Free Minds & Free Markets

The Federal Government Ruined Puerto Rico

Puerto Rican statehood is an opportunity to redefine American federalism.

Clevergrrl/FlickrClevergrrl/FlickrPuerto Rico voted to become a U.S. state this week. Needless to say, we should all be deeply concerned about the island's engorged debt, destructive fits of socialism, and terrifying chupacabras.

But Puerto Rican statehood also represents a unique opportunity to reform American federalism. Accepting a new state with markedly different problems and programs means acknowledging that states aren't interchangeable. We should welcome Puerto Rico and, while we're redefining what constitutes our union, rexamine the power dynamic between Washington and the states.

Puerto Rico is a test case in one-size-fits-all solutions and federal intervention ruining an economy. The island has significantly lower income and productivity than the continental United States, but it is still subjected to a national minimum wage crafted for the mainland. That disparity squeezes entry-level jobs out of the market and ratchets up unemployment rates. The slumping job market is worsened by the fact that federal programs like food stamps, Social Security benefits, education grants, and disability payments aren't pegged to local cost of living. In a region poorer than America's poorest state, it's not surprising that people would opt for generous federal handouts over scrambling for jobs the minimum wage hasn't yet outlawed. Puerto Rico would benefit from an opt-out clause on the mininum wage—an option that should be available to all states.

Because Puerto Rico is an unincorporated territory and not a state, it's more vulnerable to federal intervention. The Jones-Shafroth Act exempted Puerto Rican bonds from local, state, and federal taxes. The feds might as well have sprinkled cocaine and cronuts over the bonds. Investors bought dumpsters full of Puerto Rico's sovereign debt, leading the island to further lurch into exorbitant deficit spending.

Federal trade laws also hobble Puerto Rican prosperity. The Jones Act prohibits foreign ships from moving goods between American ports. That means a foreign flagged vessel can't stop at Puerto Rico on its way to or from the mainland, but must instead offload and reload goods at another American port so a more expensive U.S. ship can transport them. Peter Schiff explains: "Even though median incomes in Puerto Rico are just over half that of the poorest U.S. state, thanks to the Jones Act, the cost of living is actually higher than the average state." The Jones Act would be a great issue to bring up when Congress deliberates on Puerto Rican accession. Abolishing it would benefit everyone, most of all Puerto Rico.

All of this may be incidental to the issue most likely to trouble Americans: How the hell are we going to shoehorn another star onto our flag? If we admitted Puerto Rico it would completely screw up the Stars & Stripes. Check out what the new mutant flag would look like:

As you can see, this hideous abomination is utterly unrecognizable. Fortunately, I've devised a way we can admit Puerto Rico without having to go out and buy a 51-star devil flag.

At this point in our history I think we can all agree that Florida is a freak state. When it's not too busy irresponsibly losing its emus, it's violating the Geneva convention with silly driving laws. I'm not opposed to taking away their electoral votes and giving it to someone more responsible, such as Canada, or possibly my improv team. They certainly don't deserve to have a star. So we could take Florida's star away and give it to Puerto Rico. I spent all night running that scenario through complicated graphic algorithms and came up with this model:

This week's vote was a non-binding resolution, but the island will hold another vote in October. If Puerto Rico petitions Congress to join the Union, limited government proponents could rightly point out that federal programs operating in Rhode Island have disastrous effects on the island of Puerto Rico. Surviving Goldwater acolytes advocate a federal government that concerns itself primarily with issues the states cannot handle in aggregate, such as international diplomacy, the military, whatever "covfefe" is, and cranking out commemorative quarters. Whereas liberals tend to feel that state governments are run by corrupt yokels, so we should increasingly defer to the enlightened technocrats of Washington instead.

It's too much to ask that liberals infer from Puerto Rico that socialist policies held back growth and prosperity. But it's feasible that in exchange for redefining the collection of states that comprise the Union, fiscal conservatives could advocate for more variance between its participants and scale back federal overreach.

Fifty-one different states might come up with 51 different solutions for killing chupacabras. The federal government would probably just wind up subsidizing them.

