#PuertoRico: this is what #collapse looks like

When people talk about a SHTF (shit hits the fan) moment or situation, we often think about a ‘zombie apocalypse’ or 1929 watershed type of event.  Much like the word ‘flood’ we think of a dam breaking and water rushing through a town drowning its victims kind of like Katrina in New Orleans.

Truth however, is stranger than fiction.  Most of the time floods are slow moving disasters.  I have seen flood fights in the middle of snow storms and I have witness near record floods occurring on sunny days.  Like floods, most SHFT ‘moments’ are not a single sudden event.  Case in point; Puerto Rico.

The U.S. territory of 3.6 or so million people is in collapse.  For the most part, those who have noticed it have left the island or begun trying to get the word out like this author. However, our screams fall on deaf ears.  Local media, mostly controlled by the left continues to dabble in the subject of economic collapse, but never really address it directly.

With unemployment over 14 percent officially and in double digits for nearly 10 years the island has continued to take one bad turn after another.  It all started with dozens of anti-business laws that were passed around 2006.  Sold under ‘workers rights’ and protections, these laws drove up the cost of doing business on the island and killed the small margin of profit for many small and medium size businesses.  Some 12 thousand businesses have closed on the island since 2006.  Twelve thousand.

To make matters worse, the coveted section 936 tax breaks under the federal tax code went away.  Those had been a boon for manufacturing on the island especially the pharmaceutical industry.  And we cannot forget the closing of Naval Station Roosevelt Roads and the five thousand jobs that went with it.

The main cause of the financial crisis however, was the implementation and expansion of workers rights and public employee unionization.  That happened back in the mid-1990’s under then governor Pedro Rossello.  Dispute warnings that it would lead to financial disaster for the island, he pushed through the legislation that would drive the government into bankruptcy.

That decision led to two decades of pandering to public sector unions whose members make up a staggering 300 thousand (one third) of the islands 900 thousand employed workforce.  That pandering led directly to those anti-business laws passed under former governor Anibal Acevedo Vila.

Combined, they led to an island with the highest per capita debt ratio of any U.S. jurisdiction and a total debt of between 73 billion and 110 billion.  The figures are confusing because it is hard to get a clear estimate on the actual debt.  The government says 73, but has borrowed more than 7 billion dollars this year.  Its local budget is under 10 billion.  Think about that.  The government has borrowed an amount equivalent to 3/4 of its total budget in less than one calendar year.

Non-governmental accountants estimate the debt at 110 billion.  The government refuses to include some debt in the official tally.

The population is in decline.  More than 300 thousand residents have fled the island looking for better roads, schools and just to find a job.  Not to mention the out of control crime rate that regularly sees a dozen murders each weekend on an island roughly 100 x 30 miles.

A full 60% of the total potential workforce is unemployed.  More than a million live on public assistance and the islands budget deficit easily surpasses a billion a year regardless of what official estimates say.

The local government responded in two ways.  Under former governor Luis Fortuño the commonwealth tried to cut the public workforce and lower taxes to stimulate the economy.  Result?  Why do you think he is the ‘former governor.’  Making tough decisions rarely gets you elected in a district  where people are used to being lied to and taken care of with other people’s money.

The current governor Alejandro Garcia Padilla is a ‘chavista’ socialist.  He promised to never lay off government workers and instead has opted for tax, after tax, after tax after more regulation.  He promised to balance the budget and supposedly did so by reducing some benefits.  Yet despite that he still had to borrow more money and presided over the biggest credit devaluation in history.

The incompetence of the Puerto Rico government borders on sociopathic bipolarism.  Most recently, the island is planning a tax increase on gasoline that can fall anywhere between .40 cents to one dollar PER LITRE.  (The island sells gas in liters not gallons) The new tax is to supposedly balance the budget in the highway authority.  Puerto Rico roads are notoriously potholed and poorly maintained.  Apparently, no one has told the government that driving up fuel costs impacts every sector of society, thus driving up prices and driving down economic activity.

All of this is occurring despite the fact that Puerto Rico receives upwards of 20 billion dollars per year from the U.S. taxpayer.  What the hell do they do with all of that money?

So this is what collapse looks like.  Not a strange illness that infects millions just by touch, not a stock collapse and not a run on banks.  Those things may happen, but they usually happen as a result of the poor decisions people and their government’s make.  It is a long string of unfortunate events stupid decisions.

Someone has to be stupid enough to throw the shit into the fan in order for it to spread the contagion.

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About worleyf

Semi-retired Media Relations guy, former radio and TV reporter and legislative aide. Middle of the road Libertarian (as if that actually existed) who reviews current news items and stories, and offers an alternative point of view.
This entry was posted in Economy, Puerto Rico and tagged , , , , , , , . Bookmark the permalink.

2 Responses to #PuertoRico: this is what #collapse looks like

  1. isla says:

    What an incredibly well-written and honest article. This should be front-page news. Of course, if you are a government worker, you don’t want your own job cut.and will resist. However, gross overspending is not sustainable in the long run, because eventually the money runs out.

    Liked by 1 person

  2. Pingback: The Popular Democratic Party’s secret plan for PR | Conservative News and Views on Puerto Rico

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