The Battle For Paradise: Puerto Rico Takes on the Disaster Capitalists

Book Review

The Battle For Paradise: Puerto Rico Takes on the Disaster Capitalists Haymarket Books (June 5, 2018) Naomi Klein

It is not common for Puerto Rico to be in the media and academic limelight, just like the classic study about Puerto Rico’s political status vis a vis the United States Puerto Rico: The Trials of the Oldest Colony in the World by Jose Trias Monge stated, Puerto Rico has been invisible in the political imagination of the United States. Despite Puerto Ricans are citizens of the United States since 1917, most in the United States imagine them as foreigners. It was not surprising that after Puerto Rico was placed in the limelight by the chaos caused by Hurricane Irma and Maria and the lack of empathy evidenced by images of President Trump during his visit to the island, most of the media discovered part of another Puerto Rico beyond the beaches, palm trees and the piñas coladas.

In recent years there are two factors explaining why there is more media and academic focus on Puerto Rico, one, the colossal $73 billion debt the island has incurred in the last decades and the worst human catastrophe unleashed by two hurricanes in 2017. But contrary to other catastrophic events this, the largest in the history of the United States, occurred on its hidden colonial possession. A recent study by Harvard University estimated that 4,645 Puerto Ricans died as a consequence of the events revealed by the natural disaster has shocked many but unfortunately much of the media coverage has just scratched the surface. While there are other estimates which might deviate somewhat from this estimate the reality is that it has been difficult for the media and even academics to have a historically contextualized understanding of the depth of this disaster.

Since September 20 of 2017 the focus of the media has been on the ravages of the Hurricanes, first Irma and then Maria, released in Puerto Rico. The electrical grid, completely collapsed with people more than a year without electricity, hospitals shutting down, some towns completely isolated from each other, a health crisis that is expressed in deaths, suicides and the increasing gradual but perceptible depopulation of the island. It is estimated that close to 500,000 people had left the island the majority traveling to the United States. Since 2004 the population of Puerto Rico has been on a decline, today 5.4 million Puerto Ricans live in the United States compared to 3.4 million in the Puerto Rican archipelago. The early decline was due to the worsening economic mic situation and the increasing indebtedness of the colonial government.

Naomi Klein, well known Canadian writer and social activist who popularized the concept of the “shock doctrine” which describes how the insecurity, powerlessness that a population experiences during economic depression, chaos allows the government to impose unpopular policies that normally would not be possible in normal circumstances. Naomi Klein in an accessible language, but rigorously factual, develops a narrative that connects the various strands that underlie Puerto Rico’s present tragedy Also, contrary to most of the mainstream media Klein weaves some of the historical facts, connected to Puerto Rico’s colonial status with policies by the US and the colonial government.

When the natural disaster hit the Puerto Rican archipelago on September 20 2017 it intensified, forces that in the last decades have left Puerto Rico’s economy, its infrastructure in shambles. These forces are a combination of decisions made by the colonial government of Puerto Rico in order to finance a bankrupt economy and governmental institutions. But the forces and woven together by the manner by which the United States has used, since Puerto Rico was conquered after the Spanish-Cuban American War of 1898. Since the beginning Puerto Rico was seen as a tabula rasa which allowed the United States to implement tax policies, immigration policies, and later in the 20^th century military and medical and chemical experimentation.

Given the complexity of the origins of Puerto Rico’s plight it is not possible to provide an accessible diagnostic in a book whose goal is to reach broader audiences for Puerto Rico’s narrative. There are a number of academic articles that have recently provided excellent background for the role of US tax policies, for example Diane Lourdes Dick, expert in tax law, 2015 provided an expert background to the relationship between US tax policies and US imperialism in Puerto Rico.

