Regarding the July 10 front-page article “A crisis with roots in Washington”:
The Puerto Rico government’s “outsize share of the overall workforce” is a misleading indicator of excess public spending. Per capita, Puerto Rico government employment ranks 37th among all 50 states and the District. As a percentage of gross domestic product in 2011, commonwealth and local spending was about 11 percent, the lowest in the country. Those prescribing austerity to fix the island’s economic crisis should consider that over the past 10 years, Puerto Rico slashed government employment by 24.6 percent. Even so, the island has seen economic contraction or stagnation.
And its reliance on tax breaks has been a fatal error. The government collects between 8 percent and 10 percent of GDP, compared with the U.S. state average of about 16 percent. This makes it unable to invest in public services and infrastructure. Although federal tax breaks for manufacturers expired, Puerto Rico’s manufacturing exports increased annually between 2006 and 2014, meaning manufacturers are reducing their dependence on labor.
Meanwhile, the island has virtually ignored its natural advantages for tourism and entertainment. Those would require investment in transportation, public safety and urban beautification, as well as an overhaul of the island’s sacred but punitive labor laws and stifling bureaucracy.
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