Photo Credit: Clevergrrl/Flickr

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  • Citizen X - #6||

    Whoa. Who painted that mural of Crusty?

  • SQRLSY One||

    It's supposed to be "Chupacabra", but it is REALLY an image of Fed-Guv!!! (WE are the goat).

  • Hank Phillips||

    That's the Pope iv Rome violating the individual rights of pregnant boricua womanhood.

  • SQRLSY One||

    Boricua, barracuda, they all smell like FISH to me! "Welfare mothers, make better lovers", Neil Young told us... I in my wisdom would add, "If it smells like fish, eat it!"

  • WakaWaka||

    Great article. Although, I would say keep Florida and bid California adieu.

    Off topic. This is the president's morning game of six dimensional hungry, hungry hippos via tweet: "I'm Under Investigation For Firing Comey By The Man Who Told Me To Fire Comey"

    What is the opposite of working the refs?

  • some guy||

    What is the opposite of working the refs?

    Knighting the refs?

  • American Memer||

    Giving the refs an unemployment check?

  • Bubba Jones||

    That is actually very clever. AG can't rule against Trump without incriminating himself.

  • Devastator||

    Thanks for off topic warning, more comments should include those before they go off the rails and try to turn the discussion into yet another Trump flame fest. Cheers. It lets me know to stop reading.

  • GlenchristLaw||

    So funny I forgot to laugh...

  • Careless||

    Yeah, the way to scale back federal overreach is to add two permanent Democratic seats to the Senate

  • NotAnotherSkippy||

    It's obvious, really. And now we like us some american imperialism.

  • Scarecrow Repair & Chippering||

    I gots a question about federal subsidies / minimum wage / welfare / etc. When they adjust these for cost of living, some of them vary by state, on the grounds that different states have different costs.

    What allowance, if any, do these adjustments make for urban / suburban / rural difference? For instance, California and New York, where San Francisco and NYC especially are so far out of proportion that they may as well be different planets. The $15 minimum wage won't do squat in those cities, while it exceeds average pay out in the boonies.

    I wonder about this for franchise chains too. Why are prices the same for McD in San Francisco and NYC, and in the boonies? Does the extra traffic and lack of parking lot actually make up for the increased property and labor costs?

  • Bubba Jones||

    The prices aren't the same.

  • Griffin3||

    Excellent article. 5 stars. Would read again.

  • Griffin3||

    Although, on further consideration, how about we split up the Republic of West Florida from Communist South Florida, add Puerto Rico, and see if there is some reasonable layout for 52 stars?

  • some guy||

    Puerto Rico sounds like it would get along with Illinois, so why don't we just merge them together. Florida can still get kicked out and Jefferson can split from California. Then we've still got 50 stars.

  • Robert||

    The Dominion of West Fla. would like a word w you:

  • Tionico||

    then what will we do when Northern Calif and Southern Oregon form the new State of Jefferson? We'll need 53 stars then. Unless Calif want to leave the union and relinquish their star to Jefferson......

  • Devastator||

    It's always easier to make a grid out of an even numbers. We could split up Texas and California as well.

  • Ken Shultz||

    If Puerto Rico came into the Union, they'd give Democrats a definitive advantage in both the Senate and the electoral college--and that means progressives.

    Fuck that.

    It's the same thing with statehood for D.C. We'll talk about bringing Puerto Rico and D.C. into the union just as soon as they split California in two, split Nevada in two, and then maybe we can split Kansas or Alabama. Give Republicans six more senators and maybe the Democrats can have four more.

    "It's too much to ask that liberals infer from Puerto Rico that socialist policies held back growth and prosperity. But it's feasible that in exchange for redefining the collection of states that comprise the Union, fiscal conservatives could advocate for more variance between its participants and scale back federal overreach."

    That's not about to happen. Democrats will call Republicans a bunch of racists for opposing a state that's Spanish speaking--never mind that Puerto Ricans are already U.S. citizens and can travel back and forth between Puerto Rico and the mainland at will.

    P.S. The reason the vote in Puerto Rico was so high for statehood is because the remain as is and Puerto Rican independence campaigns boycotted the vote.