 “U.S. domination over Puerto Rico's tax and fiscal policies has been the centerpiece of a colonial system and an especially destructive form of economic imperialism. Specifically, this Article develops a novel theory of U.S. tax imperialism in Puerto Rico, chronicling the sundry ways in which the United States has used tax laws to exert economic dominance over its less developed island colony. During the colonial period, U.S. officials wrote and revised Puerto Rican tax laws to serve U.S. economic interests.” (1)  

More recently, Puerto Rican economists Jose Caraballo and Juan Lara provided the most precise diagnostic for the increased indebtedness of Puerto Rico. They provide a thorough dismantling of the myth that Puerto Ricans basically, and irresponsibly placed themselves in the critical situation that preceded the natural disaster brought about by the hurricanes. In some sense most of the narratives, even the liberal ones, have been rooted in the “liberal” framework of the “culture of poverty” which essentially blames the victims for their plight. These exonerate the empire from any responsibility.      

“Using econometric analysis, we found that PuertoRico’ s government indebtedness is, to a large extent, connected to a sharp decrease in manufacturing employment (i.e. Deindustrialization) suffered by this economy, and weak evidence that It was caused by an excessive government payroll or overgenerous federal programs. In light of our empirical results, we discussed how the consequences of deindustrialization ultimately led to increase government borrowing.”     

The deindustrialization of the island was the outcome of congress’ decisions to eliminate policies which provided incentives for industries like the pharmaceutical and medical instruments to establish themselves in Puerto Rico. After 2006 these incentives were eliminated creating a wave of industrial closings and increased unemployment. The tax base was constrained and the government decided to use the bond market to sustain medical services, law enforcement, education etc. Puerto Rico had few fiscal powers to reform its currency, search for new markets (Cabotage Law forces the island to use the inefficient and expensive US merchant marine), 80 percent of all goods including food are imported.  

These analyses together with Klein’s book provide the best understanding of the chaotic disaster that Puerto Rico is experiencing. But what Klein contributes because of her involvement wit local social movements and informants is the warning about the policies that are being implemented in Puerto Rico based on a neo-liberal ideology which will increase the crisis and will lead Puerto Rico to a process of depopulation that some have called genocidal. At the same time, she is able to focus on the forces that from the ground up are resisting and that will hopefully provide the basis for the reconstruction of a better more just and self-sustaining society.

Congress imposed another layer of colonial control when in 2016 it legislated Puerto Rico Oversight, Management, and Economic Stability Act or PROMESA which cynically means promise in in Spanish. However, the promise is the imposing a series of measures by a board appointed by congress with mostly non-Puerto Ricans, or Puerto Ricans connected to the finance markets, most republicans. The measures which include austerity measures have led to the closing of hundreds of schools, a debacle in pensions due to cuts, reduction of public workers including members of the publicly owned electric company (who privatization has just been approved) which left the agency with few resources to deal with the collapse of the electrical grid.   

Klein talks about how the governor of Puerto Rico, who favors statehood for the island and other members of his government have created a vision of a future Puerto Rico, that is like a blank slate where innovators (“job creators”), can come to the island and create a neo-liberal paradise for investors. But this “paradise” will be a hell for Puerto Ricans. One of the immediate outcomes is that the depopulation of Puerto Rico continues and wealthy investors, are contributing to the gentrification, not of a neighborhood but of an entire nation. Laws which provide generous tax benefits to wealthy people who move to the island and invest have created a growing population of what Klein calls Puertopians who will help pant the black canvas of Puerto Rico into an investor’s paradise.  

Recently (2018) the colonial legislature, under threat from the Fiscal Control Board (with power over fiscal affairs in Puerto Rico) was attempting to legislate a law that would take away workers protection from being fired from their jobs. The fiscal control board was blackmailing the legislature to pass this legislation by threatening other measures which would reduce the government budget for things like the Christmas bonus and other financial measures which have existed for years. These measures are rapidly being implemented, which creates confusion and a sense of powerlessness among the people impacted. The “shock therapy” is alive and well in Puerto Rico.  

The Fiscal Control Board has a budget of $1.5 billion, its executive director has an annual salary of $625,000 (more than the governor) and they have planned to set up a surplus of $6.5 billion to pay creditors while Puerto Rico which will need $95 billion to rebuild will only get $57 billion from the US federal government. This is a way of extracting money from an impoverished island with a colonized voiceless population.

