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<h1 id="reader-title">No More Colonialism Disguised as Financial
Assistance: The US Must Relinquish Puerto Rico</h1>
<div id="reader-credits" class="credits">Nelson A. Denis _ may
19, 2016<br>
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<p>This year, 2016, marks a new era in Caribbean
colonialism.</p>
<p>The US Congress is preparing a "Financial Control
Authority," which will supervise the finances of the
entire government of Puerto Rico -- its legislature and
courts, public authorities, pension system and all
leases, union contracts and collective bargaining
agreements. The authority will also restructure the
entire public workforce (including teachers and police),
freeze public pensions and ensure "the payment of debt
obligations." Then it will issue its <em>own</em> debt,
spend the funds as it sees fit and leave Puerto Rico to
pay the bill.</p>
<p>
</p>
<h3>Congress can veto any law passed in Puerto Rico.</h3>
<p>The authority will also have prosecutorial powers. It
will be empowered to "conduct necessary investigations"
into the government of Puerto Rico, or in other words,
be empowered to hold hearings, secure government
records, demand evidence, take testimony, subpoena
witnesses and administer oaths -- under penalty of
perjury -- to all witnesses.</p>
<p>Any witness who fails to appear or to supply
information will be subject to criminal prosecution and
removal from office. This includes any elected official
on the island: even the governor and attorney general.</p>
<p>All of these powers are enumerated in the 157-page <a
target="_blank"
href="https://www.govtrack.us/congress/bills/114/s2381/text">Senate
Bill 2381</a>, also known as the "Puerto Rico
Assistance Act of 2015," which is currently under review
in the US Senate.</p>
<p>The bill is <a target="_blank"
href="http://www.bloomberg.com/politics/articles/2016-02-01/puerto-rico-faces-growing-prospect-of-financial-control-board">supported
by banking lobbyists</a> in Washington, DC, since it
will ensure the repayment of $72 billion in public debt
and exclude any bankruptcy protections.</p>
<p>It is <a target="_blank"
href="http://www.diariolibre.com/economia/puerto-rico-se-opone-a-que-estados-unidos-imponga-una-junta-de-control-XD2674880">opposed
by many of the island's journalists</a>, union leaders
and independence advocates, who view the looming
"authority" as nothing more than a hedge fund collection
agency. They also fear the imposition of a <em>de facto</em>
dictatorship in the Caribbean: created in Washington,
operated from Wall Street, all disguised as a
"management assistance authority."</p>
<p>But the problem in Puerto Rico is not its debt, the
vulture funds or even the Financial Control Authority.
The problem is that Puerto Rico, a tiny island in the
Caribbean, is staring into the rifle barrel of the
entire US capitalist system.</p>
<p>Sooner or later, there will be an explosion.</p>
<p><strong>A History of Colonialism</strong></p>
<p>For 118 years, Puerto Rico has provided a textbook
illustration of Naomi Klein's <em>The Shock Doctrine:
The Rise of Disaster Capitalism</em>. The United
States "liberated" Puerto Rico from Spain in 1898. The
very next year, in 1899, Hurricane San Ciriaco destroyed
thousands of the island's farms and nearly the entire
year's coffee crop. Of 50 million pounds, only 5 million