  • some guy||

    DC should just merge with Maryland. It's win-win. They get to vote for Congress. Everyone else gets to stop hearing them whine about not being represented. Neither party gets a significant advantage.

  • Citizen X - #6||

    DC can join Maryland, but they have to take Occupied Northern Virginia with them. Everything east of Front Royal and north of Fredericksburg might as well be Maryland anyway.

  • dantheserene||

    Now hold on there, I avoid MD (and DC) whenever possible. You can't force me to join a People's Republic.

  • Citizen X - #6||

    If you live in the area i described then you're already part of one. Sorry to break it to you.

  • Liberty =><= Equality||

    Baloney. We don't pay MD tax rates and we sure as hell don't have MD gun laws.

    Though I will grant that that's probably going to change in the next decade. We need a border wall on this side of the Potomac.

  • Liberty =><= Equality||

    It's not a win for Maryland. Last thing they need is another crime-ridden city. And of course the Baltimore pols ruling the roost in the state legislature don't want that to change.

    Not sure about the process of merging DC with MD though. The Constitution says that combining parts of states to make new states requires approval of the state legislatures, but this wouldn't fit that scenario as DC isn't part of a state. The Constitution doesn't say anything about a process for forcing states to accept additional territory.

  • The Last American Hero||

    Ah yes, the Last American Hero "DC Lateran Treaty Plan". It worked in Italy, let's give it a go here. Under my plan, the only ones not getting a vote would be the President and his family.

  • Devastator||

    No DC shouldn't merge with Maryland. It was a great idea to not put our national capital into a snake den like any one state. That's just a stupid idea, they were right to partition out the District of Columbia. Any other suggestion needs to get shot down immediately.

  • JFree||

    Honestly - you partisan hack D's and R's are the problem. Completely fucking brain dead and incapable of seeing anything beyond your shit-smeared rosy glasses.

  • DarrenM||

    Split California in two, east and west of the mountains.

  • Devastator||

    That would be dumb, if anything it should be split between North and South to reflect the politics in the region.

  • Hank Phillips||

    In 2011 religious fanatics in the Puerto Rican Senate banned abortion. It's a lucky thing Herbert Hoover taught us a healthy disrespect for idiotic laws, but until some of those politicians become shark shit, statehood looks like an increasingly attractive option. What is the procedure for becoming a Canadian province?

  • Devastator||

    You can't be a coward in politics. Admitting a state shouldn't be based on politics and who gets what advantage, that's just fucking stupid. That said, we shouldn't admit PR until they get their economic shit together.

  • B.P.||

    Can't Puerto Rico continue to stand as a warning about the failures of socialism, federal government overreach, etc., without becoming a state?

  • Agammamon||

    Of course not. In fact, its *imperative* that PR become a state now so the covering up of failed Federal policies and meddling can begin in earnest.

  • Fist of Etiquette||

    All of this may be incidental to the issue most likely to trouble Americans: How the hell are we going to shoehorn another star onto our flag?

    Damn skippy! All of my curtains, bed sheets and clothing are made out of American flags and I'm not about to change for no foreigners. Just combine the Dakotas. It will be just as easy for Americans to not give a shit about them as one state as it is separately.

    And Puerto Rico as a state name isn't going to fly. They'll have to rename themselves South South Bronx or Port Robby.

  • Crusty Juggler - Elite||

    They'll have to rename themselves South South Bronx


  • Hank Phillips||

    Not so fast! Puerto Rico was in the same Prohibition District as New York last I checked. When the Great Depression resulting from prohibition and tax forfeiture could not be ignored, Herbert Hoover's Republicans redrew the Prohibition districts to make them closely match the Federal Reserve districts. New York and Puerto Rico were in the same prohibition district by the inscrutable logic of government control over trade and production.

  • MarkLastname||

    *its 'damn skippy home slice '

    And I think 'Richport' actually works well. All our states should aspire to be named so ironically.

  • Hank Phillips||

    Threatening to change the name back to Porto Rico--what ianquis called it for many decades--would revive the independencia movement in a big hurry.

  • albo||

    I like to be in America!
    O.K. by me in America!
    Ev'rything free in America
    For a small fee in America!