At the same time, from the bottom up, despite the seemingly state of powerlessness that pervades among Puerto Ricans, social movements are quietly developing a way of resisting and indicating that there is another vision for what a paradise would look like for Puerto Ricans.

She describes the work of environmentalist organization Casa Pueblo, who was initially one of the only places in the central mountains with access to electricity because of it solar powered panels. Its radio station also was for many days the only source of information for many in the island. This organization has been led by a group of engineers and scientists who decades ago were in the forefront of a national social movement to stop the open-air mining of copper and other minerals located in the island’s central highlands. Hundreds of college youth camped in the areas that were targeted by the US multinationals and contributed to the change of plans which saved the mountain regions of Puerto Rico from devastation. Arturo Massol Deya, a biologist and his family led the process of transforming their movement into an environmental organization. His organization was awarded the Goldberg award years back which helped propel further their organizing efforts. Recently they have managed thousands of acres of forests and provide training and education to youth.

Puerto Rico, because of the colonial policies which limit the island being able to protect its industries and agriculture imports 80 por cent of the food and goods consumed in the island. Ironically, in the last few decades a group groups and individuals began to buy land and set up sustaining ecological farms. After the storm these disparate agricultural islands were growing tubers like cassava, sweet potatoes, taro that were the only ones that were not uprooted by the storms. These agricultural products had been the source of food for Puerto Rico’s indigenous Tainos and the Africans who were enslaved in Puerto Rico but interacted with the Tainos. The isolated islands of agricultural producers have recently begun to networks and have created a movement that together with other community organizations are beginning to imagine from the ground up another vision of the paradise in Puerto Rico that is self-sustaining and which will provide the basis for sustaining the island’s population.  

Interestingly, one large source of support, both financial and political for the resistance efforts in Puerto Rico are the millions of Puerto Ricans in the diaspora. Hundreds of Puerto Ricans have raised funds, volunteered to go to work in Puerto Rico. In some sense the diaspora is providing a voice to Puerto Ricans in the island since Puerto Ricans cannot vote in US elections. Many organizations in the US are pressuring congress, together with the four Puerto Rican congresspersons representing Puerto Rican communities. Many of those Puerto Ricans who left recently are finding a connection with their homeland.         

  

    

1.     U.S. Tax Imperialism In Puerto Rico By Diane Lourdes Dick* 65 Am. U. L. Rev.1, 2015.

2.     Deindustrialization and Unsustainable Debt in Middle-Income Countries: The Case of Puerto Rico By Jose Caraballo Cueto and Juan Lara Journal of globalization and development, Vol 8 Issue 2, 2018.

Victor Manuel Rodriguez

Department of Chicano and Latina/o Studies

California State University, Long Beach

Puerto Rico's Crisis? Let's Look At Our U.S. History

Aug 6 2015, 9:34 am ET 

Opinion: Puerto Rico's Crisis? Let's Look At Our U.S. History 

by Victor M. Rodriguez 

There's a new kid on the block - Cuba has become the darling of US economic and political interests. In contrast, Puerto Rico continues to be the unwanted child that is more of a nuisance and for whom there is no love lost.

Ironically, the histories of Puerto Rico and Cuba were intertwined since before the Spanish-American War, when the last colonies of Spain in the Americas fell into United States control. The Cuban Revolutionary Party, which led the Cuban war of independence, had a Puerto Rican section and its platform included the struggle to free Puerto Rico and Cuba from Spain.

While the countries' flags are similar, their colors are inverted. And now their paths are diverging in dramatic ways. At one point after the Cuban revolution in 1959, Puerto Rico was showcased as a democratic model. Now Cuba's possibilities are in the spotlight.

Yet whereas Cuba's present events are seen in the context of history- primarily the last 54 years of the embargo - history is missing in the efforts of American and Europeans pundits to make sense of Puerto Rico's crisis.

