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Joseph Stiglitz on Puerto Rico’s Economic Future

Joseph Stiglitz , 2001 Nobel Prize winner in Economics, spoke at an event hosted by the Center for a New Economy at Yale University. His talk, “Austerity, Climate Change and Colonialism in Puerto Rico,” examined the question of economic growth in the U.S. territory.

“As Americans,” he began, “we have a particular responsibility to Puerto Rico because of our colonial relationship.”

While the United States has moved away from the idea that Puerto Rico is a colony since allowing the U.S. territory to construct its own constitution in 1952, more recent discourse about Puerto Rico has increasingly accepted the colonial nature of the relationship between Puerto Rico and the United States.

Stiglitz pointed out that Puerto Rico is one of the few places in the nation that has faced negative growth. He identified the colonial relationship as one of the disadvantages leading to the difficult economic position Puerto Rico experiences. Dealing with unpayable debt, a fixed exchange rate, and a regulatory structure imposed by the United States, Stiglitz said, Puerto Rico was put under the authority of the PROMESA Financial Oversight and Management Board. The board, he further claimed, did not have any plan for positive growth for Puerto Rico. Instead, he argued, the board imposed austerity measures that made growth impossible.

Stiglitz concluded that the austerity measures increased outmigration, reducing the resources for growth in Puerto Rico.

Going forward

Stiglitz identified advantages Puerto Rico can benefit from going forward: the relationship with the United States that allows free trade and economic support, plus ample sunlight to support solar energy. He recommended writing off PREPA and shifting quickly to renewable energy.

He questioned the value of manufacturing going forward. “AI and robotization will lower the asset value of unskilled labor,” he suggested, pointing out that tech advancements in manufacturing are reducing the number of jobs the industry provides globally. He expects that Puerto Rico will see the same 8-12% share of jobs in manufacturing as the U.S. as a whole in the future.

Instead, Stiglitz says, the priority for Puerto Rico should be “creating a learning society.” Comparing the position of Puerto Rico with Korea and Japan in the 20th century, he emphasized the importance of education and support for businesses. There are, he said, “lots of untapped opportunities.”

The presentation ended on an optimistic note, emphasizing the stability and security of Puerto Rico as part of the American family, in comparison with neighbors in the Caribbean and Latin America.

Joseph Stiglitz has spoken on Puerto Rico’s economic challenges for the CNE before. ┬áHe has listed more advantages for Puerto Rico in the past. The most recent talk did not contradict his earlier discussion of advantages but focused more on the problems caused by the austerity measures insisted upon by the PROMESA Board. “You’re sending all your resources abroad to pay your creditors and you don’t have enough left to fund growth,” he said.

 

Image courtesy of Wikimedia Commons

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