U.S. Exploitation of Puerto Rico?

John Kerry stirred up emotions when he said that Israel was at risk of becoming an “apartheid state”; Matt Peppe responded by suggesting that the U.S. can find that danger much closer to home than Israel.

After examining some historical examples of separate and unequal treatment, Peppe quotes First Circuit Appeals Court Judge Juan R. Torruella, who wrote that “the Insular Cases… are responsible for the establishment of a regime of de facto political apartheid, which continues in full vigor.”

Peppe notes that Puerto Rico’s residents, though citizens of the United States, cannot vote in presidential elections. He then points to the economic relationship of the United States and Puerto Rico, saying, “Since the early days of the US occupation of Puerto Rico, American corporations happily exploited the island’s population and resources to make vast fortunes… which they promptly shipped off the island and into their bank accounts on the mainland.”

Peppe first mentions coffee and sugar plantations as the sites of this exploitation. In 1900, when free trade was established between the U.S. and Puerto Rico, an influx of U.S. investment galvanized the sugar cane industry — but made it impossible for small family farms to compete. Having lost their market in Spain, Puerto Rico’s farmers quickly became dependent on the U.S. market instead. When U.S. investors stepped in, the U.S. found itself doing both the buying and the selling, and Puerto Rico’s part in the equation was very small.

When Puerto Rico’s sugar industry collapsed in the mid-20th century, the U.S. put in place Operation Bootstrap, a set of initiatives intended to diversify the economy of Puerto Rico — and to supply goods for the armed forces. One of the features of Operation Bootstrap was an insistence on bringing people from the countryside into the cities. One result was the collapse of the textile industry, which had employed many women in Puerto Rico in their homes. The number of factory jobs created by Operation Bootstrap did not replace the jobs lost in the textile and sugar industries.

While economists disagree on whether the economic problems of the sugar plantations were caused by unwise local policy decisions or by policies imposed by the U.S., it is clear that Puerto Rico’s economy was strongly influenced by the U.S. government and by U.S. corporations.

“To this day,” Peppe says, “US colonialism continues to suppress Puerto Rico’s self-sufficiency by preventing it from developing its own industries and creating sustainable food sources.”

Once again, economists disagree about the extent to which Puerto Rico’s economic issues are the result of actions by the U.S. However, it is clear that Puerto Rico does not receive the kind of support that states receive. The Federal Reserve’s Report on the Competitiveness of the Puerto Rican Economy held that the tax incentives that brought pharmaceutical manufacturing to the island also led to the decline of that industry in Puerto Rico, and that the lack of an adequate infrastructure held Puerto Rico back economically.

U.S. corporations that use Puerto Rico to dodge taxes do not, as we have seen in the case of Microsoft, keep the money they make in Puerto Rico either by employing significant numbers of people on the island or by spending money there. Manufacturing continues to be a large part of the GDP, but actual employment has fallen drastically. As long as these companies are both the buyers and the sellers and money simply washes through Puerto Rico, their presence on the island doesn’t strengthen Puerto Rico’s economy.

“All of this for the last 115 years,” Peppe remarks, “without the consent of the governed.”

At the beginning of the relationship between the United States and Puerto Rico, the now-quaint attitudes of the time meant that the U.S. government could hold that Puerto Ricans were completely different from the people in the states, and that they could not have the full rights of citizens until they became more civilized. Like colonial powers throughout history, the U.S. felt free to make use of the resources of Puerto Rico without first obtaining consent.

Times have changed. The last several administrations have expressed a commitment to supporting the will of the Puerto Rican people. And yet, as Peppe points out, “Puerto Ricans spoke decisively against their political status in a referendum in 2012, with 54% of voters rejecting the political status they have been subjected to for 115 years. What they heard in response were crickets.”

The United States needs, as Peppe suggests, to reflect on its relationship with Puerto Rico. The words of an American congressman struck a similar chord many years ago: “As a Puerto Rican,” said Rep. Jose Serrano, “I don’t want my birthplace to be a colony.  As an American Congressman, I think it is indecent that my country has colonies… and this must end.”