While political action committees supporting the lifting of the blockade against Cuba (with support from U.S. businesses) are sprouting in the nation, other lobbying organizations are also being formed around Puerto Rico's crisis with the purpose of not allowing Puerto Rico to get the tools it needs to pull itself out of the weight of a $73 billion dollar debt. 60 Plus, a conservative lobbying organization that is partially funded by the Koch brothers, has mounted a vigorous campaign to deny Puerto Rico a bailout. In fact it has supported placing the island under a financial control board which will further limit the scarce options Puerto Rico has as an "unincorporated territory" of the United States.

Our history as a useful - but unincorporated - territory
 
Contrary to the experiences of Hawaii, Arizona and Alaska, Puerto Rico did not become a territory -the legal space for lands conquered by the United States which could then become a state. Puerto Rico instead became an "unincorporated territory," meaning it "belongs to but its not part of the United States."

Puerto Rico cannot go to international banks because it does not have international standing as a colonial possession. It also can't increase its trade and reduce the cost of its trade because it is forced by an archaic law - the Jones Act enacted in 1920 - that forbids the island from using any other ship except the U.S. merchant marine. Some studies have indicated that the use of the U.S. merchant marine increases the cost of living in Puerto Rico by $200 million (lowest estimate).
Even worse, the U.S. Congress imposes life and death decisions on Puerto Rico, yet the commonwealth only has one "resident commissioner" who has a voice but no vote in Congress. 3.6 million Puerto Ricans are powerless and basically voiceless in probably the most critical time in its 117 year relationship with the United States.

For those who question why Puerto Rico finds itself in this "territorial" situation, it is worth remembering that the island did not have a choice; Puerto Rico served a strategic military interest for the U.S. going back to the 19th century as one of the "coaling" stations around the world. In fact, the U.S. built the largest naval base outside of the United States in Puerto Rico. German ships roamed the Caribbean (both in WWI and WWII) and the U.S. felt it needed to buttress its fortifications.
In 1941, lands were expropriated in the eastern part of Puerto Rico in a town called Ceiba and in the island of Vieques. The deep-water port that was created in Roosevelt Roads was large enough in case the British Navy was in danger of falling into the hands of Nazi Germany.

During the Cold War, Puerto Rico was the launching pad for troops that invaded the Dominican Republic in 1965, and provided logistical assistance to many other military interventions in Latin America including the invasion of Panama in 1989. Other military installations like the naval center in Sabana Seca were also used for electronic surveillance of Latin America. It wasn't until 2003 that the U.S. Navy left Vieques and closed Roosevelt Roads in 2004.

Uneven playing field
 
In 1984, Congress took away (no explanation provided) the possibility of Puerto Rico using the bankruptcy process in order to restructure its debts. Puerto Rico's legislature, whose powers are also limited by Congress, recently passed its own bankruptcy law to help its public corporations use the process to reorganize and alleviate the weight of the large debt. But the law was repealed by the federal courts because it was unconstitutional. Puerto Rico cannot make decisions on its own, only with the approval of Congress, where it does not have a meaningful presence.

Puerto Rico status and lack of power arise from long-held stereotypes about Puerto Ricans that are deeply rooted in American culture. In 1909, President Taft said Puerto Ricans were given more power than was good for them. More recently, some stories in the media have reaffirmed that view of Puerto Ricans. In a July 2014 Wall Street Journal column under the title "Puerto Rico's Borrowing Bubble", Mary Anastasia Grady paraphrased Margaret Thatcher, "Here we go again: Another big government paradise is running out of other people's money."

Set Up for Failure: A Manufactured Crisis
 
It is crucial to understand that Puerto Rico exists in a particular legal context completely created by the United States. Unfortunately, while the United States provided modernity to the old colonial institutions - particularly for labor - in terms of self-governance it was a step back. In the last few years of Spanish colonial rule, Spain granted autonomy to Puerto Rico in 1897. The island was able to have a customs system to place tariffs on foreign goods and protect its local production, it was able to enter international treaties, and also had an elected parliament with two chambers - the house of representatives (all had to be born in the island) and the administrative council. It was able to have representatives in the Spanish parliament with vote and voice. It did not grant total sovereignty but it had more tools to develop its economy than Puerto Rico's present status.

