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Publicly funded private Island – Puerto Rico, taxes, and profits

The Puerto Rican government is content to privatize the public infrastructure, and throw the cost, and the corporate profit margin that this would entail, on the backs of the struggling, tax paying citizenry.

Puerto Rico, by and large, still looks and operates much as though it were still stuck in the dark ages, and at night, it definitely is, as the power grid, damaged by Hurricane Maria, remains an unreliable public infrastructure all these months later. The water situation isn’t much better as the citizenry must additionally filter the water that comes from the tap, since its quality can’t be taken for granted.

Typically, after major disasters like this one, when the local population and/or government can’t respond to the needs of the community all at once, the Federal government steps in to provide assistance, both in man power and in funding recovery efforts. However, the Federal Emergency Management Agency (FEMA) is providing a very limited amount of assistance, and the Feds are sending very small amounts of capital for the aid and rebuilding of the Puerto Rican infrastructure.

Instead, it sees the Puerto Rican situation as an economic liability. The alternative, it seems, as far as the Puerto Rican governor is concerned, is to simply privatize the public infrastructure, and throw the cost, and the reaping of a corporate profit margin that this would entail, on the backs of the already struggling citizenry.

In a recent article, reflecting on his trip to the island, Ted Glick treats on these and other issues that it is still experiencing:

One of the big takeaways for me was the reinforcement of something I have known intellectually for years, that extreme weather events, like the climate changing which makes them worse and more frequent, hurts low-income people the most. Middle- and upper-class people who have access to financial and other resources had found ways to lessen their suffering or discomfort, like through personal generators. But those without those resources were in a different situation. I heard of at least one family that was sleeping in a tent in their living room because there had been serious damage to their roof that they had not yet been able to afford getting fixed.

Unfortunately, it’s not just recovery from the big storm that is a big problem. The pro-statehood Governor of Puerto Rico, Ricardo Rossello, announced just before we got there that he wanted to privatize the electrical system, currently publicly owned, which would certainly lead to higher electrical rates for many struggling Puerto Rican consumers as the corporate buyer looks to make its profits.

Then there is the relatively large Puerto Rican debt (though hugely smaller than the US debt) of $73 billion. There have been calls for that debt to be forgiven, for obvious reasons. Lin-Manual Miranda, for example, creator and star of the Broadway hit “Hamilton,” called for that in a December opinion piece in the Washington Post. He wrote:

“Puerto Rico’s creditors should do the right thing and walk away. It is the only way forward. Anything short of full debt forgiveness would be a brutal form of economic punishment to a people already suffering.”

But to add insult to injury, the Republican tax bill passed at the end of 2017, unless challenged and changed, will make things even worse.

A December 20th Washington Post story reported that the Puerto Rican Governor “is calling on lawmakers to rewrite a key part of the tax bill that he says might cause the island’s hefty manufacturing sector to contract, jeopardizing hundreds of thousands of jobs. [It] includes a new 12.5 percent tax on profits derived from intellectual property held by foreign companies — a move designed to compel those companies to move back to the United States. The new tax ‘is a big hit, and Puerto Rico both fiscally and economically is downtrodden, and this is the last thing they need,’ said Federico de Jesus, a former Puerto Rico government official who has been tracking congressional relief efforts for the island.”

US citizens have a special responsibility to help Puerto Rico, which has been a colony of the United States since 1898. It is our humanitarian and moral responsibility, and it is our duty as citizens of the nation which has the power to help Puerto Rico either move forward or backwards after Maria. We must do what we can as far as practical hurricane recovery support but also support groups calling for a cancellation of the debt, changes to the Republican tax bill and reform of the electric power system, not its privatization.

Puerto Rico belongs to the United States, and its population are tax paying US citizens, but it appears as though they are staring down the barrel of getting the Greek treatment through the privatization of its public services.

The push to privatize, however, isn’t limited just to utilities, it also extends to education. The government plans to close hundreds of schools and push for privatization of the education system, paid for by parents, while the Puerto Rican government takes federal funds for their operation. Jeff Bryant recently discussed how this comes about in his recent article at Common Dreams:

A week after the storm made landfall on the island, and with most of the island still in darkness, author and journalist Naomi Klein warned in The Guardian that “vultures” circling the devastated landscape were advocating the only way for the island to get the lights back on was to sell off its electricity utility, a phenomenon of what she calls the Shock Doctrine: “the exploitation of wrenching crises to smuggle through policies that devour the public sphere and further enrich a small elite.”

The government will continue taking money from the Feds while private companies will “undemocratically” run the show. Financiers will demand repayment of debt, which the government, for all the money it will be taking in, will not be able to pay, leaving the island in crisis.

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