular 2019 track by singer Pedro Capó in the genre of reggaetón, of which Puerto Rico is the undisputed global epicenter. The statement came just in time for the COVID-19 pandemic; during its early stages, few people (revelers or not) were allowed to leave the island at all since the authorities imposed some of the world’s most heavy-handed health restrictions.
Although the Puerto Rican government eventually eased some of its authoritarian measures and allowed inbound tourism last July, it still maintains what is arguably the world’s longest-running lockdown constraints. Since March 15, 2020, a nighttime curfew has been in place; it forbids anyone not “providing essential services or attending to a medical emergency” from leaving their home from midnight until 5 a.m. Before May 10, the curfew applied at different points in time from 7 p.m. or 10 p.m. Also, most businesses still must operate “on a 30 percent capacity cap,” while all schools (both public and private) have remained closed for over a year under an executive order.
According to the health authorities and some media outlets, Puerto Rico’s harsh lockdown measures have been an undisputed, lifesaving success. As one expert told NBC News, they were implemented without resistance because “the pandemic was never politicized” on the island. But not all Puerto Ricans have been subjected to the same type of restrictions on their basic liberties; the 670,000 natives who left the island for the U.S. mainland between 2009 and 2019 have had a vastly different experience, especially the hundreds of thousands who moved to Florida as they escaped a recession that began in 2006, the government’s debt default in 2016, and the devastation of Hurricane Maria in 2017.
In 2018 alone, 133,500 Puerto Ricans—nearly 4 percent of the island’s population—left for the mainland according to The Miami Herald. About 33.5 percent of these migrants, the Herald reported, chose to settle in Florida, which has surpassed New York, the magnet of the mid-20th century Puerto Rican diaspora, as the state with the largest Puerto Rican population in the country (1.17 million versus 1.08 million according to a recent UCLA study).
Increasingly, these new arrivals have chosen to live in central Florida; in 2016, 29 percent of Florida’s Puerto Rican population lived in the two counties where Orlando and Tampa Bay are located. According to a study by the Hispanic Federation, the influx of Puerto Ricans into these areas has caused what is “perhaps the most important shift in Florida’s population to occur since the mid-twentieth century,” when Cubans fleeing Fidel Castro’s dictatorship began to arrive in South Florida en masse.
The experience of central Florida’s Puerto Rican population, a group one sociologist referred to as a new diaspora of “Disneyricans,” is beginning to have an impact on the island itself. Jorge Rodríguez, who heads Puerto Rico’s Instituto de Libertad Económica (Institute for Economic Liberty), says that “there are many families on the island whose nephews or cousins in Florida have been in school since last August,” when Gov. Ron DeSantis decided that K-12 public education should resume at full capacity. Since social media keeps them in constant contact with their relatives, Rodríguez says, “many people on the island are wondering why Puerto Rican kids can go to school in Florida or Texas, but not in their homeland.”
But the comparison doesn’t end with schooling. For months, Florida residents have faced no continuous curfews, business capacity caps, or any of the other restrictions still in place in Puerto Rico. In a sense, normal life on the island has also moved to Florida. Challenging Pedro Capó’s thesis about Puerto Rico’s insuperable party credentials, the organizers of both the Guaya Guaya concert and the Zalsa Fest (a pair of large-scale, annual popular music events in Puerto Rico) decided to hold the shows in Orlando for the first time in April. The Puerto Rican authorities promptly announced that all returning festivalgoers would have to quarantine for 14 days.
The tendency of travel, however, has been in the opposite direction, to the extent that Puerto Rico has become depopulated. In 2018, 64 percent of Puerto Ricans lived in the 50 states or Washington, D.C., according to UCLA’s César J. Ayala. This exodus has caused a devastating brain drain, since those who leave tend to be entrepreneurial individuals and those better prepared for the contemporary labor market. In fact, one key factor driving educated Puerto Ricans out of the commonwealth is their lack of opportunities in a system where nepotism is rampant and meritocracy barely exists.
Much has been made of the “talented” children (hijos talentosos), the relatives, significant others, and “dear friends” (amigos del alma) of established politicians who are paid six-figure salaries to work for the government despite meager credentials and the supposed ban on such practices. The epithet arose after María Milagros Charbonier, a former member of the Puerto Rico House of Representatives for the New Progressive Party (NPP), told a radio station that politicians like her “have talented children, and if you have a talented child, he has the right to work and not be excluded, even from the government.” In August of 2020, Charbonier, who was once in charge of the House Ethics Committee, was arrested in an FBI sting due to a corruption scheme involving several of her family members.