  • Crusty Juggler - Elite||

    I hope Heaton doesn't think he can continue to slack off on the alt text because of his sartorial excellence.

  • creech||

    While waiting for a red eye the other night, I saw a show on CNN about Puerto Rico. Said host claimed P.R. had already gained its independence from Spain before the Spanish American war and that the U.S. took it over as a war trophy. I say the U.S.should give them their independence to "apologize" for McKinley's colonialism irrespective of the wishes of the Puerto Ricans.

  • Agammamon||

    I would like us to do that will *all* our territories and possessions without distinction.

  • Liberty =><= Equality||

    Maybe Jarvis Island and Palmyra Atoll, but not any place that would give a military advantage to our adversaries if they took it over. PRC would give their last chopstick to have a base in Puerto Rico.

  • American Memer||

    51 is 3x17. Could we have three concentric circles of 16/17/18 stars (or 15/17/19 or whatever works out best)?

  • Agammamon||

    All we need in one Big Red Star.

  • NotAnotherSkippy||

    Well at least we'd get to drop the m16 and use ak's.

  • Brandybuck||

    That would be cultural appropriation

  • Enjoy Every Sandwich||

    So the country would be known as "Texaco"?

  • DarrenM||

    All we need in one Big Red Star.

    The problem with that is that you'd be unable to make it out against the red background.

  • ace_m82||

    The article may overstate the election "victory" a bit.

    Food for thought:

  • Liberty =><= Equality||

  • Hank Phillips||

    Very nice. That's Borinken in the center, I can tell!

  • loveconstitution1789||

    The push for Puerto Rico becoming a state is to get more Democrat voters in place.

  • Liberty =><= Equality||

    Solution: annex Alberta to balance things out.

  • Dick Puller, Attorney at Law||

    Indeed, we should have invaded Alberta instead of Iraq. There's plenty of oil, they all speak English, and the Albertans would be genuinely grateful for being liberated.

  • Tionico||

    yeah, those Albertans never did take well to that froggish bit......

  • Robert||

    They learned how to mess w people for a while with alcohol prohib'n. They learned how to abolish slavery. They learned how to turn R on a red light.

  • Devastator||

    Don't forget Kansas, their shit is all fucked up too. It's not just Democratic states.

  • The Last American Hero||

    Fedgov ruined Puerto Rico, as opposed to all those other thriving Caribbean and Latin American countries?

  • Dillinger||

    Clears the way for me to be mayor of San Juan...daily pressers from Coqui Beach

  • IceTrey||

    If PR was smart they would leave the US legalize all drugs and become a banking haven.

  • Hank Phillips||

    Shhhh! That and getting rid of the 1st Wesley Livsey Jones law are the whole point. Didn't you sign the NDA?

  • jonnysage||

    Really? Florida is the freak? Not say, Oregon? Heres a simple solution. Combine NH and VT. /thread

  • Hank Phillips||

    There is more elegant solution to the Starry Banner iv Freedom posted at libertariantranslator. In the wrong language you can see it at This "lone star" solution is politically apropos because I was born there. It also allows, say, Cuban voters a way to escape from communism and Papal christianofascist abortion bans by cheaply adding another estrellita to the left (naturally) of Puerto Rico. I personally would prefer independence, but if papist chupacabras in the banana-republicano Senate keep trying to ban abortion, the island will have to apply for statehood or British protection--like Bimini, the British Virgin Islands, Barbados, Trinidad and many other jurisdictions in which women possess individual rights.

  • Hank Phillips||

    Woops, scratch Trinidad. Too close to Venezuela to be free.

  • Migrant Log Chipper||

    You're talking to yourself again, Hank.

  • Tionico||

    Hmmmm.. an amusing observation: you seem to be rather fixated on the issue of the killing of the not-yey-born, and blame it on the papal "christianofascists", I wonder on what basis one person has the authority to take the life of another innocent with not even a hint of due process. And its not just the roman catholics who oppose such slaughter. It also seems you consider that a woman (or anyone else) not being allowed to kill an unborn person somehow does not possess "individual rights". I've always wondered by what rhetoric such folk justify the absolute and final removal of the "individual right" of those unborn..... the half of the "customers" who never leave the abortuary alive.

