Is Statehood a Guarantee of Prosperity for Puerto Rico?

Puerto Rico’s debt crisis is not getting better. The Island owes just about 100% of its GDP — over $70 billion dollars — to a variety of creditors, and the governor has announced that the debt cannot be paid. In fact, Puerto Rico has already defaulted on debts and is expected to continue doing so.

10% of public schools have already been closed, according to The Progressive, and a new law requires the closure of 30% of the remaining schools, for a total of 535 schools. Cuts have affected police, healthcare, and firefighters as well. 45% of the population live in poverty and unemployment is over 12%, even as hundreds leave for the States each day.

Against this backdrop, there are people saying that statehood wouldn’t improve the economic position of the territory.

wealth-guarantee

Detroit isn’t a state, of course, but we get his point.

The current territorial status obviously isn’t good for the economic position of Puerto Rico. If being a territory were a good idea from the standpoint of economics, Puerto Rico would not be in its current position. That’s obvious. However, that doesn’t mean that being a state would guarantee prosperity.

Is there evidence suggesting that States in general are better off financially than territories?

Let’s compare Puerto Rico and Hawaii. In 1957, both were territories of the United States. Both had a minimum wage of 25 cents. Both were island territories at some distance from the mainland United States, and both were economically reliant on agriculture.

Hawaii became a state. Puerto Rico continued to be a territory.

How are they doing now?

Hawaii:

  • 4.1% unemployment
  • 11% poverty rate
  • Median household income $69,501
  • 78% high school graduation rate

Puerto Rico:

  • 12.2% unemployment
  • 45.2% poverty rate
  • Median household income $19,518
  • 62% high school graduation rate

Hawaii and Puerto Rico are not identical, and there may be many factors involved in their different historical paths. Both are in better positions now than they were in 1957, when both were territories. However, Hawaii is clearly much better off now than Puerto Rico.

And in fact, every one of the 32 territories which have become States is in a far stronger financial position now than they were as territories. And every one of them is in a much better financial position than Puerto Rico.

Statehood might not guarantee prosperity, but it is a better bet than being a territory.

En Español

2 Comments

Howard Hills

This understates the economic benefits of statehood, which is the opposite of the now discredited autonomy party that grossly exaggerated the benefits of the “commonweakth” model of development based on unsustainable federal corporate tax subsidies and high local income taxes for wasteful local government expansion of underperforming and failed public sector programs. History shows what will happen. Investment by US and foreign private sector will be massive as soon as statehood is approved by Congress, even if it is not immediate.

Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.