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88 pages, Paperback
First published June 5, 2018
We knew that the real disaster was not the hurricane but the terrible vulnerability imposed by Puerto Rico’s colonial relationship to the United States, as well as the forced privatization of health and other services; massive layoffs; huge numbers of school closures; reductions in social rights and in investments for collective well-being; abandonment of social and physical infrastructure; and high levels of government corruption and ineptitude. This vulnerability was aggravated by Washington’s imposition of the Financial Oversight and Management Board, an unelected body pushing for the privatization of electricity and schools, increased costs of basic services, massive cuts in public education, pensions, vacation time, and other rights—all in order to pay bondholders a $73 billion debt that was patently unpayable, illegal, and illegitimate. The net result was to leave the majority of people in Puerto Rico without a hopeful future, and that was all before Hurricane Maria hit our shores.
Several Puerto Ricans I spoke with casually referred to Maria as “our teacher.” Because amid the storm’s convulsions, people didn’t just discover what didn’t work (pretty much everything). They also learned very quickly about a few things that worked surprisingly well. Up in Adjuntas, it was solar power. Elsewhere, it was small organic farms that used traditional farming methods that were better able to stand up to the floods and wind. And in every case, deep community relationships, as well as strong ties to the Puerto Rican diaspora, successfully delivered lifesaving aid when the government failed and failed again.
Earlier this month, in San Juan’s ornate Condado Vanderbilt Hotel, the dream of Puerto Rico as a for-profit utopia was on full display. From March 14 to 16, the hotel played host to Puerto Crypto, a three-day “immersive” pitch for blockchain and cryptocurrencies with a special focus on why Puerto Rico will “be the epicenter of this multitrillion-dollar market.” Among the speakers was Yaron Brook, chair of the Ayn Rand Institute, who presented on “How Deregulation and Blockchain Can Make Puerto Rico the Hong Kong of the Caribbean.” Last year, Brook announced that he had personally relocated from California to Puerto Rico, where he claims he went from paying 55 percent of his income in taxes to less than 4 percent. Elsewhere on the island, hundreds of thousands of Puerto Ricans were still living by flashlight, many were still dependent on FEMA for food aid, and the island’s main mental health hotline was still overwhelmed with callers. But inside the sold-out Vanderbilt conference, there was little space for that kind of downer news. Instead, the 800 attendees—fresh from a choice between “sunrise yoga and meditation” and “morning surf”—heard from top officials like Department of Economic Development and Commerce Secretary Manuel Laboy Rivera about all the things Puerto Rico is doing to turn itself into the ultimate playground for newly minted cryptocurrency millionaires and billionaires.
The official slogan of this new Puerto Rico? “Paradise Performs.” To underscore the point, conference attendees were invited to a “Cryptocurrency Honey Party,” with pollen-themed drinks and snacks, and a chance to hang out with Ingrid Suarez, Miss Teen Panama 2013 and upcoming contestant on “Caribbean’s Next Top Model.”
But make no mistake—the true religion here is tax avoidance. As one young crypto-trader recently told his YouTube audience, before moving to Puerto Rico in time to make the tax-filing deadline, “I had to actually look it up on the map.” (He subsequently admitted to some “culture shock” upon learning that Puerto Ricans spoke Spanish, but instructed viewers thinking of following his lead to put a “Google translator app on your phone and you’re good to go.”)
Broke and desperate, the Puerto Rican government turned to borrowing, in part by using its special tax status to issue municipal bonds that were exempt from city, state, and federal taxes. It also purchased high-risk capital appreciation bonds, which will eventually rack up interest rates ranging from 785 to 1,000 percent. Thanks in large part to these kinds of predatory financial instruments, borrowed under conditions that many experts argue were illegal under the Puerto Rican Constitution, the island’s debt exploded. According to data compiled by lawyer Armando Pintado, debt-service payments, including interest and other profits paid to the banking industry, increased fivefold between 2001 and 2014, with a particularly marked spike in 2008. Yet another shock to the island’s economy.