    Just wondering the value set that leads to such conclusions......

  • JAQO||

    Puerto Rico ruined itself, just like the rest of the world is ruining itself extorting taxes from willing populations scared about freedom and self-reliance to prop-up various forms of self-serving and unstoppable collectivism. The American federal beast, which Americans refuse to let it starve to literal death, will not stop being what it is, nor should it be expected to do so. Furthermore, Puerto Rico has had five plebiscites and, with the exception of the last one which is clearly non-representative of the will of the people, Puerto Ricans have never overwhelmingly supported statehood and, thus, favor the status quo. This is all a distraction as what Puerto Rico needs is the same thing America and the world needs: laissez faire capitalism... and that ain't happening. We are doomed. Just bend over and take it real good...

  • MoreFreedom||

    "This is all a distraction as what Puerto Rico needs is the same thing America and the world needs: laissez faire capitalism"

    I agree JAQO. I used to live in PR.

    Heaton overestimate the effect of the minimum wage, Jones Act and other federal government actions which mostly benefit PR (he misses Social Security benefits, welfare, rum subsidies, the former 936 tax exemption, etc) and is why the island has supported the status quo. The real reason PR is so bankrupt is because of government corruption, lack of free markets, and a labor force where there are 3 private sector workers for every 1 government employee, vs. about 16 to 1 in the US. Many government jobs are handed out to relatives, friends, and campaign contributors for kickbacks. Welfare fraud is rampant. As is police corruption and crime. All the doors and windows there have burglar bars for good reason (look in Google street view). Taxes are high and the standard of living is low.

    The government lives far beyond it's means and never really intended to pay back stateside creditors, believed they'd be bailed out and are desperately trying to avoid giving haircuts to all the government pensioners, government employees and welfare queens who should be the ones who get a haircut in bankruptcy.

  • jdgalt1||

    I suggest this flag instead.

  • Tionico||

    Take that first suggested fifty one star flag above, and invert the entire field. The shorter line at the bottom, longer one at top, gives an unnatural "weight" to the whole thing.... flip it and it will settle right down and be more tolerable.

  • Mekial||

    A more sane choice than making Puerto Rico a state is making it a borough of New York.

  • Bubba Jones||

    The slumping job market is worsened by the fact that federal programs like food stamps, Social Security benefits, education grants, and disability payments aren't pegged to local cost of living.

    Peter Schiff explains: "Even though median incomes in Puerto Rico are just over half that of the poorest U.S. state, thanks to the Jones Act, the cost of living is actually higher than the average state."

    The second seems to undermine the first.

  • Johnimo||

    Can someone please help me understand just why the writers for this (supposedly) libertarian site are such idiots? Does this guy REALLY think that only Puerto Rico need exemption from the minimum wage law. The law should be abolished for all the States. We should all be "pro choice" on wages.

  • MoreFreedom||

    Having lived on the island, Heaton's article really lacking. The feds didn't ruin PR, the island politicians/voters did. Heaton's comes close with the feds "sprinkled cocaine and cronuts over the bonds", but drug addicts are the ones responsible for their addiction, not their dealers. But Heaton is otherwise accurate.

    Consider, 1/4 of employees on the island are paid by government, vs. about 1/16 here in the US. That's socialism on steroids. And with that many government employees, few are actually working. The island is also a cesspool of crime and corruption (just google puerto rico corruption). PR natives consider cheating mainlanders an OK thing.

    The PR politicians want to renege on loans made on the full faith and credit of PR, so they don't have to renege on promises to PR government pensioners and welfare recipients. They're willing to become a state for a bailout, rather than actually contributing something like Texas did when they gave up a huge chunk of land to become a state. I say make them an independent nation, or make them pay up first. Letting the government employee pensioners take their haircut would be a good step, because it then creates an incentive for government employees to actually ensure the island is well governed, rather than setup to steal from mainlanders.

  • MoreFreedom||

    And just look at google street view anywhere in San Juan. You'll see burglar bars over all the doors/windows of practically every home - for a good reason.


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