I had the good fortune to attend a conference in San Juan for half of last week; "fortunate" in the sense that it was 86 degrees when I got on the plane Sunday morning and 7 – 7 goddamn degrees – when I got off in Chicago.
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Beyond that I got to visit America's politically ambiguous colonial non-state possession for the first time. Although I didn't see the entire island or get to stay for very long, the short visit did motivate me to do something Americans tend never to do: pay a little bit of attention to Puerto Rico.

About the extent of my knowledge of Puerto Rican politics and internal affairs, as is the case with most Americans, is that they are all screwed up. The island's government is deeply in debt, its population is aging and unproductive because the young people leave to the mainland US for higher wages, and Congress has no intention of altering the relationship between PR and the rest of the country because of course every aspect of that relationship has been defined in a way that benefits us. That's how colonialism works.

Puerto Ricans have some interest in statehood, which is a non-starter with a Republican Congress. Their objection, as with D.C. statehood, is the inevitable addition of two more Democrats to the Senate should PR become a state. Ironically, in the 1990s it was the Republicans who were all for PR statehood. They pretended that it was some sort of principled stand but most people saw it as a transparent effort to curry favor with Hispanics. Believe it or not, it was even more cynical than that; they wanted to make PR a state so that the government would no longer be obligated to pay the island for the use of various military facilities on it like the test bombing range on Vieques. It was a classy move, although obviously it went nowhere.

That was about all I knew. Well, there was one more thing: over the past year I kept reading that there was a lot of controversy on the island over the issue of cabotage.

This information created two problems for me. First, every time I see it I replace "Sabotage" with cabotage and get the song stuck in my head. Second, I have no goddamn idea what cabotage is.

It seemed worth a half hour on the way to the airport to read a little.

Cabotage is, "the transport of goods or passengers between two places in the same country by a transport operator from another country." It is forbidden in the United States by the Jones Act, which is nearing its 100th birthday. For example, that a Panamanian ship cannot stop in New Orleans and then stop in San Juan. Only an American owned, registered, and crewed ship can transport things from cities like Houston or New Orleans to the island. This is important because PR has to import nearly everything (for reasons that are controversial, but for which the island itself deserves at least some blame). In short, the highly consolidated US shipping industry has Puerto Rico over a barrel.
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As you might expect they take every opportunity to ream them.

The real tragedy is that mismanagement – both self-mismanagement and ineffective governance by colonial powers like Spain and the U.S. – has created a dependence on imports that isn't strictly necessary. The island is well suited to agriculture but grows almost none of its own food.

It has some of the best conditions for a renewable commercial timber industry but instead imports wood from the U.S. and Canada. Compared to much of the Caribbean, it is underdeveloped for tourism and undercut on price by similar destinations in the region. It's a sad state of affairs and one that is not rare around the world: a place with a lot of potential that it will never realize for political reasons.

It will be an ancillary issue at best but during this election it wouldn't be surprising to see the candidates pressed on bailing out the Puerto Rican government as it comes closer to defaulting on its $70 billion in debt. I'm no economist but at a debt-to-GDP ratio of more than 68%, promising alternatives to a Congressional bailout are neither numerous nor apparent.


  • I thought PR had ratified becoming a state in the last election.
    Obviously the sand in the gears is the US then.

    One thing they have going for them is Bacardi.
    Oh, wait. That's not PR at all, it's Cuban.
    Really. Next time you're in Canukistan or else where—well I'm guessing on Canukistan—read the label.
    American Bacardi is Product of Puerto Rico.
    Australian is Product of Cuba.

    How freaking cynical is that?

  • I can't shake the feeling that the heart of America is cynical.
    Also Ed, I'd like to see your write up of that wonderful example of American protectorate, the Philippines.

  • As a practicing instructor of basic university-level economics, a debt-to-GDP ratio of 68% is not particularly high.

  • Death Panel Truck says:

    @Eau: He could have said, "Puerto Rican-Americans," but that would have been as redundant as saying, "Texan-Americans."

  • I was stationed in both Puerto Rico and the Phillippines in the 1990s (not at the same time!). Both have a long, long history of being colonies of other countries (notably Spain and the USA), but there's very little similarity in the two. Ed is right–the young people want to come to the USA; from Puerto Rico, they come for college and/or jobs. The Phillippines? When they're done robbing American servicemen in their own country, they marry off a female relative to an American serviceman who will "love them longtime"…or at least until they hit the shores of the continental US, at which point they promptly get pregnant, then need their mother/sister/aunt/cousin to help them care for the baby. The new arrival of course misses other relatives, and before you know it, there are a passel of relatives in the USA. As soon as they get citizenship, suddenly the "love you longtime" evaporates (but the child support doesn't!) and the clan disperses to pull in yet more of their relatives.