were saved.</p>
<p>US hurricane relief was bizarre. The US government <a
target="_blank"
href="http://www.latinamericanstudies.org/puertorico/hurricane.pdf">sent
no money</a>. <a
href="http://www.latinamericanstudies.org/puertorico/hurricane.pdf"><br>
</a></p>
<p>
</p>
<h3>Because their island is a captive economy, Puerto
Ricans are the largest per capita importers of US goods
in the world.</h3>
<p>Instead, the following year, it outlawed all Puerto
Rican currency and declared the island's peso, whose
international value was equal to the US dollar, to be
worth only 60 cents. Every Puerto Rican lost <a
target="_blank"
href="http://digital.ipcprintservices.com/article/Pesos_To_Dollars/387415/37506/article.html">40
percent of his or her money</a> overnight.</p>
<p>In 1901, the United States passed <a target="_blank"
href="https://books.google.com/books?id=nRdHAQAAIAAJ&pg=RA3-PA73&lpg=RA3-PA73&dq=1901+Hollander+Law&source=bl&ots=Axmh1EySO-&sig=YDyBkSi4f68AbrSnQpPcD9UrPTs&hl=en&sa=X&ei=aE3nVP_qL-21sQSYsYCADg&ved=0CEYQ6AEwCA#v=onepage&q=1901%20Hollander%20Law&f=false">the
Hollander Act</a>, which raised the taxes of every
farmer in Puerto Rico. </p>
<p>With higher taxes, devastated farms and 40 percent less
cash, farmers had to borrow money from US banks. But
with no usury law restrictions, interest rates were so
high that within a decade, the farmers defaulted on
their loans and the banks foreclosed on their land.</p>
<p>The United States, which was undergoing its industrial
revolution, then turned a diversified island harvest
(coffee, tobacco, sugar and fruit) into a one-crop,
cash-cow economy.</p>
<p>The very first US-appointed governor of Puerto Rico, <a
target="_blank"
href="http://www.amazon.com/American-Sugar-Kingdom-Plantation-Caribbean/dp/0807847887">Charles
Herbert Allen</a>, leveraged his tenure on the island
into the presidency of the American Sugar Refining
Company -- which today is known as Domino Sugar.</p>
<p>By 1930, all of Puerto Rico's sugar farms belonged to
41 syndicates. Eighty percent of these were US-owned,
and the largest four syndicates -- Central Guanica,
South Puerto Rico, Fajardo Sugar and East Puerto Rico
Sugar -- were entirely US-owned and covered <a
target="_blank"
href="http://www.amazon.com/Economic-History-Puerto-Rico-Institutional/dp/0691022488#reader_0691022488">more
than half of the island's arable land</a>. With no
money, crops or land, Puerto Ricans sought work in the
cities. When the Puerto Rican Legislature enacted a
minimum wage law like the one in the mainland United
States, the US Supreme Court declared it
unconstitutional. After a visit to the island, AFL-CIO
President Samuel Gompers held a press conference to <a
target="_blank"
href="https://books.google.com/books?id=xF4NDALYWSAC&pg=PA1218&lpg=PA1218&dq=samuel+gompers+puerto+rico+wages&source=bl&ots=fsB9xA1edb&sig=dc7WoOpX1U1Wh6-dqQbOb_xj9GY&hl=en&sa=X&ved=0ahUKEwi0wPKP7qDLAhUDmR4KHSF_DoQQ6AEIRTAI#v=onepage&q=samuel%20gompers%20puerto%20rico%20wages&f=false">declare</a>:
"In all my life I have never witnessed such misery,
sickness and suffering."</p>
<p>To make matters worse, US finished products -- from
rubber bands to radios -- were priced 15 to 20 percent
higher on the island than on the mainland. Again, Puerto
Rico was powerless to enact any price-fixing
legislation.</p>
<p>The United States did give Puerto Ricans one "gift."
