Introduction: Paradise in Peril
Puerto Rico is a land of breathtaking beaches, lush mountains, and a culture rich with history and resilience. But beneath the surface, something is deeply wrong.
In 2006, Puerto Rico’s population was nearly 4 million. By 2100, it will shrink to just 1 million. That level of depopulation is almost unheard of outside of war or famine.
For decades, Puerto Rico has endured:
- A 20-year economic crisis 💰
- Austerity measures and mass privatization 🏦
- Devastating hurricanes, earthquakes, and a pandemic 🌪️🌊
- Mass displacement, skyrocketing costs, and rolling blackouts ⚡
And yet, Puerto Rico is not poor. It was once an economic powerhouse, a manufacturing hub producing life-saving medicines and medical equipment. But the wealth it created was siphoned away, leaving behind an island in freefall.
How did this happen? And can Puerto Rico survive?
The Roots of Puerto Rico’s Economic Decline
A Colony in Limbo
For over 400 years, Puerto Rico was a Spanish colony with no political autonomy. But by the late 1800s, independence movements in Cuba and Puerto Rico pushed Spain into granting them limited self-rule.
Just months later, in 1898, the United States declared war on Spain, quickly defeating the crumbling empire. In the Treaty of Paris, Spain handed Puerto Rico, Guam, and the Philippines to the U.S., while Cuba was made independent under American oversight.
Puerto Rico was now an American colony, a strategic military outpost in the Caribbean.
The Insular Cases: Second-Class Citizens
In Washington, lawmakers debated Puerto Rico’s fate. Should it become a state, an independent nation, or remain in limbo?
They chose limbo.
Through a series of racist Supreme Court rulings known as the Insular Cases, Puerto Rico was designated as an “unincorporated territory”—meaning it belonged to but was not part of the United States.
This meant:
- Puerto Ricans were denied full constitutional rights.
- They could not negotiate trade treaties or set their own taxes.
- They were subject to U.S. taxation but had no voting representation in Congress.
By law, Puerto Rico was now entirely controlled by the United States, but its people had no say in the policies governing them.
How the U.S. Exploited Puerto Rico
The Collapse of Puerto Rican Industry
At the time of U.S. takeover, Puerto Rico’s economy was based on coffee, its largest export. But under U.S. control:
- Puerto Rican coffee exports were hit with tariffs, making them uncompetitive.
- The U.S. flooded its own market with cheap Brazilian coffee, crushing Puerto Rican farmers.
- The industry collapsed, throwing thousands into poverty.
The Sugar Monopoly
The U.S. saw Puerto Rico as a gold mine for sugar production. But instead of letting Puerto Ricans profit, U.S. corporations seized their land through rigged property tax laws.
- American banks lowballed land values for U.S. owners (low taxes).
- Puerto Rican farmers were taxed heavily, forcing them to sell their land.
- By 1920, half of Puerto Rico’s farmland was owned by U.S. sugar corporations.
The result? Puerto Ricans, once self-sufficient farmers, were now low-paid laborers on plantations owned by U.S. tycoons.
One of the masterminds of this economic takeover, Charles Herbert Allen, served as Puerto Rico’s governor for just 17 months before resigning to build a sugar empire on Wall Street—with land he had helped seize from Puerto Ricans.
Today, his company is known as Domino Sugar.
The Jones Act: An Economic Noose
In 1920, the U.S. imposed the Jones Act, a law that cripples Puerto Rico’s economy to this day.
This law states that any goods shipped between two U.S. ports must be on American-built, owned, and crewed ships.
How does this hurt Puerto Rico?
- Shipping to Puerto Rico costs double what it does to other Caribbean islands.
- Imported goods (including food) are far more expensive.
- Puerto Rican businesses struggle to export goods competitively.
The U.S. Virgin Islands are exempt from the Jones Act—and their prices are 50% lower than Puerto Rico’s.
Puerto Rico’s Golden Age – And Its Collapse
Operation Bootstrap: The Illusion of Growth
After World War II, Puerto Rico launched Operation Bootstrap, a plan to industrialize the island.
- U.S. companies were exempt from all taxes.
- Cheap Puerto Rican labor made manufacturing highly profitable.
- Pharmaceutical companies flocked to Puerto Rico, turning it into the Caribbean’s manufacturing powerhouse.
From 1950 to 1971:
✅ Per capita income rose 400%
✅ Illiteracy was nearly eliminated
✅ Life expectancy jumped from 46 to 70 years
But this economic boom was built on an unstable foundation—one where Puerto Rico never actually controlled its own prosperity.
The End of the Boom
In 1996, the U.S. Congress repealed the corporate tax breaks that had attracted industry to Puerto Rico.
By 2006, the tax incentives were gone. Factories closed, jobs vanished, and the economy collapsed.
At the same time, NAFTA and CAFTA trade agreements eliminated Puerto Rico’s competitive edge, allowing American companies to relocate to Mexico and Central America, where wages were even lower.
The result?
🚨 Hundreds of thousands of Puerto Ricans left for the mainland U.S.
🚨 The economy shrank, the tax base collapsed, and debt skyrocketed
Puerto Rico’s Debt Crisis and Austerity Rule
The Debt Spiral
To stay afloat, Puerto Rico borrowed billions—but unlike a U.S. state, it was legally banned from declaring bankruptcy.
Wall Street vultures bought up Puerto Rican debt at pennies on the dollar and demanded full repayment, dragging the island into an economic death spiral.
By 2016, Puerto Rico’s debt reached $123 billion, and Congress imposed La Junta, an unelected fiscal control board that now controls Puerto Rico’s economy—without Puerto Ricans having any say.
Under La Junta’s rule:
❌ Electricity prices skyrocketed, despite constant blackouts ⚡
❌ 670 public schools were shut down 🏫
❌ Healthcare was slashed while hospitals struggled 🏥
❌ Pensions and labor protections were cut 💰
A Puerto Rico Without Puerto Ricans?
The Rich Move In, While Puerto Ricans Are Pushed Out
While the economy crumbled, the Puerto Rican government opened the island to the ultra-rich with Act 60, allowing them to:
💰 Pay no capital gains taxes
💰 Live in Puerto Rico tax-free while locals pay full taxes
💰 Buy land at rock-bottom prices from displaced Puerto Ricans
The result?
🚨 Billionaires and crypto traders flooded the island
🚨 Rent skyrocketed by 600%
🚨 Locals were priced out of their own neighborhoods
Puerto Rico is being emptied, erased, and auctioned off.
Conclusion: Can Puerto Rico Be Saved?
Puerto Rico’s history is one of extraction, exploitation, and economic suffocation. But its people have never stopped fighting.
With a push for:
- Debt cancellation
- The repeal of the Jones Act
- Renewable energy investment
- Genuine economic sovereignty
Puerto Rico could reclaim its future.
But without urgent change, a Puerto Rico without Puerto Ricans may soon become reality.