Notorious corruption cases are no surprise given the tremendous amount of government intervention in the economy. In 2015, tourism and exports produced a mere $9 billion in total money inflows to Puerto Rico according to the commonwealth’s Planning Board, whereas net transfers from the U.S. federal government amounted to an astounding $178 billion. The reliance on federal money, which has only increased with Hurricane Maria reconstruction programs and COVID-19 relief checks, has created several layers of perverse incentives.
To begin with, the public sector dwarfs the private. In 2005, scholars Steven J. Davis and Luis Rivera-Batiz wrote that “the Puerto Rican government has traditionally accounted for a large share of employment and production activity on the island,” where “private sector employment rates are less than half the U.S. rates in recent decades.” Meanwhile, the few who do operate in the private sector “have learned to focus their creative energies on how to curry favor with government officials and circumvent bureaucratic obstacles to commercial success.”
According to Sergio M. Marxuach, policy director at San Juan’s Center for a New Economy, such obstacles include occupational licensing requirements that restrict the supply of services, as well as government restrictions to business entry and location, which afford “commercial rivals the opportunity to block” competitors from entering the market. There are also “buy local” laws that “insulate business interests from foreign competition.” Inevitably, such barriers to the free market raise prices for consumers. As a whole, Marxuach told a U.S. Senate hearing in 2015 that these obstacles “reflect and promote a business culture focused on rent seeking.”
There is also a culture of dependence on the government. In 2005, Davis and Rivera-Batiz wrote that transfer payments from the state had accounted “for more than a quarter of Puerto Rican household incomes in recent decades.” Rodríguez thinks that this is particularly harmful in a territory that has never managed its own affairs; Puerto Rico was a Spanish colony from the 16th century until 1898, when Spain ceded control of the island to the U.S. after its defeat in the Spanish-American War. Thereafter, American military governors and presidential appointees ruled Puerto Rico for half a century.
One of them was Rexford Tugwell, who was appointed by President Franklin Delano Roosevelt in 1941. He proceeded to nationalize two private electric utility companies with the sale of $20 million in government bonds. Thereafter, state-owned enterprises themselves began to issue their own debt, which soon surpassed that of the commonwealth. As Reason Foundation’s Marc Joffe argues, these are the New Deal roots of the 2017 energy crisis, which arose when the bankrupt, state-owned Puerto Rico Electricity and Power Authority (PREPA) announced that it wouldn’t be able to provide its customers with power for six months.
It was only in 1948 that the first native Puerto Rican was elected governor. Rodríguez says that “the lack of self-rule and the large welfare state have consequences in people’s moral agency.” He thinks that this contributes to the fact that many Puerto Ricans were in favor of harsh COVID-related lockdowns. “The attitude toward the government has been: ‘If you lock us down, you are good because you are helping me.’” Rodríguez adds that “the spirit of the Bill of Rights, where giving excessive power to the government is dangerous because it can deprive us of our liberties, never reached Puerto Rico.”
The culture of dependence has even influenced the debate concerning Puerto Rican statehood, a step that one of the island’s main political parties (the NPP) supports and which 52 percent of voters backed in a 2020 referendum. One argument against statehood has been that, if the island becomes a state of the union, a decision that ultimately rests with the U.S. Congress, its residents would stop receiving federal subsidies without paying federal income taxes. The status quo option implies that Puerto Rico can continue to act as a banana republic as long as it remains a heavily subsidized quasi-colony, with no say over U.S. policies that harm the island. These include the Jones Act, a protectionist measure that seeks to shield American maritime unions from competition, but drives up the prices of goods in Puerto Rico.
Ultimately, what may decide Puerto Rico’s future is not an abstract debate about the benefits of statehood, but the experience of more than a million Puerto Ricans who reside in one particular U.S. state. Life in pro-business Florida, which takes second place in the Fraser Institute’s Economic Freedom of North America 2020 rankings, has shown them a clear, successful alternative to their homeland’s interventionist, big government ordeal.
For instance, thousands of Puerto Ricans in Florida currently work under at-will contracts, whereas Puerto Rico’s inflexible labor laws contain a protectionist ban on at-will employment. This lack of labor mobility and competition helps explain why, historically, Puerto Rico has had much higher levels of poverty and unemployment rates as well as lower labor force participation rates than the U.S. as a whole, let alone compared to the states that fare best economically.
Prominent Democrats including Rep. Alexandria Ocasio-Cortez (D–N.Y.) have supported Puerto Rican statehood, likely due to the belief that it would afford their party two additional senators. But if the “Disneyricans” and other members of the diaspora ever return home to rule the roost, Puerto Rico could end up not only rejecting AOC’s brand of democratic socialism, but also taking a turn toward the free market policies that it needs so urgently.
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