Over the objection of the Puerto Rican Legislature,
Puerto Ricans were declared <a target="_blank"
href="http://www.loc.gov/rr/hispanic/1898/jonesact.html">US
citizens in 1917</a>, just in time for military
conscription into World War I. </p>
<p><strong>A Classic Colony</strong></p>
<p>After a fraudulent plebiscite in 1952, in which voting
for independence could get you 10 years in jail (<a
target="_blank"
href="http://www.truth-out.org/progressivepicks/item/30925-how-the-united-states-economically-and-politically-strangled-puerto-rico">see
Public Law 53 -- the Gag Law</a>), the United States
filed papers with the United Nations Decolonization
Committee, declaring that Puerto Rico had chosen to
become a "<a target="_blank"
href="http://www.puertorico-herald.org/issues/2004/vol8n42/CBOnNatureV.html">free
associated state</a>" with the US, and was no longer a
colony.</p>
<p>
</p>
<h3>Every man, woman and child in Puerto Rico will be
paying $2,000 per year just to cover the interest on
Puerto Rico's public debt.</h3>
<p>However, to this day, US federal agencies control the
island's international trade, foreign relations, banking
system, currency, shipping and maritime laws, customs,
import-export regulations, immigration, postal system,
radio, TV, transportation, Social Security, military,
environmental controls, coastal operations, judicial
code, civil and criminal appeals, and cabotage rights
(i.e. the Jones Act). In addition, the US Congress has
plenary jurisdiction over any law or regulation
promulgated by the Puerto Rican Legislature. <a
target="_blank"
href="https://issuu.com/harvardpoliticalreview/docs/november-2-1977?e=1314388/3098941">Congress
can veto any law</a> passed in Puerto Rico.</p>
<p>The <a target="_blank"
href="http://www.jstor.org/stable/25613040?seq=1#page_scan_tab_contents">US
military presence</a> is overwhelming. At its peak, no
one could drive five miles in any direction without
running into an Army base, nuclear site or tracking
station. <a target="_blank"
href="https://issuu.com/harvardpoliticalreview/docs/november-2-1977?e=1314388/3098941">The
Pentagon controlled 13 percent of Puerto Rico's land</a>
and operated five atomic missile bases. The island of
Vieques was bombed mercilessly for 62 years. From 1984
through 1998 alone, more than 1,300 warships and 4,200
aircraft used the island for target practice, and
pounded it with 80 million pounds of ordnance.</p>
<p>The colonial veneer is so ludicrously transparent that
José Trías Monge, the chief justice of the Supreme Court
of Puerto Rico who crafted the "free associated state"
and drafted the Puerto Rican "Constitution," finally
threw up his hands and wrote a book titled <em><a
target="_blank"
href="http://www.amazon.com/Puerto-Rico-Trials-Oldest-Colony/dp/0300076185">Puerto
Rico: The Trials of the Oldest Colony in the World</a></em>.</p>
<p><strong>Operation Booby Trap</strong></p>
<p>From the mid-1950s until 2006, the United States laid a
red carpet from Wall Street to San Juan. US corporations
were given 10- and 20-year tax exemptions on all gross
revenues, dividends, interest and capital gains income.
Instead of growing fruit, coffee and sugar cane, Puerto
Ricans now manufactured bras and razors behind concrete
walls.</p>
<p>Unfortunately, once Playtex and Schick found cheaper
labor in Asia, the factories all disappeared. Once the
IRS 936 tax exemption expired, the pharmaceutical
companies vanished. All of them had repatriated their
profits back to the US mainland. None of them had
invested in Puerto Rico. In the end, rather than
providing a true economic base and self-sustaining
growth, these corporations only produced more dependency
on the United States, and more long-term unemployment.</p>
<p>The program was originally called Operation Bootstrap.
