Last Friday, together with the New York City Chapter of the Labor Council for Latin American Advancement, we gathered with Jose La Luz, Natasha Lycia Ora Bannan and Nelson Denis to discuss H.R. 5278, the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA), looking at the history of Puerto Rico’s economic crisis and the impact of PROMESA on the people.
We also examined the possibility of a federally created Fiscal Control Board for Puerto Rico in the Spring 2016 issue of the New Labor Forum, with a piece by Jennifer Wolff, senior program director at the Center for a New Economy, on the fiscal and economic crisis and its impact on labor unions. We invite you to revisit that piece and continue the conversation.
Debtors’ Island: How Puerto Rico Became a Hedge Fund Playground
“You could call it a perfect storm: a fiscal crisis converging with a deep secular economic decline. Once touted as the showcase of U.S.- led economic development, debt-strapped Puerto Rico is currently embroiled in a struggle for survival. During the mid-twentieth century, Puerto Rico grew at a rapid pace, betting on cheap labor, privileged duty-free access to the U.S. market, and tax incentives for U.S. companies. By the 1970s, however, the formula had lost steam and the government turned to ever-more crafty means to keep the economy and itself afloat by seeking new federal tax exemptions for U.S. firms, obtaining additional transfers in federal funds, increasing government employment, and issuing public debt in ever-larger amounts. By the year 2000, the government ran on ever-larger deficits. The dance came to a screeching halt in 2014, when Puerto Rico’s debt was degraded to junk status and the island was effectively shut out of the financial markets. Read more.