  • Ooops, sorry…digressed there. What I gathered from my time in Puerto Rico and by talking to colleagues from Puerto Rico who came to the continential USA, Puerto Rico is a beautiful island that can't govern itself out of a paper bag, sadly. And Ed is right–anytime the rightwing shows any interest in the island, the people there know to grab on to what money and possessions they have.

  • Being in the air freight business I'm very familiar with cabotage. Most countries have it to protect their domestic airlines.

    For example: I can fly freight between Toronto and the US or between Calgary and the US. What I cannot do is fly freight from Toronto to Calgary due to Canada's cabotage rules.

    Likewise you won't be jumping on an Air Canada flight between New York and San Francisco because of our cabotage rules.

  • The relationship between Puerto Rico and the US is basically the same as the relationship between England and Ireland before the revolution.

  • @Major Kong-

    Is that one of the reasons that Canada is freaking out because of a bridge on the Trans-Canada highway broke and has cut the country in two? I know it's hard to believe, but yes, the Trans-Canada highway is the only route that links the western half with the eastern half. The bridge in question is north of Thunder Bay, in the part of Ontario that most people forget about, and apparently there isn't another road that anyone can take that isn't in the US.

  • @HoosierPoli-
    I was thinking the same thing. England, iirc, had a debt-to-GDP ratio of over 90% for generations without many problems. One of the big issues with the bankruptcy deal is that a lot of people bought PR municipal bonds because they had a high return and were tax free. Of course, loaning money to people who apparently have no way of paying it back is one of the ways we got into the crisis in 2008, and I think PR is another victim here. The people who bought the bonds, well the wealthy and institutional investors at least, demand to made whole in any bankruptcy settlements, while the small guys and the island suffer.

  • Andrew Laurence says:

    If it's the bridge on highway 11 over the Nipigon river, there is another road, but on Google Maps it looks dodgy.

  • c u n d gulag says:

    All I can deal with today – if even that – is the death of David Bowie.

    I saw his "Let's Dance" tour at Madison Square Garden.

    RIP David Bowie.
    Planet Earth is blue…

  • Steve in the ATL says:

    You learn something new everyday. I didn't real that there were Puerto Ricans anywhere other than the shittier boroughs of NYC.

  • Khaled: I heard on the radio the other day a professor who claimed that much of the debt crisis was created for the benefit of 200,000 people worldwide, a microscopic investor class.

  • @Brian M: the "debt crisis" is really about low rates and keeping them low hurts banks and other "rentiers". The previous time the Fed did not raise the rates the scream that was heard from the banking sector was a big clue. They do not make a lot of money when interest is low, and so they prattle on about "inflation" and demand rate increases, never mind that inflation has been extremely low (to the point of deflation in the EU) and low rates helps to release "pent-up" demand in the private sector. Raising rates helps bankers make more money, but doesn't help the average person seeking a mortgage.

  • @Andrew Laurence:

    Meh. The average saver has very little in the bank, and I would wager that whatever gains they would get from the small rise in savings account interest and/or money market interest would be swallowed up by the rise in mortgage rates.

    Some back of the envelope calculations: On a $300,000 30 yr mortgage at 3.5%, the person will pay $184,968.26 in interest. At a 5% rate, the interest becomes $279,767.35

    A savings account that pays 0.5 % (which would be remarkable at this point) verses 1.5% on $20,000 in cash (which is way more than most Americans have in cash in the bank) over 30 years would earn the average saver about $8,000 more over the same time period ($11,261.60 paid vs $3,228.00)

    So, while some people may get an extra $8,000 in savings rate, the bank makes an extra $95,0000 on the mortgage. Sounds like the bank wins.

  • Andrew Laurence says:

    My mortgage is fixed at 2.99% until I pay it off. I owe not a penny other than that, to anyone. I have money in the bank. I'd prefer higher interest rates on my savings.

  • Andrew Laurence says:

    @Michael: Nearly every country prints its own currency. The difference is that the US is able to BORROW in its own currency. So you're mostly right.

  • @Andrew Laurence: You want a cookie? Hope you never have to move for any reason. Or buy a new car without cash. Or have an sudden medical expense that requires some sort of payment plan. Do you plan on retiring anytime soon? Have money in anything beyond a savings account? If you have a majority of your money in "the bank" instead of invested, you are already leaving massive amounts of money sitting on the table.

    Yes, most people have fixed mortgages, but people buy mortgages all the time, people move, want a bigger house, etc. Companies that hope to expand may delay the expansion due to the increased cost of capital. So that money you have in the stock market may not go up as much as you might have hoped. Even if you are slightly better off, the economy will slow a little. Now, the Fed rate may not have a very big impact, but raising the rate to avoid inflation is silly, since inflation is almost at zero.