With typical wit and accuracy, Rep. Vito Marcantonio
named it <a target="_blank"
href="http://www.vitomarcantonio.org/chapter_9.php">Operation
Booby Trap</a>. </p>
<p><strong>The Jones Act</strong></p>
<p>The greatest booby trap of all is the Merchant Marine
Act of 1920, also known as the <a target="_blank"
href="http://www.upa.pdx.edu/IMS/currentprojects/TAHv3/Content/PDFs/Jones_Act_1920.pdf">Jones
Act</a>. Under section 27 of this act, <em>all</em>
goods carried by water between US ports must be shipped
on US flag ships that are constructed in the United
States, owned by US citizens and operated by US
citizens. That means that <em>every</em> product that
enters or leaves Puerto Rico must be carried on a US
ship.</p>
<p>
</p>
<h3>The Puerto Rico debt crisis is a national financial
crisis, with no clear resolution in sight.</h3>
<p>This includes cars from Japan, engines from Germany,
food from South America, medicine from Canada -- any
product from <em>anywhere</em>. In order to comply with
the Jones Act, all this merchandise must be off-loaded
from the original carrier, reloaded onto a US ship and <em>then</em>
be delivered to Puerto Rico. It all makes as much sense
as digging a hole and filling it up again.</p>
<p>There is one major exception.</p>
<p>A foreign-flagged vessel may enter directly into Puerto
Rico -- after paying an extreme levy of taxes, customs
and import fees, which often <a target="_blank"
href="http://www.businessinsider.com/r-us-shippers-push-back-in-battle-over-puerto-rico-import-costs-2015-7"><em>double</em>
the price</a> of the goods they carry.</p>
<p>This is not a business model. It is a shakedown. It's
the maritime version of the "protection" racket. This
maritime mafia is so entrenched that several Jones Act
carrier company executives were indicted and jailed for
<a target="_blank"
href="http://new.grassrootinstitute.org/2013/12/sixth-jones-act-shipping-executive-goes-to-jail-in-puerto-rico-rate-fixing-case/">price
rigging in Puerto Rico</a>.</p>
<p>A <a target="_blank"
href="http://docplayer.net/494027-Economic-impact-of-jones-act-on-puerto-rico-s-economy.html">40-year
study</a> of this "cabotage cost" to Puerto Rico shows
the following results:</p>
<p><span class="wf_caption"><img alt="(Credit: US General
Accounting Office)"
src="cid:part24.4C576DE8.C3F53025@freedomarchives.org"
width="640"><span>(Credit: US General Accounting
Office)</span></span></p>
<p>From 1970 through 2010, the Jones Act cost Puerto Rico
$29 billion. Projected from 1920 till the present, this
cost becomes $75.8 billion.</p>
<p>Ironically, this $75.8 billion cost is <em>higher</em>
than the amount of Puerto Rico's current public debt. In
other words, if the Jones Act did not exist, then
neither would the public debt of Puerto Rico.</p>
<p>In addition, if the Jones Act did not exist, <a
target="_blank"
href="http://jacksonville.com/news/metro/2015-01-21/story/john-mccain-plan-scuttle-100-year-old-maritime-law-unleashes-anger-first">10,000
maritime jobs</a> would immediately shift to the
island from Jacksonville, Florida.</p>
<p><strong>Fourth-Largest Market for US Corporations</strong></p>
<p>The tiny island of Puerto Rico -- with only 3.5 million
residents -- is the <a target="_blank"
href="http://www.latinamericanstudies.org/puertorico/PR-Solidarity-Committee.pdf">fourth-largest
market in the world</a> for US products.</p>
<p>Because their island is a captive economy, Puerto
Ricans are the <a target="_blank"
href="http://www.amazon.com/Harvest-Empire-History-Latinos-America/dp/0143119281#reader_0143119281">largest
per capita importers</a> of US goods in the world.</p>
<p>Eighty-five percent of all <a target="_blank"
href="https://news.vice.com/article/puerto-ricos-debt-crisis-empties-houses-impoverishes-citizens">fruits
and vegetables</a> consumed in Puerto Rico are sold by
US corporations.</p>
<p>Puerto Rico has more Walgreens stores per square mile,
than anywhere in the United States -- and <a
target="_blank"
href="http://periodismoinvestigativo.com/2014/05/puerto-rico-first-in-the-world-with-walgreens-and-walmart-per-square-mile/">more
Walmart stores per square mile than anywhere on the
