This week, the governor of Puerto Rico declared that the island will not be able to pay its debt of over $70 billion, and urged the federal government to save it from default. Its bonds were downgraded to junk status and it’s being compared to Greece.
LR reports that Puerto Rico’s default could be avoided if an obsolete 1920’s law known as the Jones Act, which was created to ensure American monopoly over its national waters, is abolished. The law places an unfair and excessive burden on outlying territories and states (like Alaska, Hawaii, Guam, Puerto Rico and the US Virgin Islands) by excessively taxing non-American ships passing through US ports. According to the LR report,
From 1970 through 2010, the Jones Act cost Puerto Rico $29 billion. Projected from 1920 up to the present, this cost becomes $75.8 billion.
Much of this burden is passed on to consumers and tax-payers on the island, which still has the highest poverty rate in the nation in spite of decades of considerable growth. The Jones Act is a vestige of an era that is long gone, and the moral urgency to end it is increasing by the day. LR goes further and argues that, because the law is unfair, the federal government should retroactively pardon the past debt generated by the Jones Act, which would provide reparations that would, in the end, save Puerto Rico’s economy from the certainty of fiscal collapse.
But there are many difficulties with this. Puerto Rico operates, for all purposes, like a US state in all but name. It’s part of the US judicial system and its waters are protected by the US Coast Guard; its residents are US citizens and use a US passport when they travel, they send their bravest to fight US wars abroad, they send their mail through the US Post Office, and in general they act like the ghost of the medium-sized 51st state that they would be but they don’t constitute a state. If Puerto Rico was a state, it would have two senators and six representatives: it would have voice and vote at the federal level to assert its self-interest. But as a US Commonwealth–basically, a colony–it has no representatives in Congress, only one Commissioner with a voice but no vote. It’s just sitting there being governed by the American empire.
There are only two states that have a voice and self-interest in ending the Jones Act (Alaska and Hawaii, who are both also affected by it) but they’re only two out of fifty states, and not as invested in this as an emergency issue because they’re fiscally much stronger than Puerto Rico.
Add to that the general indifference, frequently tinged with racism, that we’ve historically seen in American politics, and the influence of bankers and of Wall Street in policy and in law. Many people say that the financial industry IS the government behind the government, and that debt is the modern version of slavery. It will take a huge moral outcry for the US government to even consider abolishing the Jones Act.
A broader conversation needs to happen concerning the nature of debt and the power dynamics that are tied to, and perpetuated by, debt. There are too many large corporate, outside interests who for decades have kept Puerto Rico from becoming self-sufficient, able to provide its own energy and other needs. Like vultures, they have hovered over a voiceless land that has been unable to defend itself (as it has no vote at the federal level and no sovereignty at the international level), dismantling its small businesses and building Walmarts–of which there are more per-capita in Puerto Rico than anywhere else–and other large department stores, which drive local merchants out of business, as they are unable to compete with prices of sweatshop-made goods.
Autarchy should have been the policy all along. Slowly and over the long-term, it will always have been better to be self-sufficient.