Trump is Usually Rude, Crude and Correct

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  1. Puerto Rico is to the U.S. as Cuba is to Russia. Both problem children. Maybe Trump could make a trade with Putin to exchange headaches. Sometimes children must be sent away.

  2. The problem with Puerto Rico (which is by some measures the most affluent Latin American territory) is that there came a point when their association with the U.S. induced unsalutary developments in the island’s political economy. Not sure when the turning point was, but my guess would be the Kennedy administration. As we speak, the employment-to-population ratio is just about the lowest of any component of the occidental world. Not sure why that is, but my guess would be that the minimum wage in Puerto Rico is set far too high given prevailing private sector wages and that eligibility standards for cash doles are lax and the benefit levels also set with reference to mainland wages rather than local wages. In an ordinary occidental country, about 60% of the population over the age of 15 are typically employed. In Puerto Rico, the ratio is 35% and in the Virgin Islands it is 43%. When 1/3 of your potential labor force craps out, you’re doing something very wrong.

    Aside from that, they’re quite affluent by regional standards, but sinkholes of crime. The homicide rate in the U.S. Virgin Islands is as bad as Detroit’s (curiously, the British Virgin Islands are nothing like that). That in Puerto Rico is not that bad, but it is worse than a typically core city rate on the Mainland and twice that of the most crime ridden state in the nation. You might be able to repair these problems, but I think you’d have to dramatically reduce the discretion of territorial government there to do that (and select very capable people to run such a trusteeship). Not hopeful.

  3. Two things the U.S. Government might do which might help our insular dependencies would be to repeal certain regulations on shipping and tariff collection which are injurious to the development of local enterprise there (I think one such troublesome piece of legislation is called the ‘Jones Act’. Another is to revise the federal minimum wage law by instituting a local rate for each territory outside the continental United States and then cut the continental U.S. into about 16 region and have a distinct rate for each region. You could set the federal minimum wage each year according to a formula in which the local personal income per capita was the key argument. You could also limit the applicability of the federal minimum wage to companies which employ people in multiple states, companies which employ people abroad, companies which employ people outside the state in which they are incorporated, and companies which employ migrant labor or H1-Bs. Replacing certain federal welfare programs (TANF, SNAP, Section 8, and LIHEAP) with an amended EITC might also help.

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