planet</a>.</p>
<p>Thanks to the Jones Act, all these US products have
been "price-protected" for the past 96 years. Automobile
prices are <a target="_blank"
href="http://www.puertorico-herald.org/issues2/2005/vol09n32/CBStickerShock.html">30
to 40 percent higher</a> in Puerto Rico than the
United States.</p>
<p>Some products -- particularly unprocessed food items --
cost <a target="_blank"
href="http://www.businessinsider.com/r-us-shippers-push-back-in-battle-over-puerto-rico-import-costs-2015-7">twice
as much</a> in Puerto Rico.</p>
<p>The tragedy of all this is that Puerto Ricans cannot
afford to <em>pay</em> these inflated prices. The per
capita income of Puerto Rico is $16,400 -- roughly half
that of Mississippi, the poorest US state. But the <a
target="_blank"
href="http://www.theguardian.com/world/2015/jul/12/puerto-rico-cost-of-living">cost
of living</a> is 12 percent higher in Puerto Rico than
in the United States thanks to the Jones Act.</p>
<p><strong>Shrinking Tax Base </strong></p>
<p>When the <a target="_blank"
href="http://articles.orlandosentinel.com/1996-08-03/news/9608021051_1_puerto-rico-ricans-section-936">IRS
tax exemptions expired in 2006</a>, dozens of
pharmaceutical companies abandoned the island and
unemployment became rampant. With no economy of its own
and no real private sector, the government of Puerto
Rico became the island's largest employer.</p>
<p>Over the past 12 years, 1 million Puerto Ricans have
moved to the United States, largely in search of
employment. The island's tax revenue has eroded and
public debt is skyrocketing due to a <a target="_blank"
href="http://www.pewhispanic.org/2014/08/11/puerto-rican-population-declines-on-island-grows-on-u-s-mainland/">population
loss of 22 percent</a>. This unhealthy equation --
shrinking tax base plus large payroll equals mounting
public debt -- has exposed the government of Puerto Rico
to the ways and whims of Wall Street.</p>
<p><strong>Lies From Wall Street </strong></p>
<p>Puerto Rico's bonds are highly attractive because they
are <a target="_blank"
href="http://www.forbes.com/sites/richardfinger/2013/12/01/default-puerto-ricos-inevitable-option/#199c37ed5b5f">triple-tax-exempt</a>:
All capital gains are exempt from federal, state and
local taxes. But with a 22 percent population loss, Wall
Street demanded a higher level of taxation from the
remaining 78 percent of island residents. The Wall
Street credit ratings services -- Standard & Poor's,
Fitch, Moody's and Dun & Bradstreet -- insisted on
"fiscal austerities" in order to avoid the downgrading
of Puerto Rico's debt.</p>
<p><a target="_blank"
href="http://www.nytimes.com/2014/02/09/us/economy-and-crime-spur-new-puerto-rican-exodus.html">The
Puerto Rican government complied</a>. They laid off
30,000 workers, charged 67 percent more for water,
raised electricity rates, raised property and small
business taxes, hiked the gasoline tax <em>twice</em>
in one year, <a target="_blank"
href="http://www.reuters.com/article/puertorico-debt-pension-idUSL2N0CS0KG20130405">cut
public pensions</a> and health benefits, raised the
retirement age, closed 200 schools and hiked the sales
tax to 11.5 percent. </p>
<p>After all this austerity, three rating services still
downgraded the island's debt to "junk bond" status. In
other words, Wall Street <em>lied</em> to Puerto Rico,
and then <a target="_blank"
href="https://www.washingtonpost.com/business/economy/puerto-rico-bonds-downgraded-to-junk-levels/2014/02/04/c9495a22-8ddf-11e3-833c-33098f9e5267_story.html">hiked
the premium payments</a>. And now they want to
collect.</p>
<p>The debt service on $73 billion will be <a
target="_blank"
href="http://www.bloomberg.com/news/articles/2015-09-08/puerto-rico-bond-plan-said-to-outline-debt-service-affordability-ieatwuim">roughly
$7 billion annually</a>: $4 billion on its GO (general
obligation) bonds, and $3 billion for PREPA (the
Electric Power Authority) and PRASA (the Aqueduct and
Sewer Authority). </p>
<p>With a population of 3.5 million, this means that every
man, woman and child in Puerto Rico will be paying
$2,000 per year just to cover the <em>interest</em> on