After World War II, when decolonization processes where taking place around the world, the United Nations was questioning Puerto Rico's colonial status.
In alliance with Puerto Rico's governor Luis Muñoz Marín, a former socialist and supporter of independence, the U.S. created the so-called "Commonwealth" (the Estado Libre Asociado, or Free Associated State) which was presented to the United Nations as a non-colonial solution.
A consequence of this "ruse" led the United Nations to approve removing Puerto Rico from the list of nations which had not achieved self-determination. Puerto Rico was able to draft its own constitution but the constitution was subordinated to the U.S. Since there were some progressives in the Popular Democratic Party they in fact inserted the International Bill of Rights into that constitution, including the right to education.

Since the U.S. Congress had plenary powers it deleted that and other parts of the constitution that would have strengthened the educational process and given rights to Puerto Rico that even states did not enjoy.

While Puerto Rico had no international presence, the U.S. used some Puerto Rican intellectuals to create a good image of "autonomy" and equal partnership. One of the leading Popular Democratic Party (the party that supported the commonwealth status) intellectuals, Teodoro Moscoso was the architect of the island's industrialization program and was named director of President Kennedy's Alliance for Progress.

But efforts to 'enhance" the "Estado Libre Asociado" failed, despite the fact that in 1967 and 1993 the "Commonwealth" supporters won the referenda asking to enhance the powers of Puerto Rico. On both occasions, despite promises, the U.S. Congress ignored the results. The "Commonwealth" has remained the same since the 1950s.

Even progressive economist Paul Krugman misses the point when he writes in a New York Times column that "There was a time when Puerto Rico did quite well as a manufacturing center," or "Puerto Rico then, is in the wrong place at the wrong time."

The reality is that the place where Puerto Rico is currently was created by American policies and institutions, and it's a place set up for failure, not success. This "manufacturing center" was already failing by the 1970s, according to economist James Dietz, author of "Puerto Rico: Negotiating Development and Change."
 
By the 1970s the industrial model of Krugman refers to began to sputter and the wage convergence (wages in Puerto Rico and the United States growing together for some time) that was used to say the model was doing well for Puerto Rico ended. It is also when the local government began to borrow because it felt it could not raise more revenues as the economy was cooling off.

Moving forward
 
The only solution to the Puerto Rico's crisis is to have the tools it needs to increase its economy. Austerity measures will deepen the crisis and could likely create political and social instability.
Yet despite Puerto Rico's indebtedness, no changes are even suggested to its current colonial status. One reason is that the "unincorporated territory" is profitable for a sector of American business. Last year, (2014) about 36 million dollars were repatriated by Puerto Rico-based corporations. The other reason is that there is an escape valve for the frustration - people can vote with their feet and leave.
But the pressure cooker cannot withstand more austerity. A qualitative change in the relationship between the United States and Puerto Rico - with more sovereign powers to develop its economy and break the economic dependence - are necessary. Puerto Ricans don't want handouts, they want the possibility of creating an economy that works, not one that is based on smokes and mirrors.

Unfortunately, the Popular Democratic Party may not be able to lead this process since it is enmeshed with the debtors. The New Progressive Party - whose leader, Pedro Pierlusi, is the non-voting Puerto Rican Resident Commissioner in Congress - is trying to use the occasion to ask for statehood. Unfortunately, he is not aware of our historical context. Puerto Rico's status was not created for statehood but for perpetual colonization or independence.

Victor M. Rodriguez is Professor and former Chair of the Department of Chicano and Latino Studies at California State University of Long Beach. Among his published works is Latino Politics in the United States: Race, Ethnicity, Class and Gender in the Mexican American and Puerto Rican Experience in the United States (Kendall-Hunt, 2012). He can be reached at: victor.rodriguez@csulb.edu.or his website.