  • Andrew Laurence says:

    @Khaled: You're absolutely right. I stand corrected. I much prefer a low-interest-rate scenario because I want my equities to do well, and I don't really care how my savings account does. Sorry to have troubled you with my asinine response.

  • robbing American servicemen in their own country,….marry off a female relative to an American serviceman ….promptly get pregnant,….get citizenship, suddenly the "love you longtime" evaporates (but the child support doesn't!) and the clan disperses to pull in yet more of their relatives. etc etc etc

    Well, apparently I bailed on this conversation too early.
    And yes, there's truth in what you say Katydid but you left out the important part.
    The reason the people of the Philippines are reduced to selling themselves or robbing or conning (comparatively) well-off Europeans is because they've been enslaved by a succession of ruthless colonial powers and for the last 110 years that's been America.The Philippines poverty rate is roughly the same level as Haiti another beneficiary of America's largess to itself.
    The war that commenced this slavery was suitably horrendous –
    and though several Treaties have declared otherwise, military bases, hand-picked dictators and financial manipulation has kept the country under America's boot heel ever since.

  • @Waldoh; the USA has been out of the PI for more than a decade now. The PI gov't wanted to bilk Uncle Sam even more, and Uncle Sam said, "Nope, bye."

    I was there as a dependent in the late 1960s, there again as an active duty member in the 1990s. I've been to some very poor places–Guam, the Azores, Spain..the PI was its own place. The Spanish name for it is "Isla de Ladrones" (Island of Thieves) and it's very, very much the culture there. There's a saying: "Start at one side of the Olongapo Bridge, and by the time you get to the other side, your pockets will be clean and you will have no watch". There were many schemes going–besides the "bring all your family to the USA on Uncle Sam's dime", there was, "push your kids in front of the serviceman's car". If the kid gets hit, Uncle Sam pays out richly. If the car crashes, rob the driver.

    Because there's so much intermarriage-as-a-career there, servicemen were warned not to bring anything in country that you'd ever want to see again, because your house would be broken into repeatedly, and there was no point calling it in, because likely the responder would be the brother of the one who broke into your house in the first place. In 18 months, my little on-base apartment was broken into more than a dozen times. They got a $6 clock-radio (I didn't bring a tv), Walmart "silverware", and Sears casual clothes, but that didn't stop the break-ins to see if I'd gotten anything better.

    By the 1990s, we were told not to bring dependents along because they were routinely being bullied and robbed and beaten at school by the locals, who were in DoD schools because their sister-mother (nobody really knew the relationship) married a serviceman and the kids got a new venue (the schools) to commit crimes. Dependent children were returning from the PI with PTSD from the constant abuse.

    The robbing of the supply ships was so egregious that they used to put out fake arrival notices. It used to be entertainment to watch the locals collect at the docks to wait for their chance to loot.

    I've been some poor places, but I've never seen a culture that like before.

  • @Katydid: "on-base" was broken into? Far out! Imagine living off-base. You'd think there'd be gates and check points for military base. Guess not.

    Reminds me of a story I heard.
    This guy's brother was married to a Filo, and living on one of the islands. He got cross purposes with someone by refusing to pay a bribe or some kind of "legal" scam.
    Gets arrested. The judge comes in, usual subtle to-and-fro. Judge leaves, and his aide comes in, and tells him the whole mess can "cleared up" for some exorbitant "fine"—iirc the figure was US$10k.
    Guy's brother looks at the aide and w/o blinking an eye says, "Hmmm. Interesting. I'm pretty sure I can find someone to kill him for ~US$200."
    The aide leaves, during which time he was sweating, and working out how he would get his arse out of Dodge if it came to that.
    The mess was settled for a ham.
    The guy's wife was pissed though, she'd already been making enquiries, and had a lead…
    So on that score, I guess it's good to have "local knowledge".

    Far out!! It ain't Kansarse Toto!

  • @Xynzee; there were gates and fences around the base (at least Subic Bay there was), but remember the local economy is based on marrying off any family member that was marriageable to the servicemen; "wifey" would move into base housing, and suddenly her "little brother" (likely son) would have to move in, too, then mamasan would have to move in to take care of "little brother", then of course papasan would have to move in with mamasan and you'd end up with 18 people living in base housing. Then "wifey's" "brother" (likely husband) would get hired doing maintenance (aka robbing) base housing, and he'd hire his brothers-in-law, and on and on it'd go. Your story about the fines doesn't surprise me at all. I didn't have a car when I was over there because really, what was the point, it'd only get stolen and/or implicated in some horrible car wreck for which the victims were owed a quatrillion dollars each by Uncle Sam, so if I had to leave the area, I'd take a taxi. The problem? If the taxi an American was riding in was implicated in any sort of traffic kerfuffle (even another car running into the taxi), the American riding in the back seat was held at fault and fined.