Puerto Rico's public debt. Since per capita income is
only $16,400, this $2,000 represents 12 percent of
everyone's personal income.</p>
<p>With a shrinking tax base, Puerto Ricans are unable to
meet this crushing debt burden. Any further
"austerities" will force more people to abandon the
island -- and the tax base will shrink even further. As
Puerto Rico's Gov. Alejandro García Padilla <a
target="_blank"
href="http://money.cnn.com/2015/06/29/news/economy/puerto-rico-default/">stated</a>
in a nationally televised speech, "Puerto Rico is in a
death spiral."</p>
<p>The death spiral is so pronounced that García Padilla
was recently seen begging for a Financial Control Board,
as a shield against impending bondholder lawsuits. This
is neoliberalism on steroids, a Caribbean Hobson's
choice: to be eaten by a jackal or a wolf.</p>
<p><strong>A Banquet Table for John Paulson</strong></p>
<p>While Puerto Ricans are forced to flee their own island
under a pogrom of taxes and "austerity measures," a
banquet table of "business incentives" has been laid out
for US billionaires and hedge fund operators. Two <a
target="_blank"
href="http://www.marketwatch.com/story/puerto-rico-woos-rich-with-hefty-tax-breaks-2014-04-22">tax
laws</a> enacted in 2012 -- Act 20 and Act 22 --
provide 20-year tax exemptions to high net-worth
individuals on all their dividend, interest and capital
gains income. The primary beneficiary of this has been
John Paulson.</p>
<p>Paulson deals in human misery and "distressed assets."
He made his greatest fortune -- billions of dollars -- <a
target="_blank"
href="http://www.nydailynews.com/news/money/queens-born-john-paulson-fortune-home-foreclosures-article-1.344791">by
profiting on home foreclosures</a> during the 2007 US
mortgage crisis.</p>
<p>In 2007 alone, <a target="_blank"
href="http://realestate.aol.com/blog/2010/04/28/was-john-paulson-the-goldman-scandals-real-ringmaster/">Paulson
made more than $15 billion</a> by "short-selling the
US housing market, effectively betting on its collapse,
even perpetuating the magnitude of the collapse."</p>
<p>Using Acts 20 and 22, Paulson has <a target="_blank"
href="http://nypost.com/2016/02/10/john-paulson-will-encourage-investments-in-puerto-rico/">imported
this business model into Puerto Rico</a>. He currently
owns the Condado Vanderbilt and La Concha Renaissance,
the San Juan Beach Hotel, the St. Regis Bahia Beach
Resort and the 326,000-square-foot AIG building in the
Hato Rey financial district.</p>
<p>He also owns <a target="_blank"
href="http://www.barrons.com/articles/SB51005578970899454132304580142130668645828">8.6
percent of Banco Popular</a>, the island's largest
bank.</p>
<p>Paulson also owns a large share of Puerto Rico's
"public debt." If Puerto Rico cannot pay, and if the US
Congress extends no Chapter 9 bankruptcy relief to the
island, then <a target="_blank"
href="http://www.nytimes.com/2015/12/20/us/politics/puerto-rico-money-debt.html">Paulson
will soon own</a> a portion of Puerto Rico's physical
infrastructure (water, electricity, schools, roads,
bridges) as the underlying collateral for this debt.</p>
<p>Thanks to Act 20 and Act 22, Paulson will own major
pieces of Puerto Rico without paying one cent of
interest, dividend or capital gains taxes on any of his
hotel, office, banking or infrastructure income for 20
years.</p>
<p>The banquet table is enormous. While enjoying their
20-year tax breaks, neither Paulson nor dozens of hedge
funds want Puerto Rico to receive access to any Chapter
9 bankruptcy protections. They want Puerto Rico to <em>default</em>
on its debt so that the creditors can convert this debt
into P3s -- public-private partnerships -- and turn the
physical infrastructure of Puerto Rico (the PREPA
electrical grid, the PRASA water supply, highways,
bridges, schools, prisons and airports) into <a
target="_blank"
href="http://www.orlandosentinel.com/opinion/os-ed-puerto-rico-public-private-091615-20150915-story.html">ATMs
for the hedge fund creditors</a>.</p>
<p><strong>Puerto Rico vs. the US Capitalist System </strong></p>
<p>In this game of fiscal brinkmanship, the stakes are
very high. If Puerto Rico defaults, it would be the
largest in the history of the <a target="_blank"
href="http://marketrealist.com/2014/03/puerto-rico-default-mean-us-municipal-bond-market/">$3.7
trillion market</a> for debt sold by US state and
local governments. All over the country, pension funds
will be unable to meet their payment obligations.</p>
<p>On the other hand, if Puerto Rico is allowed to file
for Chapter 9 bankruptcy protection, then every state in
the United States will demand a similar privilege. The
US financial system cannot withstand 50 states, all
potentially <a target="_blank"
href="http://www.cnbc.com/2015/10/22/puerto-rico-governor-padilla-tells-senate-liquidity-to-run-out-by-november.html">filing
for bankruptcy at the same time</a>.</p>
<p>In addition, the $3.7 trillion municipal bond industry
is more than 20 percent of <a target="_blank"
href="http://www.statista.com/statistics/188105/annual-gdp-of-the-united-states-since-1990/">US
GDP</a>, which was $18 trillion in fiscal year 2015.</p>
<p>With more than 20 percent of the entire US economy
filtered through these municipal bonds every year, the
industry is too big to fail -- a fundamental component
of Wall Street revenue and financing, which no one wants
destabilized.</p>
<p>For these reasons, the Puerto Rico debt crisis is a <em>national</em>
financial crisis, with no clear resolution in sight.
President Obama is trying to ignore it -- hiding behind
Congress, the courts and the bankruptcy laws -- but
sooner or later, he will have to address it.</p>
<p>The entire system of municipal bond financing, pension
funds nationwide and the fiscal integrity of all 50
states are threatened by the crisis in Puerto Rico. Even
a simple debt restructuring will not resolve this mess.
So long as Puerto Rico has no real industry, economy or
entrepreneurial class, the systemic problems will
deepen.</p>
<p><strong>Solutions </strong></p>
<p>The Gordian knot of predatory capitalism must be cut in
Puerto Rico.</p>
<ul>
<li>The Jones Act must be repealed as soon as possible.
This will establish a shipping industry throughout the
island and end the price inflation of US products.</li>
<li>The Jones Act carrier companies -- Crowley, Sea
Star, Horizon and Trailway -- should all be replaced
by Puerto Rican shipping companies.</li>
<li>All import fees levied on foreign-flagged vessels
should be paid into the Puerto Rican Treasury, not the
US Merchant Marine.</li>
<li>Puerto Rico must be permitted to negotiate its own
international trade agreements. This will enable it to
develop capital resources, an entrepreneurial class
and a diverse economy.</li>
<li>A large number of maritime jobs in Jacksonville,
Florida, must be rightfully relocated to Puerto Rico.</li>
<li>Any 10- and 20-year tax abatement deals with US
corporations should require the reinvestment of a
stipulated percentage of profits into Puerto Rican
infrastructure and industrial development.</li>
</ul>
<p><strong>Fairness and Common Sense</strong></p>
<p>After 118 years, it is time for the United States to
relinquish the oldest colony in the world. The present
arrangement -- the so-called "free associated state" --
benefits only a few bankers, bond traders, hedge funds,
corporate executives, real estate hustlers and John
Paulson. Morally and economically, it is time to move
on.</p>
<p>It is nakedly self-serving to inflict a Jones Act on
Puerto Rico, deny it any bankruptcy relief and then
impose a hedge fund collection agency known as "the
Financial Control Authority."</p>
<p>It is an international scandal for the United States to
turn Puerto Rico into a land of beggars and billionaires
-- bossed by absentee landlords, fought over by lawyers
and clerked by politicians.</p>
<p>The sooner it recognizes the fundamental evil of
maintaining a hidden colony in the Caribbean, the sooner
the United States will repair its credibility in the
global community.</p>
<p><em>A shorter version of this article originally
appeared at <a target="_blank"
href="http://www.nytimes.com/2015/08/06/opinion/free-puerto-rico-americas-colony.html?_r=1">The
New York Times</a>.</em></p>
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