    It was quite a scam they had going on, which is why they were so devastated when they tried to jack up the rent on the bases and Uncle Sam said, "Uhmmmm, nope. Take 'em" and pulled the military out.

  • @Katydid: makes sense.
    I wasn't surprised by the "scam" this guy found himself trapped in, and bribery is just expected, especially where Westerners are concerned.
    It was more the, progression of escalation that is shocking.

    How many times have you ever heard of someone threatening a judge with assanination and getting away with it. We expect crims to, but some ordinary schmuck like us?

  • @Deathpaneltruck: Not a 30 Rock fan, I take it? Fair enough, that gag is pretty dated now.

    @Katydid: 'I've seen poor, but I've never seen a *culture* like that' is just a little too close to 'I'm not racist, they're just a shitty race', don't you think? Your history outlined above gives you an on-the-ground insight, but you should be wary of personal bias anytime you have skin in the game, so to speak. im also interested in your take on the closing of the bases. The Philippines trying 'to bilk the US even more' seems to imply that they were they already getting a good deal, and got greedy. That doesn't sound like the manner in which the US I am familiar with deals with colonial outposts. I also believe there were all kinds of issues including stockpiling nukes (which was a pretty big deal in the 90s, IIRC). My take is that the PI senate found a spine lying around somewhere (or just wanted to oust the pro-US president and took their chance) and the US left because they knew they could find someone else who would bend over further, faster.

  • @katydid: My comments are meant to be offered in a chin-stroking, musing-over-my-third-beer tone, not the hectoring, finger-wagging tone I fear I inadvertently hit. Sorry about that.

  • @Eau; thank you for clarifying; I was bristling a bit. I didn't want to get too deep into my personal history, but when I said I'd never seen a culture like that, it comes from a place of experience. I'm second-generation American (my parents were both born in the USA to foreign-born-but-naturalized citizens), third generation US military. While both my grandfathers served in WWII and then finished their military careers in the Continental US, my father was stationed all over the world, taking the dependents along with. I then went to college, graduated, joined the military, and proceeded to travel all over the world on my own deployments. When I say I've never seen a culture like this, it's true.

    As for the military base situation there; Uncle Sam was forking out a pretty penny for using the land, and in return, and not only were people like the Marcos family profiting, but the local people were, as well. Not only did they hold all the jobs on the base, but they had free access to the servicemembers. More than once I came home to find the door of my apartment completely off the hinges and my belongings ransacked. Everyone did; it wasn't personal. American servicemembers were also seen as the locals' ticket to the USA; as a woman, I saw and laughed at the blatantly predatory behavior of the local women toward the servicemembers, but when a sailor is 18 and a pretty woman is telling him he's the only one for her, then ooops! somehow she's pregnant and it's his baby…well, not so funny anymore because now he's on the hook for 18 years of child support.

    But I digress; the general feeling of the locals toward the military and the USA was one of contempt, so it was funny to watch the whole base rental deal go down. "We want more money, you stupid American pigs! MORE MONEY!" –"No, thanks. Goodbye!" "Don't leave! Me love you longtime!"

  • @Katydid: I don't mean to imply that I doubt your first-hand accounts of life in PI, I just wonder if it really is unique in its 'culture' of poor, trapped locals resenting what they see as wealthy foriegn interlopers and taking said interlopers for all they can, up to and including a ticket to a better life for themselves and those they love.

    And I can't help but doubt any account of the US military being overly generous to any but itself and perhaps the odd defence contractor. Just my personal bias showing, perhaps. :)

  • @Eau; as I pointed out, I was stationed in some pretty poor places while on active-duty status, and before that, in some pretty poor places as a child dependent. The PI stands out for the utter ruthlessness and greediness. Uncle Sam is quite generous with jobs for locals and jobs for dependent spouses and children of active-duty military; go to any base BX, commissary, movie theater, bowling alley, etc. overseas and you'll see countless examples of local people (or locally born foreign dependents) working jobs.

    Getting back to Ed's point about Puerto Rico; it was very poor, and made so by the same forces that made the PI poor, but it's simply not as unsafe as the PI, nor was there the ethos to entrap US servicemen in sham marriages to get CONUS. Just like the PI, many people in Puerto Rico are bilingual and there was a lot of initiative to interview for jobs in the USA and/or get into colleges in the USA.

    Guam is another very-poor island chain, but they as a society choose to use their natural resources as a beach paradise. About as aggressive as they got were the open invitations to weddings/christenings/high school graduations via signs posted on trees and streetlamps. If you went to one, you'd get a bellyful of really good food, and were expected to bring a gift. Knowing any of the people involved was not mandatory.

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